Parallel public, LB&O hearings expected

Special session of Alaska Legislature would get accept-reject contract, could also get bill authorizing body to hold state’s interest

Kristen Nelson

Petroleum News Editor-in-Chief

The Alaska Natural Gas Development Authority board has been following publicly available information on the administration’s gas pipeline contract negotiations, and members asked at their August meeting for an overview of the public process once an agreement is reached.

Deputy Commissioner of Revenue Steve Porter said once agreement is reached, there will be a public comment period. The contract will become a public document at that point, and so will a preliminary finding, by Commissioner of Revenue Bill Corbus.

That finding, as described in the Alaska Stranded Gas Development Act, will determine whether “the proposed contract terms are in the long-term fiscal interests of the state…” In addition to the contract and the fiscal interest finding, the act specifies that non-confidential “supporting financial, technical and market data” will also be made public.

The commissioner will also “offer to appear before the Legislative Budget and Audit Committee to provide the committee a review of the commissioner’s preliminary findings and determination, the proposed contract, and the supporting financial, technical, and market data…” If the committee accepts the commissioner’s offer, the act says the committee will give public notice of the meeting. If confidential data is disclosed, it cannot be disclosed “during a public portion of the committee meeting…”

The public and members of the Legislature will have “at least 30 days” to comment on the proposed contract and on the commissioner’s preliminary fiscal findings.

Porter told the ANGDA board that once a contract is released the administration will make staff available to the board to answer its questions.

Coordination specified in act

Porter said it is the administration’s “intent to run those generally concurrent.” In response to a question about the role of the committee, he said “LB&A is not an approval process; it is a comment process.”

While the public comment period is “at least 30 days,” the commissioner has only 30 days after the public comment period closes to prepare a summary of public comments, propose any amendments, make final findings and determination, secure agreement to any proposed contract changes and submit the contract to the governor.

The contract then goes to the Legislature. “A contract developed under this chapter is not binding upon or enforceable against the state or other parties to the contract unless the governor is authorized to execute the contract by law.” The state and other parties have 60 days after the contract is authorized to execute it.

May be public entity bill

And that public entity bill, Porter said, would be something the Legislature could change.

Board Chairman Andy Warwick asked Porter if the administration would be recommending a particular entity, and Porter said the administration is giving this a lot of thought.

Porter also said there are different public entity issues for the main line and a spur line: The state might take a non-operator equity interest in the main line, but could be the operator of a spur line. The Legislature would treat a public entity bill the way it treats any bill, Porter said, but the fiscal contract can only be voted up or down, not changed.

If the Legislature does not approve the contract the governor submits, he said, “you start over.” But under the act, the state could only go back to the table with parties who have already applied.

In addition, ANGDA is working with the Regulatory Commission of Alaska on proposed changes to state statutes governing a natural gas pipeline from the North Slope, and would like to see statutory changes go before the special session (see story in Aug. 7 issue of Petroleum News).

ANGDA board can help educate

ANGDA Chief Executive Officer Harold Heinze said comments from the ANGDA board during the public comment period “will be very valuable to a lot of people … it actually can shape what happens.” The business community in particular will be interested in what the board has to say, Heinze noted, since ANGDA is not part of the negotiations, “but there may be some commentary we can offer that will help” people understand the issues.

He said he thought ANGDA board comments would be especially valuable on open season issues: “The board’s commentary as to whether it is sufficient or not is going to be very important to a lot of people out there because we’re not involved in the negotiating of it, so we’re a true third party.” This is one of the issues ANGDA would like to see RCA address, as the state’s pipeline act specifies that once the RCA sets volumes for a natural gas pipeline they can only be changed by the pipeline’s owner/operator. The RCA decision would be based on an open season, Heinze said, but some communities in Alaska might not be in a position to sign gas supply contracts today, and firm transportation commitments would be part of the existing open season process.

ANGDA could also take a lead in commenting on the organizational structure the state chooses for its ownership, he said, and on broad comparisons of projects, helping people understand what the choices are for the state.

He urged the board to fund a study comparing project options for the state, saying it didn’t look as though the Legislature was having that work done. Board members, however, wanted to wait and see what a contract contained. Porter said he would be recommending to the administration that it fund such a study.