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Yukon Pacific withdraws from gas group Alaska Gasline Port Authority vote set for October in pipeline communities Kristen Nelson PNA News Editor
Yukon Pacific Corp. notified ARCO Alaska Inc. July 14 that it is pulling out of the ARCO-led North Slope gas sponsor group.
Meanwhile, residents of the Fairbanks North Star Borough, the North Slope Borough and the city of Valdez will vote this fall on the formation of a port authority to finance a gas pipeline.
Wayne Lewis, Yukon Pacific vice president, told PNA July 15 that Yukon Pacific was withdrawing from the gas sponsor group because it wants to focus on the Valdez route for which it has permits. The sponsor group, he said, is still exploring alternative routes for the pipeline and alternative sites for a liquefied natural gas plant.
Lewis said that during the 12 years Yukon Pacific spent getting its permits, a Cook Inlet pipeline terminus and siting for a liquefied natural gas plant were evaluated by the regulatory agencies.
“We didn’t make the decision to route the line to Valdez and build a plant at Anderson Bay, the agencies did,” Lewis said.
George Findling, ARCO Alaska business development advisor for gas development, said that ARCO Alaska received a letter from Yukon Pacific, but would need to discuss it with all of the sponsor group partners. Findling said the sponsor group’s work plan is on track as specified last year. The focus, he said, is still on making the project competitive.
Alaska Gasline Port Authority vote set Meanwhile, residents of the Fairbanks’ North Star Borough, the North Slope Borough and the city of Valdez will vote in October on whether or not to form the Alaska Gasline Port Authority to finance and own a gas line from the North Slope to Valdez.
Sheri Pierce, Valdez city clerk, said July 16 that there would be a second reading of the proposed ordinance at the city’s July 19 council meeting. The council was expected to adopt the ordinance and a resolution placing the ordinance on the Oct. 5 ballot.
Becky Gay, government affairs administrator at the North Slope Borough, said the North Slope Borough introduced a port authority ordinance at its July 6 monthly assembly meeting. The plan, she said, is to have the ordinance on the ballot by October.
The mayors group, Gay said, sees an earlier window for gas sales from the North Slope than the gas owners do, which is why the group is moving ahead with the port authority votes.
“It’s pretty funny when government is trying to move faster than the private sector,” Gay said.
The port authority suggestion came from high-level bond counsel during a quest about how to get tax-exempt status for gas line financing, she said.
There are a lot of different components, including different kinds of project financing and gas contracts. “The missing link has been the authority to bring it all together — that’s what the port authority does,” Gay said.
She said that probably only 5-15 percent of the project would be eligible for tax-exempt bonds, but that income from the port authority would probably be exempt from federal income tax. No changes in federal law would be required, just a ruling from the Internal Revenue Service. As soon as the port authority is formed it can ask for a tax-exempt ruling from IRS, Gay said.
And, she said, with the port authority no individual community’s bond rating or permanent fund is at risk, you don’t have to pledge any of that. The port authority, she said, is its own entity of risk.
Benefits to state, communities Profits of the port authority would stay in the state. The first payment after expenses would be a payment in lieu of tax to municipalities that have real or personal property located within their taxing jurisdiction which is exempt from taxation because it is owned by the authority. The annual payment would be equal to 2 percent of the original cost of construction or acquisition of that property. The value of qualifying property each year would be its original cost plus subsequent capital costs — not including costs incurred for maintenance.
Once payments in lieu of taxes are made, 60 percent of the balance of net revenues would go to the state of Alaska, 30 percent to municipalities with each receiving an amount based on population, with a minimum payment of $50,000.
Ten percent will be divided equally among municipalities which join the authority prior to Dec. 31, 1999.
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