House approves TransCanada buyout

With a unanimous vote in the House on Wednesday, the Alaska legislature has approved Gov. Bill Walker’s request to end the state’s partnership with TransCanada — and take a larger role in the effort to build a natural gas line from the North Slope.

The Alaska LNG project will now become a four-way partnership, between the state and the three major North Slope producers, ExxonMobil, BP and ConocoPhillips.

APRN’s Rachel Waldholz is in Juneau covering the legislative session.

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Alaska House of Representatives passes SB3001. Photo: Jeremy Hsieh/KTOO.
Alaska House of Representatives passes SB3001. Photo: Jeremy Hsieh/KTOO.

TOWNSEND: Rachel, what was the reaction when the House voted today?

WALDHOLZ: Well, when the board lit up and showed all 39 House members listed in green — meaning every single member had voted yes — there was definitely a bit of a stir. That’s yes votes from 22 Republicans, 16 Democrats, and the lone Independent. The only person who didn’t vote was Rep. Louise Stutes (R-Kodiak), who was excused today.

That’s an even stronger bipartisan vote than the Senate, which voted yesterday and passed the measure 16 to 3.

And it’s a big win for Gov. Walker.  He has said from the start said that the state needs a bigger say in the gas line project. Now it will have that.

TOWNSEND: So, what were the stakes here?

WALDHOLZ: By the time they took this vote, a lot of lawmakers saw this as a live or die moment for the gas line project itself. I think a lot of Republicans, especially, aren’t necessarily happy with the Walker administration or the way it’s handling the gas line. But they felt they had to approve this request to support the project, and keep it moving forward.

Rep. Mark Neuman (R-Big Lake) is co-chair of the House Finance Committee, which worked on the bill. He was very skeptical of administration officials during hearings. But this is what he said right before the vote:

NEUMAN: This is Alaska’s future. I see no other way that we can continue to pay the state’s bills into the future without this pipeline. We are a resource development state. It’s what we do.

Other lawmakers saw it as a much simpler issue. Rep. Les Gara (D-Anchorage) said it’s just a financial decision: this project will cost less without TransCanada as a partner.

GARA: Mr. Speaker, we could all engage in a lot of flowery speeches about the importance of the gas line — and it is important to the state’s future. And I suspect we’ll hear a lot of that, and some of that will be justified. But that’s not what this bill is about. This bill is about saving the state money. It’s about saving the public money. And it’s about making more money for the state if this project moves forward.

TOWNSEND: Rachel, remind us what this is all about — how does this mean the state plays a bigger role in the project?

WALDHOLZ: The Alaska LNG project includes three parts: a gas treatment plant on the North Slope, a pipeline down to Cook Inlet, and a liquefaction plant in Nikiski.

Right now, TransCanada controls the state’s share of the gas treatment plant and the pipeline. By ending the partnership, the state will have a full 25 percent stake in all three parts — and a full 25 percent vote in the project itself.

The vote authorizes the state to spend about $157 million to reimburse TransCanada for its efforts to date, and to continue work through the current planning phase, called pre-FEED (pre-Front End Engineering and Design).

TOWNSEND: Many lawmakers started the session much more skeptical of the governor’s proposal, even a little antagonistic. What changed?

WALDHOLZ: I think lawmakers thought the administration made a pretty strong financial case – that it would be more expensive to keep TransCanada in as a partner, than to end the partnership now. So that was key.

But also, it became clear that TransCanada itself wanted out of the partnership. Representatives from the company told lawmakers that once it was clear the Walker administration wanted them out of the project, they couldn’t be as effective, and it wasn’t worth it for them to stay in. It seemed likely that if the legislature rejected this bill, TransCanada would walk away anyway. So I think a lot of lawmakers felt like they didn’t have much of a choice.

And I think they agreed with the administration in the end, that the state needs more control of this potential gas line project, which could be huge. 

The House adjourned Wednesday afternoon. The Senate is expected to adjourn Thursday, ending this year’s third Special Session.

Click here for our “What is Alaska LNG?” series.