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Gas authority wants more money Board seeks additional $200,000 for studies of Alaska LNG project Larry Persily Petroleum News Juneau Correspondent
Just a month after receiving $200,000 in additional state funding, the Alaska Natural Gas Development Authority says it needs $200,000 more before the end of the year to stay on schedule. The authority faces a June 2004 deadline to present the Legislature with a development plan for a state-owned natural gas pipeline project.
Board members say they need quick approval of the money in December because their work could be delayed if they wait for the Legislature to convene in January and go through the usual budget process.
The authority wants to build a $12 billion project to pipe North Slope natural gas to Valdez, where it would be liquefied and shipped to LNG receiving terminals in California, Mexico or the Far East.
The 6-month-old authority has yet to sign consultant contracts for the first $200,000 but is worried it will not have the second $200,000 in hand when it wants to start issuing additional contracts sometime after the first of the year.
Board Chairman Andy Warwick said he fears the authority could be “cooling our heels, without much to do” in the first few months of the year if the first $200,000 is gone and the authority has to wait for more money. Administration not convinced Although the administration supported the authority in its request for the first $200,000, it doesn’t look likely the second time. “The authority has not shown they need the money,” said Deputy Revenue Commissioner Steve Porter, who serves as the department’s liaison to the gas authority.
The additional money would pay for studies of a spur line from the main line toward Cook Inlet, the possibility of using barges to bring LNG to coastal communities, and the prospect for separating propane from the gas stream and distributing it in Alaska. The money also would pay for further review of the legal problems in using non-U.S. tankers to carry Alaska LNG to West Coast terminal and the financial hurdles in obtaining U.S. tankers for the job.
The board voted 5-1 at its Nov. 17 meeting to ask the Legislative Budget and Audit Committee for the second $200,000 appropriation at the committee’s Dec. 12 meeting in Anchorage. The committee, which has limited authority to spend funds when the full Legislature is not in session, approved the first $200,000 at its Oct. 29 meeting.
Board member Scott Heyworth, organizer of the successful 2002 citizens’ initiative that created the authority, spoke in favor of requesting more money. “It’s a pittance,” he said. Funding a longstanding issue Board member Bob Favretto cast the only vote against the motion, cautioning that perhaps it is too soon to ask for more funding, although he said he doesn’t believe anyone in the administration or Legislature thinks “we’re done asking for money.”
The authority started the fiscal year July 1 with a $150,000 state appropriation and has discussed its need for additional funding ever since its first meeting.
The second $200,000, however, will not be enough to last through the end of the fiscal year on June 30, 2004, said Harold Heinze, the authority’s chief executive officer. He expects the board will also need to ask for $1.95 million in supplemental funding after the Legislature returns to work in January, bringing the fiscal year’s total budget to $2.5 million — assuming lawmakers approve the second $200,000 on Dec. 12.
The second $200,000 would carry the authority just until early spring, Heinze said.
The $2.5 million total is what Heinze and the board requested earlier this fall, when they asked for a special legislative session to make a lump-sum appropriation. They later retracted that request for a special session, deferring to legislative and administration objections, and instead have gone after the money in installments. More money needed in Fiscal 2005 This fiscal year’s $2.5 million would pay for several studies, cost estimates and market analysis, but no actual design work, engineering or permitting. Those costs would come in fiscal year 2005, which starts July 1, 2004.
“No one has asked me yet because they haven’t had the courage to ask me how much we need next year,” Heinze told the board, advising them it could be in the range of $100 million to $200 million for engineering, permits and design. After that step would come even larger funding needs to start building the pipeline, liquefaction plant, terminal and LNG tankers.
The first $200,000 is destined for studies of possible federal tax-exempt status for the authority, an analysis of in-state benefits of a state-owned gas pipeline, and to cover staff and office expenses through June 30. Authority to assess Yukon Pacific permits Some of the first $200,000 also will go toward hiring a contractor to assess the value of assets held by Yukon Pacific Corp., which has been unsuccessful in its more than 20-year effort to build a pipeline from the North Slope to Valdez. The company holds permits for the route and is interested in selling those permits to the state gas authority.
“We need to decide what are the valuable assets that we may be interested in at some point in the future,” Heinze said. “I know they’ve got a pot full of stuff.
“There is an intention on our part down the road” to acquire some of Yukon Pacific’s assets, Heinze said. “Then we’re talking real money.”
Board members Nov. 17 instructed Heinze to work with the attorney general’s office on a confidentiality agreement to protect Yukon Pacific’s propriety information when it’s in the files of the state authority. Board wants out of public meetings law The board also instructed Heinze to work with the attorney general’s office on possible legislation that would exempt the authority from the state’s open meetings and purchasing laws. “I personally believe the (open meetings law) is a significant impediment to what we are doing,” Warwick told board members.
The law requires state boards to give adequate public notice of their meetings and to conduct the meetings in public unless there is a legitimate reason under the law to go behind closed doors.
“We need more flexibility on the open meetings law,” Warwick said. “I believe in it for government but I just don’t see where it can work for building a pipeline.”
The chairman also expressed concern that state purchasing laws could delay the authority in hiring contractors for its studies.
The board instructed Heinze to report back on possible legislation at the authority’s Dec. 15 meeting in Anchorage.
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