Legislators: Is AGDC ready?

Leaders of the state-owned Alaska Gasline Development Corporation were the subjects of a legislative inquiry on Tuesday as lawmakers consider whether the AGDC is fit to take over from pipeline giant TransCanada in the natural gas megaproject known as AKLNG.

Tuesday was the fourth day of a special session devoted to deciding whether the state should buy out TransCanada’s share of the $45 billion to $65 billion project in order to be assured of more profit once it begins operating.

“I think members of the Legislature would like assurances that whether it’s Gov. (Bill) Walker or some other governor down the road … that AGDC is fully autonomous … from any administration that may be in power at the time,” said Rep. Mark Neuman, R-Big Lake and chairman of the House Finance Committee.

The official question on lawmakers’ agenda in this special session is whether to allocate $157.6 million to pay for the state’s share of the first phase of AKLNG, which would bring natural gas from the North Slope to Cook Inlet for export.

To avoid paying up front for its one-quarter share in the project, the state entered into a contract with Canadian firm TransCanada. Under the terms of the agreement, TransCanada pays all of the state’s direct costs until construction begins, then half of the state’s share of construction costs. In return, the state gives TransCanada a cut of its revenue once gas starts flowing.

If the pipeline deal falls apart for any reason, or if TransCanada wants to walk away from it, the state must repay TransCanada every dollar plus 7.1 percent interest.

That’s a high interest rate compared to the open market, which is why the state is considering a buyout and has earmarked $68 million of the legislative request to take an “offramp” built into the TransCanada contract. If the state doesn’t act by Dec. 31, its next offramp is years (and hundreds of millions of dollars) later.

Lawmakers seem to have been convinced of the financial benefits of such a decision, and they’re now focusing on what would come after a buyout, when AGDC takes TransCanada’s spot.

Can the state borrow the $12 billion to $16 billion needed for its share of the pipeline? Can AGDC effectively manage the effort? And what happens if the worst happens and the deal falls apart?

Early in Tuesday’s House Finance Committee meeting, AGDC vice president Joe Dubler firmly killed any question about whether the AGDC has the legal ability to take TransCanada’s role. Neuman had questioned that ability on Monday.

Armed with a legal opinion from one of the state’s assistant attorneys general, Dubler explained that Senate Bill 138 — which began the AKLNG project — allows AGDC to “acquire an ownership or participation interest in an Alaska liquefied natural gas project” among other things.

“AGDC has statutory authority to acquire TransCanada’s interest in the AKLNG Project,” wrote assistant attorney general Martin Shultz.

The AGDC questioning will continue today in the Senate Finance Committee, which meets at 9 a.m.

The most anticipated meeting of the day will come in the afternoon, however, as TransCanada major projects director Vincent Lee speaks to the House Finance Committee.

More in News

The Kenai Peninsula College main entrance on Aug. 18, 2022, in Soldotna, Alaska. (Jake Dye/Peninsula Clarion)
Chiappone and Dunstan to speak at the KPC Showcase

Kenai Peninsula College continues its showcase with two new speakers this week and next

U.S. Rep. Mary Peltola, D-Alaska, talks about issues of concern regarding the proposed merger of supermarket chains Kroger and Albertsons during a floor speech in the House chamber on Wednesday. (Screenshot from official U.S. House of Representatives video feed)
Begich leads in early results, but Alaska’s U.S. House race won’t be immediately decided

About 245,000 ballots had been counted by 11:32 p.m., and Peltola trailed by about 5 percentage points

The Alaska governor’s mansion on Wednesday. Gov. Mike Dunleavy is considered a contender for a post in Donald Trump’s second presidential administration. (Mark Sabbatini / Juneau Empire)
Election summary: Trump wins, GOP takes over U.S. Senate, Alaska may get new governor

Begich and repeal of ranked choice voting narrowly lead; GOP may lose control of state House.

Nesbett Courthouse in downtown Anchorage on Oct. 7, 2024. (Yereth Rosen/Alaska Beacon)
Voters line up at the polling site at Anchorage City Hall on Nov. 4, 2024. City Hall was one of the designated early voting sites in Alaska’s largest city. It is not a designated site for Election Day voting. (Yereth Rosen/Alaska Beacon)
Alaska Republicans lose two seats in state House, increasing odds of leadership switch

Rural Alaska precincts had reported few results by 11:30 p.m. Tuesday night.

Donald Trump won or was leading as of Wednesday morning in all seven swing states in the 2024 presidential election. (Doug Mills / The New York Times)
Donald Trump returns to power, ushering in new era of uncertainty

He played on fears of immigrants and economic worries to defeat Vice President Kamala Harris.

A voter is handed as ballot at Woodworth School in Dearborn, Mich., on Tuesday, Nov. 5, 2024. One of the most consequential presidential elections in the nation’s modern history is well underway, as voters flocked to churches, schools and community centers to shape the future of American democracy. (Nick Hagen/The New York Times)
Trump verges on victory, picking up Pennsylvania

Donald Trump has captured Pennsylvania, the biggest prize of the seven battleground… Continue reading

Signs and supporters line the Kenai Spur Highway in Kenai, Alaska, on Tuesday, Nov. 5, 2024. (Jake Dye/Peninsula Clarion)
Update: Unofficial results for the 2024 general election

Preliminary, unofficial election results as of 9:55 p.m.

Poll worker Carol Louthan helps voters submit ballots at the Soldotna Regional Sports Complex in Soldotna, Alaska, on Tuesday, Nov. 5, 2024. (Jake Dye/Peninsula Clarion)
Update: Bjorkman, Ruffridge, Elam and Vance lead in election night results

Several residents said that they came out to vote because they knew this election was “a big one.”

Most Read