Walker’s LNG direction confounds some lawmakers seeking clarity

It took one day for some lawmakers to go from confident in the state’s natural gas pipeline pursuits to confused and concerned.

Confused over Gov. Bill Walker’s new plan to expand the scope and mission of the state-backed Alaska Stand Alone Pipeline, or ASAP.

Concerned about his selections for the Alaska Gasline Development Corp. board that some believe do not meet the statutory requirements.

On Feb. 19, Walker said he wanted AGDC to consider expanding the ASAP line to something in size comparable to the AKLNG project, in which the state is already a partner with North Slope producers ExxonMobil, ConocoPhillips and BP, and TransCanada.

The smaller ASAP line, once limited to 500 million cubic feet per day capacity under previous laws, was originally considered to be a backup should the larger-capacity fail to advance.

Once a critic of the ASAP line, especially during his campaign, Walker has now placed greater credence on a line that no longer has statutory size restrictions; he believes it needs to be a stronger second option.

“The preferred line for me is one that gets built,” Walker said at a news conference in Juneau. “That is my preferred line. And I want to make sure that one gets built.

“I’m not sure that betting everything on AK LNG is the right approach. I think that as far along as we are with ASAP I think that makes sense to have, to advance that at the same time.”

This came one day after North Slope producers, Deputy Natural Resources Commissioner Marty Rutherford and AGDC’s Dan Fauske assured members of the House and Senate Resources committees of the AKLNG project’s progress.

Lawmakers see competition

It’s prompted House Rep. Mike Hawker to call on Walker to revisit his decision.

In an email to Petroleum News, the Anchorage Republican writes: “I ask the governor to evaluate the actual consequences of his recent actions, withdraw his decision directing the state to enter into competition with AKLNG, and reaffirm our commitment to the proven and working path of success established by the legislature through AGDC working with the very talented intellectual resources we have developed in our state Department of Natural Resources.”

Before Walker’s announcement, House Speaker Mike Chenault had been long looking for more details on Walker’s direction. The announcement brought more confusion than clarity, said Chenault, R-Nikiski, one of ASAP’s architects.

“As far as I was concerned, the project was proceeding along a path that we had designed it to,” Chenault said. “AGDC was working with AKLNG on parts they could assist them on to keep from duplication. I think things were moving along on a decent scale; things were on time.

“We hadn’t seen any hiccups. We hadn’t seen any reason to be concern that the project wasn’t moving forward – until now. I don’t know what disruption this will bring to the total process.”

ExxonMobil reevaluating

“Now that the governor has announced that state of Alaska is sponsoring a project in direct competition with the Alaska LNG Project, we are assessing the impact on our forward plans,” Jordan said in an emailed statement.

Several days prior to Walker’s announcement Hawker was among those confident that the project was moving forward uninhibited.

He shared his thoughts in an interview with Petroleum News only to have to revisit his position late Feb. 20, the day after Walker’s announcement.

Hawker has been on the front lines of resource development issues for more than a decade either as a member and co-chair of the House Finance Committee, longtime member or chair of the Legislative Budget & Audit Committee, including this year, and a member of the Resources Committee.

“This change of state policy by executive directive has introduced such uncertainty and impossible conditions into the execution of our legislative commitment to AKLNG that the project’s prospects are now severely compromised to the point of complete uncertainty about its future viability,” Hawker said.

Hawker went on to say the change “quite possibly stops progress on a viable work plan that had the greatest possible likelihood of a successful outcome.”

House Rep. Les Gara doesn’t share the same concerns as his House colleagues.

“I think what he did on the ASAP line was smart,” the Anchorage Democrat said. “My early thoughts are that it’s always a good idea to have competition, especially now that the small line is no longer a small line but a big line that could get us export revenue.

“It forces the producers to come to the table and negotiate more readily where as if they knew they were the only game in town, they would have a much stronger negotiating position against the state.”

New board members

He named former Sens. Rick Halford, who led Walker’s transition team, and Joe Paskvan, plus former Bethel Mayor Hugh Short.

Critics of these choices cite state law that says Walker shall consider expertise in natural gas pipeline construction, large project management and finance.

Walker says the expertise will come from his administration and that the board members bring additional skills.

“I don’t look at the expertise from the board,” Walker said. “I look at the expertise from the staff and from our professional staff that we have.”

That’s not how Senate President Kevin Meyer sees it.

All three face several confirmation hearings starting in March. The Anchorage Republican said it’s unlikely they would get rejected, but the scrutiny will be intense.

“The question is, these new board members, what expertise do they have?” Meyer said. “That’s a concern. There are just all sorts of things that make you wonder.”

Gara said it’s simply a philosophical change.

“I think he replaced some oil industry leading board members with people who have more of an independent streak to benefit the state,” Gara said. “The board should be people who should be willing to stand up for Alaska’s interest. If there is expertise they don’t have, they bring in the expertise. That’s good boardsmanship.”

- Steve Quinn