In-State Gasline Bill Passes House Vote

In a late-night vote on Monday, the Alaska House passed legislation meant to advance the construction of a small-diameter pipeline. It would transport natural gas from the North Slope to Southcentral for Alaskan consumption and, potentially, for export.

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The thing is complicated. It would make the Alaska Gasline Development Corporation its own separate entity, and position it to receive $250 million in state funds this year for design and permitting work, with at least another $150 million to come down the road. The hope is to eventually hand things off to private firms for construction of a 700-mile line capable moving 500 million cubic feet of gas a day. That would cover urban Alaska’s energy needs, and still leave some available for export.

Passage of the bill was a coup for Speaker Mike Chenault, a Nikiski Republican who had failed to advance similar legislation in the past. Wearing an Alaska bolo tie and Johnny Cash-style black suit, he handed over his gavel, stepped down from his podium, and gave a rare speech to the House.

“We’re all wanting the same thing, Mr. Speaker,” Chenault said. “We all want the cheapest gas – or the cheapest energy – that we can get to all Alaskans.”

Not everyone is happy with the bill. Democrats have concerns that it doesn’t do enough in the way of public oversight or consumer protection. They made multiple attempts to tweak the document. One amendment would have put into statute language prioritizing the Alaska market over foreign demand in the event of a gas shortage. Another would have given the legislature final approval of a pipeline plan before construction. As written, control of project implementation falls to AGDC and industry. Rep. Les Gara, of Anchorage, said the amendment was needed to give the public a say on whether the project should be built depending on how much it would bring down utility rates.

“The bill is written to say, by passing this bill, this is final legislative approval,” Gara said. “The public can talk all it wants in the future about how high the price of gas might be under this project, but nobody will be there to listen.”

He also argued that since the state was putting hundreds of millions of dollars into project development, the legislature should have some say on if the pipeline is worth the money before ground is broken.

Rep. Mike Hawker, an architect of the bill, responded that any pipeline construction and utility rate agreements would be reviewed by the Regulatory Commission of Alaska and an AGDC board made up of the governor’s appointees. He said that with the way the bill is written, North Slope producers, pipeline operators, and utility companies would all have to negotiate with each other and have incentive to agree on the best possible rate, which, in turn would get passed on to the consumer.

The Anchorage Republican’s opposition to the amendment also had a philosophical basis. The key principle for Hawker in drafting the bill was market efficiency.

“Why in the world would we want the legislature to interfere in a private sector transaction that actually moves a pipeline project forward?,” Hawker said. “I don’t think we ought to be there.”

All eight of the Democrats’ amendments failed, though a pair of measures concerning local hire received some Republican support. The gasline bill ultimately passed 30-9, with four representatives splitting from their caucuses on the vote. Democrats Max Gruenberg, of Anchorage, and Scott Kawasaki, of Fairbanks, voted yes on the bill. Neal Foster of Nome broke with the majority, along with Eric Feige, a Chickaloon Republican who also represents Valdez. The City of Valdez has been an advocate for a bigger pipeline, and it was behind a million-dollar advertising campaign against the bill because of how it could indefinitely sideline the AGIA project.

With less than two weeks left to the legislative session, the bill has been sent over to the Senate, where two committees will review the measure.