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House panel version of gas-line bill takes shape

Posted: April 6, 2014 - 8:05pm

JUNEAU — The House Resources Committee version of a bill to advance a major liquefied natural gas project was starting to take shape Saturday, as members dug into a thick stack of proposed changes.

The committee, with a reputation for finely parsing language, was making slow but steady progress in an amendment process that began Friday. The panel planned to resume work Sunday, after making a slight dent in the stack after hours of meeting Saturday.

Changes that had been approved included a provision to require negotiated contracts that must get legislative approval, such as marketing and transportation-services agreements, to be made public at least 90 days before the proposed effective date for the contract. Co-chair Rep. Eric Feige, R-Chickaloon, said the idea is to ensure there is adequate time to vet proposed contracts, months instead of a few days.

The committee also approved allowing for certain legislative staff members and legislative consultants to be part of confidential briefings on negotiations rather than only lawmakers. Another amendment required legislative briefings on project progress every four months, accompanied by a written report by the Department of Natural Resources on the amount of money the state may be obligated to pay TransCanada Corp. if a project were terminated before gas starts flowing.

The bill under consideration by House Resources, SB138, from Gov. Sean Parnell, would set state participation in the project, also being pursued by the North Slope’s major players, TransCanada and the Alaska Gasline Development Corp., or AGDC, at about 25 percent. It also is aimed at moving the project — currently estimated to cost between $45 billion and more than $65 billion — into a phase of preliminary engineering and design and cost refinement.

It is one of the biggest issues of the legislative session, scheduled to end April 20. House Resources is one of three House committees to which the measure has been referred, though House Speaker Mike Chenault has said the referral to Labor and Commerce could be waived, allowing for the measure to go next to House Finance.

As proposed, TransCanada would hold the state’s interest in the gas treatment plant and pipeline, with the state having an equity buy-back option. The arrangement has been cast by Parnell administration officials as a way for the state to not have to bear as much in upfront costs as it would on its own and as an amicable transition from terms under the Alaska Gasline Inducement Act, under which TransCanada had been pursuing a project for years. Parnell has said terms of the act do not apply to the project currently being pursued.

Questions have been raised over at what point the license with TransCanada under the inducement act expires. Natural Resources Commissioner Joe Balash said TransCanada has signed a letter, which he and the state revenue commissioner also intend to sign, clarifying the intent that the license would terminate following the execution of a new agreement, which would happen within 90 days of passage of the legislation currently under consideration.

As for other amendments, the committee, on a 6-2 vote, added language to allow for out-of-state residents to serve on AGDC’s board. As proposed, the corporation would hold the state’s interest in liquefaction and marine terminal facilities. The lead sponsors of the bill that established AGDC have said it was their intent to allow for out-of-state residents to serve on the board in an effort to get the best, most qualified people, and it was an oversight to not have made that point explicit.

That issue flared up with Parnell’s appointment of a Texas man and former pipeline company executive to the board. Critics of the appointment say the law calls for Alaska residents to serve on Alaska boards and commissions. Parnell has argued that under the state constitution, appointments to boards like that of AGDC only need to be U.S. citizens. A separate bill — in line with the amendment added to the gas-line bill — was introduced in the state House on Friday.

Other proposed amendments, which were still pending, included putting off state investment until a final investment decision in made on a project; taking oil taxes off the table in contract negotiations; and putting a share of the revenue received from the state’s share of royalty gas in the project, after payment is made to the Alaska Permanent Fund, into special funds for transportation projects and for Railbelt electrical generation and transmission upgrades.

The version of the bill that passed the Senate last month earmarked 10 percent of the revenue from the royalty gas toward energy projects for communities that won’t have direct access to a North Slope gas line.

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