Legislators quiz Alaska LNG project managers on progress

An LNG tanker fills up at the ConocoPhillips liquid natural gas export facility in Nikiski, Alaska. When it opened in 1969, it was the only facility of its kind in the U.S. to get a license to export its gas to Japan.  The planned Alaska LNG project would site a liquefaction terminal for North Slope natural gas nearby. (Photo courtesy of ConocoPhillips)

Lawmakers got a progress report on the Alaska LNG project from the state’s gasline development corporation on Wednesday in Anchorage.

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It is a busy year for the Alaska Gasline Development Corporation, or AGDC. It is trying to land agreements with Chinese companies to buy the state’s gas. At the same time, the corporation is working through an exhaustive federal environmental review and negotiations with North Slope companies to sell their gas into the pipeline.

Before the meeting on Wednesday, Sen. Cathy Giessel, R-Anchorage, sent the corporation a bulleted list of the information and questions that she wanted answered.

Giessel asked for everything from a list contractors the corporation is using and how much money it’s compensating board members for travel to certain types of state employees moonlighting for the corporation as well.

On that last one, Giessel said she is concerned about the influence of partisan politics on the project.

“When we created AGDC, we were very careful to make sure that AGDC was a separate entity that would not be influenced by politics. In other words, governors that come and go,” Giessel said. “Here is the governor’s deputy chief of staff on a list documented by AGDC as working for a AGDC. It’s concerning.”

Giessel is not the only legislator who said that they were concerned about political influence on the LNG export project.

The Alaska LNG project has been a key issue for current Gov. Bill Walker and it’s an election year.

When asked about Giessel’s letter, Anchorage Democrat Geran Tarr said she wants the legislature to have oversight but thinks it’s important not to micromanage what the state corporation is doing.

“It just seems that you know people who are politically aligned to the governor are more willing to trust what they’re doing moving forward and people who are not politically aligned with the governor are not trusting,” Tarr said.

Tarr said she is concerned that the politics are getting in the way of lawmakers being able to accurately gauge the Alaska LNG export project’s feasibility based on its merit — rather than their own political alignments.

Putting aside the politics —  a lot of lawmakers had questions about how the project would be financed and what the state could be obligated to pay for.

They heard presentations from the Department of Natural Resources and the Department of Revenue as well.

Senator Bert Stedman, R-Sitka, asked the Department of Revenue about its analysis of how the state is going to pay for its portion of construction on the project.

“When you have cost overruns of 10, 20, 30 billion possibly — which is not out of the realm of possibilities,” Stedman said. “How are you going to factor in the state exposure of capital calls in particular if we draw on the Permanent Fund or something I never really thought about and not too excited about grandma’s pension pool to to do to deal.”

Lawmakers also asked about tariffs and the trade war with China.

Frank Richards, the senior vice president of the gasline corporation says– so far — the project seems to have escaped major impact from the steel tariffs. And, China hasn’t retaliated with a tariff on LNG imports.

“China wants clean efficient natural gas, Alaska has it, U.S. wants to produce it and export it. So we feel that are in a good position as a project as Alaska to not hopefully be impacted by that,” Richards said.

Lawmakers were on a tight timeline to get the meeting finished, so several will be submitting questions in writing to the corporation.

Project organizers are on a tight timeline too. Their deadline for signing commercial agreements with potential Chinese investment partners and buyers is in December.