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State of Alaska investment in gas pipeline under discussion
Larry Persily PN Government Affairs Editor
While the Alaska Natural Gas Development Authority continues its effort to determine if the state should build, own and operate a liquefied natural gas project, others are talking about how to help finance the estimated $12 billion venture if it goes forward.
A Juneau legislator wants to amend state law to give specific permission for the Alaska Permanent Fund Corp. to loan money for the project.
And a member of the Alaska State Pension Investment Board believes the gas project might be a good investment for public employee and teacher retirement funds.
Martin Pihl, named by Gov. Frank Murkowski to the pension investment board last year, said he raised the issue at the board’s Jan. 9 meeting “just to put it on our radar screen … to be in on the ground floor.
“I just want our people (investment staff) to be knowledgeable about it … if it’s a pension fund-type investment,” he said in an interview Jan. 13.
Pihl, former president and general manager of Ketchikan Pulp Co. and a former acting executive director of the Alaska Permanent Fund Corp., said he believes pension board staff should find out everything they can about the proposal for a state-owned LNG project to determine if it would be a good investment for the retirement funds.
The eight-member board handles about $12 billion in retirement funds. Bonds might be a good investment Although he doesn’t think the pension funds could be used to take an equity stake in the project, Pihl said perhaps they could invest in gas authority bonds.
Pihl made his comments at the end of the board meeting, and his colleagues took no action on his suggestion.
The $27.6 billion Permanent Fund also is a possible financing option for the LNG project, said Juneau Rep. Bruce Weyhrauch.
The freshman Republican lawmaker said he will introduce legislation this session to grant specific authority to the Permanent Fund trustees to loan money for a state-owned gas project, assuming it meets all of the fund’s existing statutory investment rules.
The 27-year-old Permanent Fund gets its money from a share of state oil and gas royalties and investment earnings on stocks, bonds and real estate.
Weyhrauch said he does not expect to propose a dollar amount for the loans or a limit on how big a percentage of the project the Permanent Fund could finance, adding he has discussed his proposal with Permanent Fund officials and Harold Heinze, chief executive officer of the state gas authority. Legislator says Alaskans want a project Alaskans are frustrated with the lack of progress in building a project — any project — to carry North Slope natural gas to market — any market — the legislator said, and he believes there will be support for loaning money from the Permanent Fund to help the project.
“It makes sense to me to have that state financial resource available to the in-state gas authority if we can use it,” Weyhrauch told the Juneau Empire newspaper earlier in January. “Under a plan like that it would be limited to simply allowing the pipeline authority to borrow money from the Permanent Fund Corporation if it met the corporation’s fiduciary duties to have a return on the investment for the benefit of the public.”
The Alaska Natural Gas Authority, created by voters in November 2002 to build a gas pipeline from the North Slope and an LNG export terminal at Valdez, has no money for construction and would need either a direct state appropriation or to sell bonds to finance the venture. The authority also needs to determine if the venture is financially feasible, and if it can line up any buyers for the LNG.
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