Big Oil given extra time to pledge gas

The state of Alaska is negotiating up to the last minute on proposals that would guarantee major oil producers’ participation in the state’s liquefied natural gas pipeline, Gov. Bill Walker told reporters Wednesday afternoon.

The Alaska Legislature is scheduled to convene Saturday in special session, and on its agenda will be a natural gas reserves tax intended to force the three big North Slope oil and gas producers to pledge their gas to the AKLNG project or pay a financial penalty.

If BP, ConocoPhillips and ExxonMobil make a binding pledge before Saturday, there won’t be a need for a tax.

“Today I received a request from them to give them as much time as possible with the issue … before submitting the bill,” Walker said. “They’ve made this request for a few more days, so we’ll certainly honor that request.”

AKLNG is a proposed $45 billion to $65 billion liquefied natural gas export project that includes a liquefaction facility on the North Slope, a pipeline across Alaska and an export terminal at Nikiski. The 800-mile pipleine project promises an extraordinary number of construction jobs and billions in extra tax revenue for the state, things expected to resolve in part or in total the state’s current $3.5 billion gap between revenue and expenses.

Walker has said his “top priority” is a guarantee that oil and gas producers won’t walk away from the project, but numerous lawmakers have said they have concerns about using taxes as a threat to force participation.

If the gas producers sign a production pledge, the special session will still go on as planned. The state is facing a Dec. 31 deadline to decide whether to buy out the AKLNG share of Canadian pipeline builder TransCanada.

Under existing AKLNG agreements, TransCanada pays the state’s up-front pipeline costs in exchange for a cut of the royalties the state receives from gas sales.

“Under the agreement that we inherited (from the administration of Gov. Sean Parnell), TransCanada sits in our seat at the table,” Walker said.

Long-term estimates indicate the state will pay a higher cost under this arrangement than if it kept its one-quarter share of the pipeline project and simply paid up front.

“We’d still have the special session just for TransCanada,” Walker said.

The Legislature is being asked to come up with money to buy out TransCanada and pay for preliminary engineering of the gas line.

Lawmakers are scheduled to gavel into their special session at 11 a.m. Saturday, but work will begin even sooner that day. At 8 a.m., state staffers will begin holding a pipeline briefing in Centennial Hall for legislators. That briefing is expected to run to 10:30 a.m.

After the Legislature gavels in, lawmakers have indicated that they intend to hold hearings starting that afternoon.

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