Governor plans to call for company buy-out in gas project

  • By Becky Bohrer
  • Monday, August 24, 2015 11:37pm
  • News

JUNEAU — Gov. Bill Walker said Monday that he plans to recommend to legislators that the state buy out TransCanada Corp.’s position in the major liquefied natural gas project that Alaska is pursuing.

Under an agreement that predates Walker’s administration, TransCanada, a Canadian pipeline company, would hold the state’s interest in the pipeline and gas treatment plant, with the state having an option to buy back part of that interest. During the legislative debate on the issue in 2014, it was cast as a way for the state to not have to bear as much in upfront costs as it would without that partnership.

But the agreement also contains language allowing the state to terminate that arrangement, though the state would have to reimburse TransCanada for its development costs, plus 7.1 percent.

In an interview with The Associated Press, Walker said the pipeline is an important piece of the project, and the state needs to be more involved in that work.

“We need a seat at the table,” he said. “Right now, they have our seat.”

He estimates the buy-out costs in the range of $100 million.

Shawn Howard, a spokesman for TransCanada, said by email that the company continues to work with the state and the project partners to advance the liquefied natural gas effort. The other partners are Exxon Mobil Corp., BP, ConocoPhillips and the Alaska Gasline Development Corp., which would hold the state’s interest in liquefaction facilities.

Walker’s administration has been involved in negotiations aimed at advancing the mega-project, which Walker called the state’s “strongest get-well option fiscally.” Alaska relies heavily on oil revenues to pay for state government and is facing large deficits amid low oil prices. It is using savings to help balance its budget.

No decision has been made yet on whether to build the project, which is in a phase of preliminary engineering and design.

The goal has been to have a fall special session for legislators to consider project-related contracts, perhaps in October. Walker said the further into August that talks go the more concerned he is about being able to meet that target. But he said he wants to get the best deal that he can for Alaska.

Kim Jordan, a spokeswoman for Exxon Mobil, said by email that the company is committed to project negotiations, but it doesn’t comment on the status of those talks. BP Alaska spokeswoman Dawn Patience said the company “remains committed to pursuing a successful Alaska LNG project that includes the State of Alaska as an equal participant and co-investor.” ConocoPhillips Alaska spokeswoman Natalie Lowman said the company continues to work through project talks and to target a possible 2016 decision on moving the effort to the next phase.

While Walker noted that the companies have sought certainty on issues like taxes, something he has suggested could be addressed through a constitutional amendment, he wants assurances that the state would be able to continue pursuing the project if one of the companies pulls out — that a withdrawing company, for example, could be replaced.

“I just can’t have a situation that any one company, for any reason whatsoever, could block this project from going forward,” he said.

The governor said he’s spoken in the past about the state having a 51 percent interest in the project. But he said the issue comes down to the state’s ability to advance the project.

“I’m comfortable with the arrangement we will have once we buy out TransCanada’s position, assuming that the Legislature approves that,” he said. “We’d have a 25-percent interest, and I’m very comfortable with that, as long as no one can block us from doing a project.”

More in News

Gary Porter, owner of Bald Mountain Air Service, stands in front of his Twin Otter airplane Friday, Oct. 22. (Photo by Sarah Knapp/Homer News)
City Council passes aircraft flat tax rate

The Homer City Council held a public hearing for Ordinance 21-62 concerning a flat tax on aircrafts.

Amelie Bignell, of Soldotna, drops a treat in the bucket of Hayden Jones, of Soldotna, on Saturday, Oct. 31, 2020, at a “trunk-or-treat” event at Orca Theatre on Kalifornsky Beach Road in Alaska. Jones was dressed as Vampirina. (Photo by Jeff Helminiak/Peninsula Clarion)
All Halloween all weekend

A sinister performance, pumpkin carving contest, food drive, pet microchip event and multiple trick-or-treats are on the docket.

Bill Elam (center) nominates Brent Hibbert to be president of the Kenai Peninsula Borough Assembly on Tuesday, Oct. 26, 2021 in Soldotna, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Johnson elected assembly president; Hibbert to be vice president

Prior to Tuesday, Johnson, who represents Kasilof, served as the assembly’s vice president.

Homer Senior Citizen Center residents participated in a worldwide Televeda bingo event to set a Guinness world record on Friday, Oct. 22. (Photo by Sarah Knapp/Homer News)
Homer senior citizens help break world record

The game was held to fight against social isolation in senior communities caused by the COVID-19 pandemic.

This illustration provided by the Centers for Disease Control and Prevention in January 2020 shows the 2019 Novel Coronavirus. (CDC)
State hospitalizations still on the rise

Despite a decrease in cases, the state is still seeing hospitalization surge.

The Seward welcome sign is photographed in July 2021. (Photo by Jeff Helminiak/Peninsula Clarion)
Seward vice mayor and council member resigns

The council accept the resignation of Tony Baclaan during its Monday night meeting.

Ben Mohr watches Kenai River Junior Classic participants head out to fish on the Kenai River in Soldotna, Alaska, on Wednesday, Aug. 11, 2021. (Camille Botello / Peninsula Clarion)
Mohr resigns as director of KRSA

He has been the executive director of KRSA for nearly three years.

Heather and Hunter Phillips walk through the Kenai Community Library Haunted Hunt with their mom Kumi Phillips on Tuesday, Oct. 26, 2021. (Camille Botello/Peninsula Clarion)
Scary reads

Spooky literary characters come to life at Kenai library haunted house.

Most Read