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AGDC OKs 8-Star limited liability company
8-Star will have public, 3rd-party investors, be controlled by AGDC; 8-Star will control Alaska LNG LLC, which will hold assets
Kristen Nelson Petroleum News
Keith Meyer, president of Alaska Gasline Development Corp., told the board Nov. 8 that the project structure for the Alaska liquefied natural gas project will include two new limited liability companies. The first LLC, 8-Star Alaska LLC, will be controlled by AGDC and will have both public and third-party financial investors.
At the Nov. 8 meeting the board unanimously approved two resolutions related to 8-Star. The first notes that the Alaska Legislature tasked AGDC with establishing the operating structure for a natural gas pipeline project and allowed it to acquire ownership or participation interest in an Alaska LNG project or an entity that has ownership interest in or is engaged in the project.
The resolution further states that “AGDC’s liquefied natural gas project has advanced to the point where potential customers, investment bankers, and investors require an understanding of the operating structure,” and to that end “AGDC seeks to acquire an ownership interest in a Delaware limited liability company with the name of 8-Star Alaska, LLC, or a name that is available and substantially similar thereto.”
The board approved a purchase price not to exceed $10,000 for purchase of interest in 8-Star.
The second resolution authorizes AGDC to “license, share, transfer, or otherwise convey corporate assets to 8-Star which AGDC deems appropriate or necessary to advance an Alaska liquefied natural gas project and facilitate 8-Star’s business operations,” including but not limited to “Alaska LNG Project or ASAP content and agreements, permits and authorizations, rights-of-way, and geographical information system databases.”
The 8-Star LLC will allow Alaskans and others to invest in the project at the appropriate time.
The second entity, Alaska LNG LLC, will be controlled by 8-Star, have strategic partner investors and hold project assets. Both the LLCs will be tax pass-throughs
Alaska LNG will be the entity which will construct, own and operate the project.
The new administration Meyer said AGDC is working with the incoming administration and Legislature.
Gov.-elect Mike Dunleavy has named former Gov. Sean Parnell to be his special advisor on the AKLNG project. Parnell, responsible for passage of Senate Bill 138 in 2014 which allowed state equity participation in an LNG project, was defeated in a re-election bid by Gov. Bill Walker, who engineered the state takeover of the Alaska LNG project when industry partners BP, ConocoPhillips and ExxonMobil wanted to put the project on hold for economic reasons.
In discussing the Parnell appointment, Tuckerman Babcock, Dunleavy’s chief of staff, told KTUU “No one knows more about the project than the former governor.” Babcock said Parnell had moved the project to a point never achieved before.
After the state takeover of the project, it moved ahead but funding has been an issue. In the last legislative session Walker budgeted for designated program receipts for AGDC, allowing it to accept money from third parties. As proposed, the authority was open ended, allowing AGDC to accept any amount of money from third parties. The House limited the amount to $1 billion for the fiscal year ending in June and a separate $1 billion for the fiscal year ending June 30, 2019. The Senate dropped the $1 billion provisions, but left references to designated program receipts in the bill.
AGDC has been operating on what Meyer has called an austerity budget, stretching funds previously allocated by the Legislature. During the session Meyer said he wanted third-party funding in place in 2018 to keep up the pace of the project, so funding issues won’t cause slippage in the schedule to have first gas in 2024-25. He has said that as long as the project is in construction in 2020, AGDC can make the 2024-25 online schedule.
Project updates In an update on negotiations, Lieza Wilcox, AGDC vice president commercial and economics, said Chinese parties visited Alaska in October to advance the joint development agreement. Sales and purchase agreement negotiations are ongoing she said, with workshops for key parties planned in November.
Meyer noted that a delegation from Vietnam visited Oct. 22 and said the JDA parties’ top negotiators were in town Oct. 22-26, advancing agreements and conducting upstream resource reviews.
Wilcox said AGDC has been working with the Department of Revenue and the Department of Natural Resources on aligning economic model assumptions. She said AGDC provided assumptions for both a two-train and a phased three-train scenario.
DNR, she said, is using their project economic model in the department’s royalty best interest finding process.
AGDC Senior Vice President of Program Management Frank Richards reviewed fulfillment of Federal Energy Regulatory Commission data requests and noted that on the Alaska Stand Along Pipeline the U.S. Army Corps of Engineers and the federal Bureau of Land Management are expected to sign a joint record of decision in mid-November. A draft environmental impact statement for the Alaska LNG project is scheduled from FERC in February.
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