The displeasure and frustration from all parties on the latest version of HB 381 shows a negotiating strategy that ultimately failed. Remove the political theatre and rhetoric, and what remains is an effort to secure public support for the bill while simultaneously attempting to divide those responsible for making the Alaska LNG Project a reality. All negotiation in good faith should now be highly suspect if the legislature is going to pull this stunt of ”did Hilcorp really say that?” in an effort to discredit them. Hilcorp has been consistent from the beginning that it opposes a targeted pass-through entity tax because it increases the cost of producing the natural gas the Alaska LNG project depends upon. Glenfarne has publicly expressed the same concern, and Governor Dunleavy has likewise described the provision as both a “poison pill” and a “line in the sand.” Trying to pit the project developer and the primary North Slope natural gas producer against each other is a new low.
The legislation did not fail because Hilcorp objected; it failed because lawmakers like Sen. Bill Wielechowski and Sen. Cathy Giessel insisted on once again attaching a controversial, unworkable, and targeted income tax to legislation intended to advance the Alaska LNG Project. Although Hilcorp is the largest and most visible company affected by the proposal, the impact would be much larger than Hilcorp’s bottom line. Taxing the upstream producers responsible for delivering the project’s natural gas inevitably affects the economics of the project itself.
Since the question has been forced and the conversation is at an impasse, the parties will need to go back to the economics of the project. Imposing a new entity-level tax on income from production, transportation, LNG processing, etc. lowers the expected return on capital. Every independent economic participant in the project understands that increasing upstream costs increases the overall cost of the project. This is the most direct economic objection and is not easily waved away. It introduces new compliance, definitional, and unitary-business complexity. The definition of “qualified entity” is broad, including ownership interests and unitary relationships, while leaving significant questions unanswered regarding implementation, deductions, apportionment, and administration. It will raise the cost of gas supplied to the LNG project. If major pass-through producers face the tax, some portion of that cost pressure will flow into the price of gas, worsening project economics under a price-cap structure. It targets the ownership structures that have actually been active. Private capital organized as S-corps, LLCs, and partnerships has played a significant role in Alaska in recent years. Changing their tax treatment mid-stream sends a troubling signal to investors considering long-term investments in Alaska.
Let’s not forget that Hilcorp is Alaska’s largest producer of natural gas and continues to invest aggressively in both Cook Inlet and the North Slope. In January 2026, Hilcorp executed a Gas Sales Precedent Agreement for additional volumes of gas to the pipeline. The majority of the natural gas expected to supply the Alaska LNG Project will originate from Hilcorp-operated fields. This does not appear to be a company trying to “kill” the project or the legislation. It is a company who is heavily involved the very infrastructure and gas supply necessary to make the project succeed.
The industry and its supporters are the only entities that keep investing to develop Alaska’s natural resources. The suggestion that Hilcorp is holding the Alaska LNG Project hostage turns reality on its head. The only reason the Alaska LNG legislation stalled is because some legislators insisted on attaching an unrelated, targeted tax that jeopardizes the very project they claim to support. Remove the tax, and the path forward becomes much clearer.
