It\u2019s business as unusual.<\/p>\n
On Friday afternoon, less than 24 hours before the Alaska Legislature was to begin its third special session of 2015, Gov. Bill Walker announced an abrupt change to the agenda.<\/span><\/p>\n A tax on natural gas left in the ground \u2500 intended to push the North Slope\u2019s big energy producers to commit natural gas to the state\u2019s pipeline project \u2500 is no longer on the table.<\/span><\/p>\n \u201cToday I\u2019ve received (letters) from the president of ConocoPhillips Alaska and the president of BP Alaska \u2026 giving me the assurance I need,\u201d Walker said. \u201cIf someone withdraws from the project for one reason or another, the gas stays with the project.\u201d<\/span><\/p>\n Walker has long said Alaska must have security, some way to ensure the AKLNG project won\u2019t fail in the same way that so many other natural gas projects have before.<\/span><\/p>\n The threat of a tax was seen as a way to provide leverage, but Walker has always stressed that it wasn\u2019t intended to punish nonparticipating companies. \u201cWe need some leverage; Alaska needs some leverage. This was leverage,\u201d he said Friday.<\/span><\/p>\n AKLNG is a $45 billion to $65 billion effort to build an 800-mile pipeline from the North Slope to Nikiski, where liquified natural gas (the LNG in AKLNG) will be exported via tanker to ports around the world. The state has partnered with ExxonMobil, BP, ConocoPhillips and Canadian pipeline builder TransCanada on the project, and is preparing to take a one-quarter stake in it.<\/span><\/p>\n In separate letters dated Friday, the Alaska presidents of BP and ConocoPhillips said they will commit their gas to AKLNG even if they don\u2019t participate in its construction.<\/span><\/p>\n While Walker has been seeking surety from the oil and gas producers, Friday\u2019s announcement wasn\u2019t a complete victory for the state\u2019s position.<\/span><\/p>\n The BP and ConocoPhillips commitment is contingent \u201con terms that are mutually and commercially reasonable,\u201d according to the language of the letters, and it doesn\u2019t include ExxonMobil, the other major oil and gas company on the North Slope.<\/span><\/p>\n \u201cWe need all the gas,\u201d Walker said. \u201cIt makes it more challenging without (ExxonMobil). You end up with a much smaller project. The economics change with a smaller project, so we want to put all the gas available on the North Slope.\u201d<\/span><\/p>\n Walker said he expects ExxonMobil to come up with a commitment similar to that of BP and ConocoPhillips by Dec. 4. That\u2019s the deadline for the state to decide whether it will commit to AKLNG for another year.<\/span><\/p>\n More immediately, dropping the tax proposal is expected to make the Legislature\u2019s special session much less contentious than previously thought, as the tax proposal was expected to meet opposition from the Republican-led majorities in the House and Senate.<\/span><\/p>\n The sole remaining items on the session\u2019s agenda will be approving (and coming up with the money to pay for) a buyout of TransCanada\u2019s share of the AKLNG project.<\/span><\/p>\n \u201cTaking gas reserves tax off the call is going to be a real game changer,\u201d said Senate President Kevin Meyer, R-Anchorage, in a text message to KTUU-TV\u2019s Austin Baird. \u201cWe shouldn\u2019t be near as long.\u201d<\/span><\/p>\n \u201cThis is good news for the future of the gasline and the future of our state,\u201d said House Speaker Mike Chenault, R-Nikiski.<\/span><\/p>\n The Legislature is expected to convene at 11 a.m. Saturday and hold its first hearings at 1 p.m. The House Finance Committee will examine whether it makes sense for the state to spend approximately $150 million from its Constitutional Budget Reserve in order to buy out TransCanada\u2019s stake in the gas line.<\/span><\/p>\n