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Senate Bill 275 addresses issues raised by AGDC’s and Glenfarne Alaska LNG’s plans to begin gas pipeline construction this year
The Senate Resources Committee began hearings March 13 on Senate Bill 275, a bill the committee sponsored which addresses concerns about the structure and benefits of the project to Alaska. In a sponsor statement the committee noted concern about confidentiality around project details, “including oversight structures, financial terms, and potential state revenue.”
In introducing the bill, Committee Chair Cathy Giessel said a question which always arises on a bill or resolution is why is this needed. She said when the Legislature last considered a gas pipeline project, in 2014, “There was tremendous transparency. The Legislature was being engaged by the project proponents very closely. We had lots of oversight, but we also changed legislation at the time, which removed our role significantly.”
This is a new project, Giessel said, and the Legislature needs to look at what needs adjustment “in terms of governance and transparency recommendations.”
In prior committee meetings, members have expressed concern about the lack of information AGDC and Glenfarne are sharing.
Staff introducing the bill referred to it as the “Alaska Gasline Transparency and Accountability Act.”
Bill provisions
Among other things, the bill would make the project subject to annual audits by the Legislative Budget and Audit Committee, allow legislators and staff to sign nondisclosure agreements allowing them to review information protected by existing confidentiality agreements, prevent the Alaska Gas Development Corp. from divesting ownership or management interests in subsidiaries without legislative approval by law; allow the Legislature at least 180 days to consider any option AGDC negotiates to acquire an interest in a project and requiring that the Legislature authorize acquiring any interest by law; prevent AGDC from entering into legal relationships unless the Legislature approves by law.
On the issue of royalties on gas, the bill provides that when the commissioner of the Department of Natural Resources takes oil or gas royalty in value, where the sales price is unreasonably low, the state’s royalty share will be based on a price that is the reasonable prevailing value of similar oil or gas for that field.
The bill also establishes a duty for the commissioner of the Department of Revenue to ensure that when the actual sales price was unreasonably low, tax payments on production are based on a price that is the reasonable prevailing value of similar oil or gas for that field.
For North Slope natural gas pipeline-related entities the bill establishes a 9.4% tax on income over $5 million, applying to S-corp and LLC natural gas pipeline carriers, producers transporting natural gas by pipeline, producers supplying natural gas to a natural gas pipeline carrier, entities involved in gas treatment or carbon capture activities related to natural gas transported by pipeline, and entities engaged in the sale of natural gas transported by pipeline.
The bill would eliminate, after Jan. 1, 2026, the ability of a producer to use gas development costs incurred on the North Slope as lease expenditures against oil production taxes.
The bill establishes a surcharge of 15 cents per thousand cubic feet for processing and liquefaction of natural gas, a surcharge which does not apply to small capacity plants.
