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Lawmakers approve LNG trucking plan Alaska Legislature gives AIDEA the ability to issue low-interest loans and a one-time grant to help reduce Interior energy costs Eric Lidji For Petroleum News
The Alaska Legislature has given the Alaska Industrial Development and Export Authority the go ahead to fund a liquefied natural gas trucking operation, if it so chooses.
Following in the footsteps of the Senate, the House unanimously passed Senate Bill 23 on April 12, giving the public corporation the authority to issue up to $275 million in financing for a North Slope liquefaction plant and a distribution system in the Interior.
“For too long, Interior and rural Alaskans have been suffering from skyrocketing energy costs,” Gov. Sean Parnell said. “I am pleased the Legislature worked quickly to address this issue and provide the necessary framework to reduce energy costs for Alaskans.”
The bill is one piece of a larger financial package the Parnell administration proposed late last year to address rising energy costs in the Fairbanks-North Pole region. The package also includes a large one-time grant, and up to $30 million in gas storage tax credits.
The Legislature approved the grant separately from SB 23, in a $57.5 million appropriation included in the capital budget, but Parnell must still approve the budget before it goes into effect. The tax credits are already on the books from prior legislation.
A ways to go Although Interior officials celebrated the news as a step toward bringing gas to the region, and at least one Southcentral official deemed it the first commercialization of North Slope gas, SB 23 only gives AIDEA to ability to offer low-interest loans through the Sustainable Energy Transmission and Supply. Before AIDEA sanctions the project, it must complete a feasibility study of the current proposals submitted by a range of private entities toward the end of last year. AIDEA expects to have the study done by June.
If AIDEA moves forward, the project could be operational by the second half of 2015.
Under current estimates, gas could reduce heating costs in Fairbanks by 40 percent.
Still, Sen. Lesil McGuire, an Anchorage Republican and former chair of the Senate Energy Committee, praised her colleagues for passing the first bill authorizing the use of the SETS fund, passed last year. The fund allows AIDEA to “issue direct loans for up to one-third of the capital cost of an energy project, or create a secondary market through loan guarantees that partner with local Alaskan banks for financing,” as McGuire put it.
“As we move into an era of fiscal constraint, Alaska cannot afford to spend all of our liquid assets on our infrastructure needs,” McGuire said in a statement. “The SETS fund program is an innovative way to partner our public banking capacity through AIDEA with private sector capital to move forward with greatly needed energy infrastructure.”
SB 23 also gives AIDEA the ability to directly help finance larger infrastructure projects that it does not intend to own or operate. Those projects would likely include oil and gas production facilities for smaller independents looking to bring new prospects online.
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