The Alaska Senate voted by a wide margin Tuesday morning to approve the state\u2019s buyout of TransCanada and advance the natural gas pipeline project known as AK LNG.<\/p>\n
After a 16-3 vote, Senate Bill 3001 moves to the House, where the House Finance Committee has been meeting for 11 days to consider the buyout. The House is expected to hold a final vote on the buyout today, ending the special session called to consider it.<\/p>\n
On the Senate floor Tuesday morning, senator after senator rose to speak in favor of the buyout and the AKLNG project in general.<\/p>\n
Sen. Pete Kelly, R-Fairbanks and co-chairman of the Senate Finance Committee, said he was opposed to the buyout when he arrived in Juneau.<\/p>\n
\u201cOver the course of the last 10 or 11 days \u2026 I\u2019ve been convinced that it\u2019s a pretty good deal for us,\u201d he said.<\/p>\n
SB3001 allocates $161.25 million; of that, $68.5 million will buy out TransCanada. Another $75.6 million will pay for the remaining part of the state\u2019s share of the first phase of AKLNG. The money will come from the state\u2019s Constitutional Budget Reserve, which contained $9.09 billion as of Sept. 30.<\/p>\n
As envisioned, AKLNG includes construction of an 800-mile natural gas pipeline from the North Slope to an export terminal on the Cook Inlet at Nikiski. It has been estimated to cost $45 billion to $65 billion, and the state has partnered with North Slope oil and gas companies BP, ConocoPhillips and ExxonMobil to pay that price and build AKLNG.<\/p>\n
The state\u2019s share of the project is estimated to be between $12 billion and $18 billion, and in return for spending that sum, it takes one-quarter of all gas that flows through AKLNG.<\/p>\n
To avoid paying up front for its one-quarter share in the project, the state entered into a contract with TransCanada. Under the terms of the agreement, TransCanada pays all of the state\u2019s direct costs until construction begins, then half of the state\u2019s share of construction costs. In return, the state gives TransCanada a cut of its revenue once gas starts flowing.<\/p>\n
If the pipeline deal falls apart for any reason, or if TransCanada wants to walk away from it, the state must repay TransCanada every dollar plus 7.1 percent interest.<\/p>\n
That\u2019s a high interest rate compared to the open market, which is why the state is considering a buyout and is planning to take an \u201cofframp\u201d built into the TransCanada contract. If the state doesn\u2019t act by Dec. 31, its next offramp is years (and hundreds of millions of dollars) later.<\/p>\n
\u201cThis was probably the cleanest offramp that we could choose,\u201d Kelly said.<\/p>\n
The buyout also promises to settle claims pertaining to the state\u2019s failed partnership with TransCanada under the Alaska Gasline Inducement Act, which envisioned a gas pipeline from Alaska to the Lower 48 through Canada.<\/p>\n
\u201cThe state eliminated a $500 million liability plus the real possibility of treble compensatory damages,\u201d said Sen. Peter Micciche, R-Soldotna. \u201cIt represents a significant bargain for the people of Alaska.\u201d<\/p>\n
While support for the buyout bill in the Senate was widespread, it was not universal. Sen. Bill Stoltze, R-Chugiak; Sen. Charlie Huggins, R-Wasilla; and Sen. Mike Dunleavy, R-Wasilla all cast \u201cno\u201d votes. Sen. Lesil McGuire, R-Anchorage, was absent.<\/p>\n
Speaking before his vote, Dunleavy said he supported the buyout of TransCanada and the pipeline project in general, but he did not support the $13 million the bill allocates to the state departments of law, natural resources and revenue for work associated with the pipeline.<\/p>\n
He said he has serious concerns with the way the administration of Gov. Bill Walker is managing the pipeline effort and could not offer his support.<\/p>\n
\u201cI think this project is necessary for the future of Alaska, but it needs to be done right,\u201d he said.<\/p>\n
Huggins, meanwhile, took a tack opposite to that of Kelly. He said he arrived convinced of the need for a buyout but was swayed to vote \u201cno\u201d by the Walker administration\u2019s actions.<\/p>\n
Sen. Cathy Giessel, R-Anchorage, appeared to obliquely respond to Dunleavy\u2019s concerns when she rose to speak in support.<\/p>\n
\u201cIt\u2019s not the state of Alaska building another fish processing plant that will never be used. This is the real thing,\u201d she said.<\/p>\n
The state\u2019s oil-company partners are spending $1 million a day on AKLNG already, and \u201cthat\u2019s a big deal,\u201d she said.<\/p>\n
If the state hits bumps in the road, she said, \u201chitting those bumps in the road is an indication that we are moving down the road.\u201d<\/p>\n
\u2022 Contact James Brooks at james.k.brooks@juneauempire.com or at 523-2258.<\/p>\n","protected":false},"excerpt":{"rendered":"
The Alaska Senate voted by a wide margin Tuesday morning to approve the state\u2019s buyout of TransCanada and advance the natural gas pipeline project known as AK LNG. After a 16-3 vote, Senate Bill 3001 moves to the House, where the House Finance Committee has been meeting for 11 days to consider the buyout. The […]<\/p>\n","protected":false},"author":426,"featured_media":28989,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_stopmodifiedupdate":false,"_modified_date":"","wds_primary_category":4,"footnotes":""},"categories":[4],"tags":[230],"yst_prominent_words":[],"class_list":["post-28988","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-state-news"],"_links":{"self":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts\/28988","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/users\/426"}],"replies":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/comments?post=28988"}],"version-history":[{"count":0,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts\/28988\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/media\/28989"}],"wp:attachment":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/media?parent=28988"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/categories?post=28988"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/tags?post=28988"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/yst_prominent_words?post=28988"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}