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HB 132 moves to Senate on 24-14 vote Bill restricting what AGDC can do in competing with AKLNG project got minor cleanup in two House committees, now in Senate Resources Kristen Nelson Petroleum News
House Bill 132, sponsored by House Speaker Mike Chenault, R-Nikiski, moved through two House committees, Energy and Resources, with minor changes and passed the House 24-14 March 23.
The bill restricts the Alaska Gasline Development Corp. from competing with the Alaska LNG project until the earliest of the state or another party with natural gas leases dropping out of AKLNG; the AKLNG parties entering into contractual agreements to undertake Front-End Engineering and Design; or July 1, 2017.
The bill was introduced after Gov. Bill Walker said earlier in the year that he wanted to see the in-state line AGDC has been working on as a backup to AKLNG, the Alaska Stand Alone Pipeline, expanded to compete with AKLNG.
In introducing HB 132 in the Senate Resources Committee March 25, Chenault said it affirms the policy direction for AGDC set by the Legislature in 2013 when AGDC was created and in 2014 when AGDC’s involvement with AKLNG was approved in Senate Bill 138.
The bill also recognizes that AGDC is already engaged on behalf of the state as a partner in AKLNG, Chenault said, calling AKLNG the project likely to deliver the greatest benefit to Alaskans.
The backup The smaller project AGDC has been working on, ASAP, is a backup, Chenault said.
Originally established when the Alaska Gasline Inducement Act was in place, ASAP was limited to 500 million cubic feet a day under the terms of AGIA. That limitation has been eliminated, he noted, and ASAP can be upsized when needed.
AGDC’s board, with new Walker administration commissioners and three new members appointed by Walker, has asked staff to provide an estimate of the cost to design two larger volume projects. Chenault said if ASAP needed to be activated due to failure of AKLNG, we don’t know today what the right size of pipe for ASAP would be, what pressure or what volume of gas would be right.
He said his concern is that ASAP has been proposed since the beginning of the session not as a backup but as a competitive line, and said it doesn’t make sense to get into competition with ourselves and spend money on both projects.
On the issue of finding agreement with the governor, rather than staging a battle, Chenault said that is “exactly what we’re looking for.” He said the last thing he wanted was a fight with the governor, but he said there is a strong feeling among many members against giving up the opportunity before us today, when the state is further along on a gas project than it has ever been.
Chenault said he is willing to work with the administration to see about coming to an agreement that would meet some of what the governor wants while meeting some of what the Legislature wants, but said that hasn’t happened yet.
Competing plan Walker has called for competition between AKLNG and an expanded ASAP line which would go to tidewater and connect with a liquefied natural gas facility built by parties other than the state.
In an opinion piece published in mid-February the governor said that while he was pleased with progress to date on AKLNG, he wants the state to “increase the viability” of ASAP, calling it “market-driven, with Alaska in control.” He said existing funding would be used to “explore market opportunities and financing arrangements with potential buyers of Alaska’s gas,” with the project designed for both in-state and export markets.
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