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State gas authority sees competition State board concerned that North Slope producers’ LNG projects outside Alaska are rivals for potential buyers Larry Persily Petroleum News Government Affairs Editor
Members of the Alaska state gas authority are starting to see North Slope producers as competitors.
The authority’s job is to build a state-funded pipeline and terminal to ship liquefied natural gas to U.S. West Coast and maybe also Asian markets, while the producers are working toward a pipeline from Alaska, through Canada and into mid-America to serve the Lower 48.
“Each one of them is a competitor to our project,” gas authority Chief Executive Officer Harold Heinze said of the three major North Slope producers: ExxonMobil, ConocoPhillips and BP.
The producers also all have interests in LNG projects worldwide, many of which could serve the same markets the state gas authority is chasing.
The issue came up at the Alaska Natural Gas Development Authority’s Jan. 12 board meeting, at which Heinze announced he wants the board to go into closed-door session for all future discussions of possible LNG sales. “I don’t see any reason to disseminate at large” any information about the authority’s possible gas buyers, Heinze said. Marketing discussions in private “I would prefer not to have the marketing discussions in open session.”
The authority currently has no buyers or financing for its proposed project, and also no agreement with producers to sell any of their gas to the authority for conversion into LNG.
The board’s attorney advised that such closed-door sessions would be allowable under an exception in the state’s open meetings law. That exception allows for executive sessions if public knowledge of the discussions could harm the state’s finances.
Board members also discussed their concern that not everyone wants them to succeed in building an LNG project.
“This is about more than building a pipeline. This is a political war,” said board member David Cuddy of Anchorage. He suggested the board set up a “war room” so that it can respond quickly to newspaper editorials and other criticisms of the proposed state-owned pipeline project.
“I’m not going to say,” Cuddy responded, when asked the day after the board meeting who is against the project. “That’s kind of amongst the board. There are people who don’t want this built. Without naming names … we ought to at least respond to the charges.” Board wants to defend its project At the meeting, board members Cuddy, Scott Heyworth and Dan Sullivan and board Chairman Andy Warwick said they believe the authority needs to be more vocal in countering misinformation about the state-funded project.
“I think we need to have some kind of a public awareness press response team,” Cuddy said.
The board rejected a suggestion that they ask North Slope producers to review financial projections for the LNG project, with board member John Kelsey concluding, “They’ve lied to us in the past and we’re just asking then to continue to lie to us.”
Board members also voted Jan. 12 to deny a request from a citizens group for a copy of the authority’s draft response to the governor’s questions of last fall about the authority’s work and its possible project. The authority has yet to submit its answers to the governor.
The request came from Backbone II, a pro-LNG project citizens group comprised mostly of businesspeople involved in past, unsuccessful efforts to promote an LNG terminal at Valdez.
The gas authority board cited “competitive reasons” in keeping its draft response confidential.
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