Lawmakers: TransCanada buyout likely, but is state ready?

Lawmakers now say it’s all but inevitable the legislature will approve the governor’s request to buy out TransCanada and take a larger stake in the Alaska LNG project. A vote is expected early next week.

This map shows the likely route of the Alaska LNG project, as of August 2015. Map courtesy of Alaska LNG
This map shows the likely route of the Alaska LNG project, as of August 2015. Map courtesy of Alaska LNG

TransCanada itself has testified in favor of the buyout.

But even as they prepare to approve the deal, lawmakers are raising concerns about the state’s ability to take the company’s place at the table.

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The way the TransCanada deal was originally set up, the state and the company share a 25 percent stake in the Alaska LNG project — and a 25 percent vote on project decisions.

In a hearing on Wednesday, TransCanada director Vincent Lee explained that that arrangement only works if there’s a melding of the minds – and when Gov. Bill Walker’s administration took over from previous Gov. Sean Parnell, that was no longer the case.

“As we see, the administration is thinking about doing the project in a different way,” Lee said. “We don’t feel the alignment is as strong as it used to be. And that doesn’t necessarily mean it’s a bad thing, it’s just that, you know, we are approaching the project from a different angle.”

When asked what would happen if the legislature doesn’t approve the buy-out, Lee said TransCanada would have to seriously consider exiting the deal anyway — in which case, the state would still be obligated to pay their costs.

That wouldn’t seem to leave lawmakers with much of a choice, and by Thursday morning, Senate President Kevin Meyer (R-Anchorage) was willing to say so.

“I think we’re going to end up doing as the administration has asked us to, and to buy out TransCanada,” Meyer said. “And it seems to be the right thing to do for the state of Alaska at this time.”

But even as they move closer to the buyout, lawmakers expressed concern about whether the state is ready to take over the company’s role — and with it, a full 25 percent stake in a $45 to $65 billion gas line megaproject.

For days, lawmakers have been asking who’s in charge of the state’s effort — and received no clear answer.

One possible candidate is Dan Fauske, the head of the Alaska Gasline Development Corporation, which represents the state in the project. When AGDC representatives showed up to testify before the Senate Finance Committee, co-chair Anna MacKinnon (R-Eagle River) had one question:

“Gentlemen, the first question out of the gate is, where is Dan Fauske?” she asked.

Joe Dubler is Vice President for Commercia Operations at AGDC. He

“Frank Richards and myself were asked to present to the committee today, and the other gentlemen you mentioned were asked not to,” he said.

“Who asked that Mr. Fauske not be in Juneau today?” MacKinnon asked.

“Madam Chair, the attorney general for the State of Alaska is the one that’s running the special session for the governor,” Dubler replied. “And he asked that Mr. Fauske not be in Juneau today.”

That did not go over well with the committee, which recessed until Fauske could be reached via phone, and later called in Attorney General Craig Richards himself.

Richards explained his thinking this way: “The governor and commissioners and myself thought it best to bring the people to present to you that were the most technically knowledgeable on the subject,” he said. “So I think you’ll find that those are the people that have presented.”

Senator Peter Micciche (R-Soldotna) said the tussle over AGDC was troubling for two reasons: one, it seemed like the administration was trying to limit lawmakers’ access to information. And, it revealed splits among the different agencies who will be taking over the state’s share of the project.

“I’m not sure that those three entities – Department of Revenue, Department of Natural Resources, and AGDC – understand where they fit in that organization, and I think there’s internal tension,” Micciche said. “That internal tension is something that I believe was reflected in TransCanada’s willingness to exit the project.”

But Micciche said he thinks the state will get there.

“If we’re going to operate at the level of the other 75 percent ownership of this project,” he said. “That internal separation needs to come together.”