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Murkowski says no to $3 million Backup plan may be to borrow planning money to stay on schedule; gas authority to meet with Alaska legislators Larry Persily PN Juneau Correspondent
The Murkowski administration says it is in no rush to decide whether it will support the Alaska Natural Gas Development Authority’s request for up to $3 million in additional funding because there is no way to appropriate money while the Legislature is out of session.
Despite the authority’s stated sense of urgency to prepare cost and construction timetable estimates for a state-owned natural gas pipeline before the Legislature reconvenes in January, the administration says the issue is moot until lawmakers return to work. “The general fund money is not available because the process does not allow it to be available,” said Steve Porter, deputy commissioner at the Department of Revenue and the administration’s liaison to the gas authority.
Harold Heinze, chief executive officer of the authority created by voter initiative last November, has a fallback plan.
“My fallback is this. If I had something that showed I had 21 and 11 votes for that, frankly, I bet you I could borrow that money somewhere here.” Heinze, who created a small sign for his office that says, “Happiness is Alaska gas going south,” was referring to the majority votes needed for passage in the 40-member House and 20-member Senate.
“If there is a body of will out there to do this, we can find the money,” Heinze said. Committee hearing Sept. 10 He will get his first chance at gathering votes when he appears before the Senate Resources Committee at 1 p.m. Wednesday, Sept. 10, at the Anchorage Legislative Information Office. The meeting will be teleconferenced to legislative information offices in Wasilla, Kenai, Fairbanks and Juneau.
The state gas authority at its meeting last month asked for a legislative hearing as soon as possible to present its funding request. “We have to work in a timely fashion” if Alaska is going to convince buyers that it can deliver liquefied natural gas to proposed U.S. West Coast terminals by the time of their expected openings starting in 2007-2008, Heinze said.
“I believe we have a viable project,” he said.
The Legislature this past session gave the authority $150,000 to start its work in determining whether the state should build, own and operate a multibillion-dollar pipeline from the North Slope to Valdez, where natural gas would be liquefied and shipped aboard LNG tankers to market.
The authority voted unanimously Aug. 25 to request up to $3 million in additional state funding immediately to prepare cost estimates, business and marketing plans for an LNG project. Then, if the work shows the Alaska project is feasible, Heinze believes the authority would be prepared to ask the administration and lawmakers in January for $100 million to $200 million — or more — in state funding to start actual design work.
At that level of commitment, Heinze said, “We would actually be at risk. The Legislature needs to understand that.” Spending plan on agenda But before asking for the big money, the state gas authority first will need to convince elected officials to find $3 million for the preliminary work. Heinze said he knows the authority will need to present a detailed spending plan at Senate Resources on Sept. 10. “It will be more detailed than people expect.”
Porter cited the lack of a detailed plan in the administration’s answer that it’s too early to decide on the funding request. “The administration doesn’t have a decision to make yet. ... We want to see a plan.
“It’s not reasonable to ask the administration to support it at this point in time.”
Under state statute, the authority has the power to issue bonds to pay for project construction and may also accept loans from federal or state agencies or private sources. The statute makes clear, however, that the state is not responsible for any debt taken out by the authority, which is to use its revenues or assets to repay its own debts. Committee invite list In addition to the state gas authority, the Senate Resources Committee has invited to its Sept. 10 hearing most of the major players in the state’s efforts to move North Slope gas to market.
The committee, chaired by Sen. Scott Ogan, R-Palmer, has invited oil company representatives to present updates on efforts to commercialize Alaska’s natural gas resources. On the invite list are the major North Slope producers BP Exploration (Alaska), ConocoPhillips and ExxonMobil, and the smaller Alaska players EnCana and Anadarko.
The committee also has invited Yukon Pacific Corp., which has been working 20 years to promote a project to move Alaska LNG to market, and Ken Thompson of Pacific Star Energy, who has been working just a year or so to form a consortium of Alaska corporations and individuals to buy a 10 percent share of an Alaska gas pipeline.
Mark Meyers, director of the Division of Oil and Gas at the Alaska Department of Natural Resources, also is on the committee invite list.
Testimony will be by invitation only.
Ogan, who was in Texas for orientation as incoming chairman of the Energy Council, was unavailable for comment Sept. 3. He will take over his duties at the council’s Sept. 18 meeting in Tulsa, Okla. The council is a legislative organization of 10 energy-producing states ranging from the Gulf of Mexico to Alaska.
Heinze hopes the Senate committee is not the last for the authority’s funding request. He said he also has asked the House Finance Committee to meet to consider the issue. Authority looks to Congress, too The authority has not limited its work to funding requests and planning. The board last month voted to send a letter to Alaska’s congressional delegation, asking that provisions of the federal energy bill intended to help private construction of a gas pipeline to North America be worded to ensure they also would apply to the authority’s LNG project.
If the governor decides to support an additional $3 million for the authority, Porter said, there is the possibility of turning to the Alaska Industrial Development and Export Authority or some other funding source for the money. He said he hasn’t found a definite source, though he also acknowledged he hasn’t been looking that hard. Other work for authority Porter said he plans to attend the authority’s Sept. 22 meeting to discuss what it could do to possibly assist or compliment the state’s ongoing efforts to convince the three major North Slope producers to build a gasline to the North America pipeline grid at Alberta instead of focusing all of its efforts on a standalone line to Valdez for LNG exports.
“There is (LNG) potential on the West Coast … at an appropriate point in time,” Porter said. “That point in time may be after the gasline is built.”
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