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Friday, September 21, 2018
HomeAlaska NewsGasline Corp. launches cheerleading squad

Gasline Corp. launches cheerleading squad

UNIONS JOIN, BUT INDUSTRY GROUPS HOLD BACK, LOOKING FOR SPECIFICS

Last month, the Alaska Gasline Development Corporation rolled out a new entity to polish its brand: the Alaska Gasline Coalition, it’s called.

The initial members of the coalition include unions, quasi-governmental agencies, and regional groups with a dog in the fight: Alaska AFL-CIO, Alaska Laborers, Anchorage Economic Development Corporation, Arctic Slope Regional Corporation, Calista Corporation, Construction Industry Progress Fund, Kenai Peninsula Builders Association, Kenai Peninsula Economic Development District, National Electrical Contractors Association – Alaska, and the Soldotna Chamber of Commerce.

Hawkins

The coalition’s purpose is to support the Alaska Gasline Development Corporation’s Alaska LNG project.

Missing from the cheering squad is the Alaska Chamber of Commerce, the Anchorage Chamber of Commerce, the Juneau Chamber of Commerce, and the Fairbanks Chamber of Commerce. Also not on the list is the Alaska Oil and Gas Association, the Associated General Contractors, the Alaska Support Industry Alliance and the Resource Development Council.

Why are the actual industry leaders not climbing on board the coalition to support the gasline?

They say it’s because they don’t know what the project actually is, how it will be paid for, and which entity will control it. While Alaskans generally want to monetize the state’s abundant natural gas, they are not aligned with Gov. Bill Walker on a deal with China at any cost.

The gasline, which Gov. Bill Walker claimed was not transparent under Gov. Sean Parnell, is an especially secretive project now. During the 2018 session of the Alaska Legislature, there was a lot of discussion about receipt authority that would allow AGDC to borrow billions of dollars, but there were no hearings about the project itself. The basic business decisions have not been revealed.

PROJECT MOVING FASTER, RUNNING SHORT OF TIME

Last month the governor attended another ‘world gas conference,” this time in Washington, D.C., with AGDC President Keith Meyer and with the governor’s communication director and deputy chief of staff Grace Jang.

Jang has been embedded at AGDC for several weeks, sources have told Must Read Alaska. Since Jang’s arrival, AGDC’s vice president for communications, Rosetta Alcantra, left the organization suddenly, just as the governor is closing in on a deal with Sinopec, the China Petrochemical Corporation, with which he signed a nonbinding joint development agreement in November to design, build, and operate Walker’s ambitious plan to commercialize the state’s gas.

Although much is not known, what the public has been told by Walker is that the Bank of China and China Investment Corporation would guarantee 75 percent of the funding, or about $32 billion to build the Alaska LNG project.

The state would, in exchange, promise China 75 percent of the gas for the life of the agreement. So far, this all is done via a memorandum of understanding, of which Walker has signed dozens in his 3.5 years as governor.

With his re-election prospects grim, the governor only has five months to finalize a binding agreement with the Chinese consortium of companies before either he wins another term of office or a new governor takes over.

With so little time left, Walker is trying to hasten the work on agreements with the Chinese entities. Over the next few weeks, insiders say Alaskans can expect to see a lot more Chinese officials in the state, where the governor is hoping to have discussions and signing ceremonies. Walker hopes to roll out a major announcement after the Aug. 21 primary election.

WHAT WOULD A BINDING AGREEMENT LOOK LIKE?

Some knowledgeable about the project worry that Walker is getting ready to sign a binding agreement laden with contingencies. Such an agreement could set forth conditions similar to the agreement Alaska had with TransCanada years ago, which the state had to pay handsomely to break. In 2015, Alaska paid TransCanada $65 million to get that company’s share of the project. Many thought that TransCanada let the state off easy.

The cautionary note being sounded is that Walker and Meyer are willing to sign away the first right of refusal for the next 10-20 years, giving China the right to build the gasline project, provide the steel and other components, and a future governor would be bound to that agreement, including the promised gas that would go into it. Even if the agreement was uneconomical and failed to proceed, Alaska would be on the hook to a foreign entity.

The Permanent Fund itself could be tapped if the project doesn’t pan out. Here’s how: With Gov. Walker so deeply involved in the formation of an agreement with China, the State can no longer claim that there is a clear separation between AGDC and the State itself.

China and other creditors could come after the Permanent Fund in the same way that creditors are going after former Alaska Dispatch News publisher Alice Rogoff, by claiming she had no separation between her businesses and her personal finances.

Such a lien on the Permanent Fund would only happen, of course, if costs were higher than expected and if the State of Alaska couldn’t break even.

Walker has so deeply engaged in the workings and agreements of AGDC, to the point of putting his deputy chief of staff inside the agency, that he has already “pierced the veil” that would keep the State of Alaska’s treasury off limits in court. Although AGDC has been designed as an independent agency that would protect the State, should something go wrong, Walker has not kept an “arm’s length” distance from the project, which AGDC president Keith Meyer claims will be turning dirt next year.

On July 11, some of this may be explained more fully in the Senate Natural Resources Committee, as Sen. Cathy Giessel, chair, convenes the quarterly review of the gasline agency’s work to date, its progress and commitments. That committee meeting starts at 9 a.m., and lawmakers will no doubt have many specific questions about the modeling and finances of the proposed gasline.

The cheerleading squad, “The Alaska Gasline Coalition,” hasn’t done much other than allow itself to be used as a publicity stunt. Its purpose was to simply provide some momentum to the project at a time when AGDC President Meyer has said quite publicly that he is done talking to the naysayers, and will engage only with people who support the project — whatever it is — from here on out. That means the Alaska Gasline Coalition is the group Meyer will be communicating with this year.

 

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Suzanne Downing had careers in business and journalism before serving as the Director of Faith and Community-based Initiatives for Florida Gov. Jeb Bush and returning to Alaska to serve as speechwriter for Gov. Sean Parnell. Born on the Oregon coast, she moved to Alaska in 1969.

Latest comment

  • Dreamers the bunch of them! What’s so sad it’s Alaska’s money and resources at risk.. Look at the Coalition group they are consistent in spending other peoples money, nothing new here! .