AK-LNG & ASAP: A citizen considers risks of continuing government ownership



How would you cope with the smorgasbord of problems/challenges Gov. Mike Dunleavy assumed upon being sworn in this December?

Some of the challenges blocking Alaska’s road to economic recovery include: a fiscal crisis and annual budget deficits, billions of dollars in state employee unfunded pension liability, the highest unemployment rate in the nation, an amazingly burdensome array of “entitlement” programs, high utility rates and one of our country’s most ineffective state educational systems.

On Gov. Dunleavy’s list of challenges, is the question of what to do with the government owned, Alaska North Slope (ANS) natural gas monetization project, AK-LNG.  Should he let it quietly go into the night and allow its current funding to lapse?  Should he try to terminate the project as soon as possible and reclaim remaining dollars? Or, should he support continued public funding of the effort to create a profitable, government-run natural gas/LNG hybrid transportation project for export and for intrastate use?

Since Gov. Dunleavy will seriously consider the opinion of citizens when making such critical decisions, it may be of some value to review the risks involved in continued government ownership of this project.  After fully considering these and other matters, citizens might feel more qualified to offer their legislators and the Governor valuable counsel.

The previous Alaska administration led the effort to expropriate the AK-LNG project from private parties when those parties, the three major ANS producers, concluded that it was not time to move the project forward.

While the administration expropriated [1, Scroll down for end notes] the project, the three producers did not object.  After all, from that point forward, they would be “off the hook” should an apparently uneconomic project fail to attract either/or gas purchasers and financing.

In short, the administration led the citizens of Alaska into an uneconomic, risky, tens of billions of dollars energy project in the midst of a state fiscal crisis because the past governor was proclaiming it would be Alaska’s financial “get-well card”.

At the time, we tried for our local and international readers to inventory the risks of such a venture.

[Read this column in full at Northern Gas Pipelines]