LB&A requests audit of AGDC funds use

Legislative auditors are digging into whether the Alaska Gasline Development Corp. is improperly using money for work on a state-led liquefied natural gas project from a fund designated for an in-state gas pipeline.

The Legislative Budget and Audit Committee approved the audit at its Dec. 4 meeting in Anchorage. Rep. Mike Hawker, R-Anchorage, had requested the audit.

Hawker’s request was that auditors examine the “compliance of actual spending with legislative intent and restrictions on the purpose and use of the In-State Gas Project fund and the Alaska LNG Project.”

AGDC has about $30 million in the Alaska LNG fund and $70 million in the in-state gas project fund and Hawker believes that the corporation is funding some activities for the LNG project from the in-state fund, which has more money.

Hawker also asked auditors to find out if the AGDC board approved specific spending decisions and contracts for senior executive employees and consultants.

Legislative staff who have queried AGDC on the comingling of funds say they were told that money from the in-state fund was typically used for activities that benefit both projects, and because of that would be legal.

An example is funding for permitting and environmental work for the Alaska Stand Alone Pipeline, or ASAP, that also benefits the larger Alaska LNG Project.

ASAP is an 800-mile 36-inch gas pipeline developed as a backup to get North Slope gas to Alaska communities in case the larger Alaska LNG Project falters.

Alaska LNG involves a 42-inch pipeline built along the same right of way as ASAP but extending beyond the proposed southern terminus of ASAP in the Matanuska-Susitna Borough to an LNG plant at Nikiski, on the Kenai Peninsula.

Both projects have large gas treatment plants on the North Slope but the Alaska LNG Project treatment plant is larger. Also, ASAP has no LNG plant at its southern end, while the Alaska LNG Project does have one.

Since the right of way from the North Slope to the Mat-Su is the same for both, the environmental work done for ASAP is directly applicable to Alaska LNG. Staff of AGDC were also instructed by the Legislature not to duplicate work for the projects if data for one can be used for the other.

- TIM BRADNER