Testimony is limited to two minutes. For more information, please contact the LIO in your community.
You can reach the Cordova LIO at 424-5461. The Dillingham LIO’s phone number is 842-5319. Contact the Kodiak LIO at 486-8116.
Gasline bill passes the Senate
On Tuesday, March 18, the Senate passed SB 138, the bill creating the framework for the state to take an equity share in the Alaska Liquefied Natural Gas project. SB 138 provides a roadmap for building a large-diameter gas line, which creates a world-scale infrastructure investment supplying domestic gas to Alaskans and exporting Alaska gas to Asian Pacific markets.
If passed into law, SB 138 will allow the administration to negotiate ﬁrm contracts with the parties to the heads of agreement and the memorandum of understanding reached in January 2014 between the state, the Alaska Gasline Development Corporation (AGDC), ConocoPhillips, BP, ExxonMobil and TransCanada, which stated all parties are in alignment. These agreements are the first steps on the path to full, legally binding contracts, and set out roles and responsibilities of the parties before finalized contracts are drawn up.
Currently, the project consists of three related megaprojects including a gas treatment plant on the North Slope, an 800-mile large-diameter pipeline from the North Slope to Nikiski, and an LNG export facility at Nikiski. Another major component calls for at least ﬁve off-take points for gas consumption within the state.
Senate changes to SB 138
The Senate made several improvements to Senate Bill 138. One of the most significant changes increases the production tax on gas from 10.5 percent to 13 percent. The intent is to set the state’s equity share in a North Slope natural gas pipeline project at 25 percent, when combining the gas tax with the royalty percentages due to the state.
The Senate also added a provision which puts AGDC in charge of the Alaska LNG project rather than a subsidiary. The bill enables AGDC to enter into contracts relating to the LNG project, but only after consulting with commissioners from the Department of Natural Resources and the Department of Revenue (DOR). It also requires AGDC’s board to appoint a program director to manage the Alaska LNG project so that it does not interfere with the state’s commitment to maintain progress on the Alaska Stand Alone Gas Pipeline project, which passed the Legislature last year with the goal of delivering affordable gas to Alaskans through an in-state small-diameter gas line.
The Senate’s discussions on SB138 also examined the topic of what kind of compensation municipalities and boroughs would receive for the impact on their communities. As a result, a provision was added directing the governor to establish an advisory board on municipal involvement in a North Slope natural gas project.
In order to help rural Alaskans, the Senate amended SB138 to ensure the gas line helps to lower energy costs for all Alaskans, regardless of whether they get the natural gas directly. The new Alaska Affordable Energy Fund will be used to develop energy infrastructure in areas that do not have direct access to a North Slope gas pipeline. The fund will receive 10 percent of all revenue received from the state’s royalty gas transported in the Alaska LNG project, after paying the Alaska Permanent Fund its share of that royalty.
SB138 also includes a section known as “Pick. Click. Invest” which would direct the DOR to work with the Securities and Exchange Commission to create the best way for Alaskans to use their PFDs to invest in the gas line. The Senate Finance Committee also added a provision to the bill requiring that the DOR’s plan for Alaska ownership must include ownership opportunities for municipalities and Native corporations.
What’s in it for Alaska?
Construction of the pipeline is expected to add anywhere from 9,000 to 15,000 jobs to Alaska’s workforce. In order to make sure Alaskans are the ones ready to fill these high paying positions, the Senate added language to the bill to expand the existing oil and gas producer education tax credit to include contributions to nonprofit regional training centers recognized by the Department of Labor and Workforce Development, and for vocational education, equipment and facilities.
SB138 also starts a gated approach to building the gas line by offering opt-out clauses if the state or any of the other parties in the agreement want to end their participation after the preliminary front end engineering design, or front end engineering design phases, but before the final investment decision.
SB138 is currently under consideration by the House Resources Committee.
A district full of champions
Politicians always enjoy it when great things happen in their districts. Recently, I received three reasons to brag when three of Senate District R’s high schools captured girls’ state basketball titles.
Congratulations to the Newhalen Malamutes, Class 1A champions, the Dillingham Wolverines, Class 2A champions, and the Kodiak Bears, Class 4A champions. We are all proud of you.
Thank you for reading this edition of the Capitol Report. Please keep in touch and do not hesitate to contact my office if we can be of assistance to you with matters involving state agencies and issues. I can be reached by email at firstname.lastname@example.org, and by phone at 1-800-821-4925, toll free, or 486-4925 in Kodiak.