AGDC in turmoil as Fauske resigns, Walker appoints new members

  • By ELWOOD BREHMER
  • Sunday, November 22, 2015 9:55pm
  • News

The melodrama that has become the Alaska Gasline Development Corp. continued Saturday morning with the sudden resignation of president Dan Fauske.

Fauske stepped down one day after Gov. Bill Walker removed John Burns and Commerce Commissioner Chris Hladick from the Alaska Gasline Development Corp., or AGDC, board.

Burns, who served as board chair, is a former Alaska attorney general.

AGDC is the state entity tasked with representing the State of Alaska in the $45 billion-plus Alaska LNG Project — the large North Slope natural gas export effort with BP, ConocoPhillips and ExxonMobil.

Walker appointed former Fairbanks North Star Borough Mayor Luke Hopkins and Transportation Commissioner Marc Luiken to replace Burns and Hladick.

Fauske tendered his resignation in a letter dated Nov. 20 that was made public just prior to a special AGDC board meeting Saturday morning. He wrote he is proud of his time as president of the corporation, but did not expand on specific reasons for his departure.

“As an (Alaskan) for many years, I strongly desire that a natural gas pipeline project will come to pass,” Fauske wrote. “In that pursuit, I wish the governor and this board of directors success. I believe that a successful project will benefit Alaskans for many years into the future and will be a source of economic prosperity for the state.”

During a press briefing following the board meeting Walker commended Fauske for his work with AGDC in bringing the Alaska LNG Project to its current point and said Fauske offered to help move the project along in any way he could during a conversation the two had Friday.

The governor said changes to the state’s gasline team are meant to bring “alignment” to the group. He also said that while he didn’t directly ask for Fauske’s resignation, he expressed his wish to the corporation that a change in leadership be made.

“We need a person in that (AGDC president) position that has done many, many pipeline projects,” Walker said.

Prior to leading AGDC, Fauske headed the Alaska Housing Finance Corp., or AHFC, for many years. AHFC first worked on the state-led Alaska Stand Alone Pipeline project known as ASAP, a contingency project to get North Slope natural gas to Alaskans if a commercial project with the producers doesn’t materialize. Fauske transitioned to AGDC when it was formed in 2013 to focus on natural gas projects.

Fauske said in a recent interview with the Journal that he was displeased with proposed AGDC confidentiality regulations — drafted by the Attorney General’s office and strongly opposed by the producers — because they would make contracts the corporation entered into public and could compromise the state’s bargaining position and ability to work with third party vendors, according to Fauske.

The governor also said he met with the leaders of the House and Senate Resources committees earlier in the week to discuss how the administration and the Legislature can work more collaboratively to bring the project along.

The coming year will be a big test for the project, as all four parties will need to decide if they want to make significant investments in front-end engineering and design, or FEED, for the project, a multi-year commitment to bring it to a final investment decision.

Alaskans will also likely have to decide if they are willing to amend the state Constitution to allow long-term contracts to be signed with the producers.

Senate Resources Committee chair Sen. Cathy Giessel, R-Anchorage, said in an interview following Fauske’s announcement his departure is a “significant loss” for the state because of his experience in finance and that she is concerned with the recent loss of experience in positions of leadership for a project crucial to the economic future of Alaska.

What, if anything, the shakeup at AGDC means for the direction of the Alaska LNG Project remains to be seen.

“Continuity, consistency, stability, predictability, those are the key words these companies (BP, ConocoPhillips and ExxonMobil) look for, not only in tax policy but also in personnel,” from the State of Alaska, Giessel said.

She added that Burns provided consistency on the board through its changes and offered “exemplary” service to the state.

The AGDC board unanimously approved acting board chair Dave Cruz to also act as corporation president until an interim AGDC president is named. That topic will be addressed at the next board meeting scheduled for Dec. 3.

Since taking office nearly a year ago, Walker has now replaced six of the seven AGDC board positions. In January, he began reshaping the board by removing three members appointed by former Gov. Sean Parnell, citing transparency issues. At the time he ordered the new board members not to sign confidentiality agreements that, prior to the Walker administration, all AGDC board members and employees were required to sign.

Cruz, owner of Cruz Construction Inc., an oilfield contracter, is the only board remaining board member to have signed AGDC’s confidentiality agreement.

Walker called the resolving the issue of what’s confidential a “fine line” and said he is assessing the concerns of all parties on the issue, but added that Alaskans need to be kept abreast of the agreements the state is entering into if they are going to be asked to change the state’s Constitution.

“We don’t want to hinder the project in any way,” the governor said. “We’ll find that line.”

As for former AGDC chair Burns, Walker said he holds Burns in the highest regard and removing him from the board does not in any way reflect the relationship the two have.
“I don’t think we’ve seen the last of John Burns in this project,” he said.

He also noted that Commerce Commissioner Hladick already serves on more than 20 different boards and DOT, the state’s infrastructure agency, will have a large role in the project moving forward.

Not to be lost in the buzz surrounding the latest AGDC leadership changes is the fact that the state now officially owns TransCanda Corp.’s share of the Alaska LNG Project. The AGDC board passed a resolution to accept TransCanada’s midstream portion of the project. That follows the Legislature’s approval of the state’s purchase TransCanada’s 25 percent share of the North Slope gas treatment plant and the 800-mile pipeline in the special session completed earlier this month.

Approval of AGDC’s fiscal year 2017 work plan and budget was delayed until the Dec. 3 meeting, apparently at the request of Walker.

He said at the briefing it was premature for the state to commit funding work before getting formal commitment from the producers that gas will be made available to the project if one or more of them pulls out. The governor and the producers settled on a Dec. 4 date for withdrawal agreements in late October.

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