Alaska Gasline Development Corporation President Keith Meyer updated the House Natural Resources Committee last week on the status of the gasline project, which is in a new incarnation under Gov. Bill Walker: It has gone from a private sector project to a state-owned one, and is now proposed to be a Chinese-led project that will send 75 percent of the gas to China, and the rest to other countries in Asia.
Must Read Alaska asked questions before that meeting, and some of those were answered by Meyers’ presentation. Others were not, especially involving who takes the risk on the state-owned project.
But the presentation raised new questions:
- How much can AGDC promise the Legislature it will actually generate for the State to spend on actual State services once gas is flowing? Is it $250 million?
- If the gasline is going to make “payments in lieu of taxes” (PILT) to local communities — worth $450 million or so, as Meyer indicated — how does that work, since the State is not a taxpaying entity? It has nothing to pay in lieu of, does it?
- Why would the State make PILT payments on a gasline asset but not some other state-owned asset, such as the State Office Building?
- How much of the expected revenue will go into the cost of operations? Is it $1.1 billion?
- Will the employees operating it be state employees? Managed by executives from China?
- If the Chinese are going to finance 75 percent of the $43 billion project, how is the State going to come up with the $10 billion or so that it will need?
- Which entity is bearing the risk for cost overruns or catastrophes?
- Meyers said there would be numerous agreements that would need to be completed by May and December. What is the list of agreements that need to be done by May? By December? Who are the lead staff members, and who are their team members?
- Why do these negotiations have to be secret, when governor said three years ago that all AK-LNG documents had to be made public? These will be the similar documents, just different owners.
- If the governor isn’t planning on using the Permanent Fund to pay for the State’s share, where will the State’s investment come from?
Gov. Bill Walker is planning on a 2024 start date for shipping gas. Here are 10 points relating to the status today:
- No investors.
- No funding.
- Nothing beyond conceptual designs.
- No significant permits.
- No export license.
- No right of way through federal, private or Native land.
- State does not own land where LNG terminal would go.
- Project has not procured any steel, or entered into a queue for facilities or pipe fabrication.
- Project does not have an engineering or construction firm for the gas treatment plant at Prudhoe Bay, the pipeline itself, compressor stations, LNG plant or any other component.
- AGDC does not have significant competent staff with project management experience on a similar project.
Earlier this year, the governor’s anchor tenant, REI of Japan, left the project without comment.