Governor announces price agreement on gas - Must Read Alaska
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Monday, September 28, 2020
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Governor announces price agreement on gas

‘THE BINDING DEAL’ MAY HAVE OBLIGATED THE STATE FOR BILLIONS

Gov. Bill Walker has been courting China for the past year. Through the Alaska Gasline Development Corporation, he is preparing to sign loan agreements with the Bank of China to finance a $40-60 billion gasline project.

In November, he signed a joint development agreement between AGDC, Sinopec, CIC Capital, and Bank of China, and large LNG buyers in China, Korea, and Japan.

He only needs a few things in place, such as the Legislature’s approval of AGDC’s authority to borrow $1 billion of “stay afloat” money. Senate Republicans have balked, while House Democrats have given their blessing.

Walker also was told by Goldman Sachs and the Bank of China, the global capital coordinators for the project, that he needed to have some gas to sell. He didn’t own the gas. This was going to make it hard to sell the project to investors.

It was time for a good-news press release.

WALKER SIGNS TO BUY GAS AT A PRICE

Today, Walker says he has a binding agreement with BP to buy their share of North Slope and Pt. Thomson gas. The press release issued by his office says AGDC and BP Alaska have agreed to the “key terms” as they relate to price and volume in a gas sales agreement.

The volume is unknown. No one even knows how much BP has in gas in Pt. Thomson.

The price? Also unknown. No one has revealed the price AGDC President Keith Meyer has agreed to pay for that gas, and what the variables might be for cost overruns, or the multitude of risk escalators. Part of this is because there are two other producers who must sign off on any agreement — ConocoPhillips and ExxonMobil. Along with BP, they have complicated gas balancing agreements between them that must be factored in.

The timing of the news release, 10 days before the end of the legislative session, shows both a political purpose and a commercial one, because if AGDC and BP were close to an actual gas sales agreement, they would have said so. That agreement will be truly binding, whereas this “precedent agreement” is “binding lite.”

The carefully worded “precedent agreement” is a bit of progress, and Walker needed to get it out there to keep the project alive.

STILL A FRAGILE PROJECT

Not even the appropriating body, the Alaska Legislature, knows today what the agreed price is or the terms that surround it; legislators will have lots of questions in coming days. The Senate has yet to sign off on AGDC’s ability to borrow $1 billion from China to continue.

Governor Walker made an announcement in March of 2016 that things were not going that well on the gasline. The partners stood by stoically as he said he would take it over from the producers.

Alaskans recall that in 2016, Walker made it impossible for ExxonMobil, BP, and ConocoPhillips to remain as the lead partners in the project, which was advancing slowly due to an unfavorable market, one flooded in natural gas. They were shown the door by the Walker Administration, which chose to go it alone.

But BP remained as a technical adviser to the project, and continues in that role today, which makes it no surprise that the company would also be the one to step forward first and say: “Give it your best shot, Gov. Walker, and we’ll sell you gas.”

 

With Walker’s campaign season in full swing, AGDC has been in the field polling Alaskans about what it would take for them to get back on board with the gasline. The agency has sifted through polling data and come up with ways to court public opinion. Alaskans told AGDC that they hope the project pennies out, but they have their doubts as to whether it’s viable.

Because Gov. Walker needs some good news to get the wind in the sail of his re-election campaign, now was as good a time as any to announce an agreement to keep working toward an agreement.

 

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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 comments

  • Why do I have the feeling that our esteemed (not) governor is selling the store and factory to the Chinese leaving Alaskans as indentured servant to the Communist nation and no say in the matter? I’m all for producing and sell our resources but not giving up everything for the deal.

  • Another Obama, another sellout. Stop this crazy man. Communist China with it foot on Alaskan necks? Unthinkable! Our governor is a known false leader who hides both intent and ideology. He is not to be trusted to act in the best interests of Alaskans, who by the way are still Americans. Take a look at Chinese advancement the world over and ask what are they fully advancing? It is not a representative form of government. Does anyone ever, with a clear mind, trust totalitarian leaders? I pray our legislators demand to know what is in this agreement. In any case, the Chinese threat, yes, I said threat, is real. They are on a war footing with us. This is real folly.

  • We are so hosed!
    Unless Alaska’s Senate stops this catastrophe, or somebody successfully sues to stop it, we could lose our sovereignty, our Permanent Fund, and our financial independence as a state.
    Not sure, short of a general labor strike, what might have a chanceof stopping this juggernaut at the popular level…
    A mad push to force mail-in voting statewide will be the first clue that it’s happening.

  • The guy is unhinged. Tunnel vision. He has pipe dreams while Rome burns.

  • when this state is suppose to be in a fiscal Crises I’m amazed at the leadership that would drive the nations largest construction project with the Alaskans money ..when oil companies said it does not pencil out and make a deal with a communist nation that does not have our best interest …..only theirs …and when it fails our grandchildren will be saddled with this debt for the rest of their life ……we will have lost our sovreignty

  • Unbelievable. Just unbelievable. These AK legislators do whatever the hell they want with no public input.

  • It just feels like this disaster of a governor is creating a catastrophic mess with his pipe dream that the next governor will need to spend his four year term cleaning it up … If that will even be possible. What liar Walker has done to Alaska makes me nauseous.

  • So even the oil companies like this deal. Obviously the big loser is the State of Alaska
    I do wonder how negotiating with China must be like.

  • Hey folks this is not fake news, walker needs to be stopped! The senate needs to stop this nut case!

  • These comments are a hoot. Oh, we are so hosed and big loser is State etc., etc.
    Has anyone stopped to think that this project doesn’t get started without Legislative approval. And we sure can’t let this Democrat in Independent garb get the credit for pulling the State out of its recession, can we?? Further, those three Republican House members (who aren’t Republicans, really) might get some credit for an economic boom?? Stop this, before it gets started. Heheh!
    Clutch a few more pearls, folks.

    • Has anyone stopped to think:
      what “binding agreement” actually means?
      what Alaskan “collateral” might be in play for a $60B+ pipeline?
      what happens to Alaska’s economy if China devalues the yuan?
      what happens to The Deal if war starts in the Far East or if Communist China decides to annex Taiwan?
      why our lobbyist-legislator team who can’t fix a state budget can now figure out and “approve” a multibillion-dollar deal with Communist China?
      how it is that a governor who has to confiscate PFD’s for the state to survive suddenly leverages a deal with the Communist Chinese?
      how it is that Democrats who just have to stiff productive Alaskans with an income tax will be able to comprehend, much less “approve”, a multibillion-dollar deal with Communist China?
      how it is that Democrats who can’t write an effective crime law will be able to protect Alaska and the Permanent Fund from the corruption and mismanagement that will accompany The deal?
      how it is that a project which didn’t pencil out in the first place suddenly transformed into a holy grail of economic opportunity?
      what exactly protects and indemnifies America, Alaskans, and Alaska’s Permanent Fund if The Deal goes bad for any reason?
      exactly why any part of The Deal must be kept secret from productive Alaskans?

      for starters…

      Yeah, you might want to clutch your pearls and anything else of value.

      “Give not that which is holy unto the dogs, neither cast ye your pearls before swine, lest they trample them under their feet, and turn again and rend you.” Matthew 7:6

      • You keep referring to “The Deal!” What Deal are you talking about? The article does not mention “The Deal”, either.
        While this gas price agreement may result in some kind of “Deal” between parties, nothing of sort seems to exist, as yet, except in your mind.
        Again, what Deal do you refer to??

        • Typing this slowly because some people don’t read so fast…

          “Gov. Bill Walker has been courting China for the past year. Through the Alaska Gasline Development Corporation, he is preparing to sign loan agreements with the Bank of China to finance a $40-60 billion gasline project.

          In November, he signed a joint development agreement between AGDC, Sinopec, CIC Capital, and Bank of China, and large LNG buyers in China, Korea, and Japan.

          He only needs a few things in place, such as the Legislature’s approval of AGDC’s authority to borrow $1 billion of “stay afloat” money. Senate Republicans have balked, while House Democrats have given their blessing.

          Walker also was told by Goldman Sachs and the Bank of China, the global capital coordinators for the project, that he needed to have some gas to sell. He didn’t own the gas. This was going to make it hard to sell the project to investors.”

          This and –everything associated with it–, seen and unseen, known, unknown, and unknowable, extant or en plot is The Deal.

          Ora, amico mio, lo sai.

      • Thanks for “The Deal” explanation and boy do I ever see why it is that you folks are so concerned. You just gave the best ever reason for Walker getting re-elected I’ve read, so far.
        You’ll be needing some biblical verses for “walking on water”, if he gets all of it (The Deal) IMO. And just imagine looking in from the outside for another 4 years while Walker starts laying pipe?

  • BP has made a political decision here. No business decision has been made nor can one be made. The good news for Alaskans is that BP always has the poorest political instincts, even in its home territory. So if BP Alaska has convinced London that Walker will win re-election that makes a Walker loss appear even more likely. But the question for Alaskans to ask is what commitment has Walker made to BP in return for this political decision and announcement? If a business decision on the Walker LNG concept, which is pure fiction, was to be made it would necessarily include all 3 branches of government (because, among other moving parts the Legislature would have to make a long-term commitment upon which the gas owners can rely, and the Alaska courts would need to give an OK to at least the long-term nature of that commitment). The business terms would be known to all Alaskans long before then. Right now NS natural gas is remarkably below water from an economic standpoint, and it’s being used for its highest and best purpose right now. The ratio between crude prices and NG prices is very high today, so stranded NS NG is all the more stranded if you like. It is so stranded that rising steel prices and the continually expected and postponed rising interest rates are not being evaluated with respect to the Walker LNG concept, which like the BP announcement is much more a political concept than a business one. People don’t buy NG, they buy energy. TAPS might not be built today given the outlook; Again – NS NG is being put to its highest and best use every day, and so far as other uses it has never been more stranded than it is today. What would China pay today for one billion cubic feet of LNG to be delivered to tidewater in Alaska in 2028? What would you pay? What pay-off would you demand today in order for you to go public with a bet on Walker?

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