JUNEAU — Gov. Bill Walker plans to continue to push the major liquefied natural gas project that Alaska has been pursuing with oil and gas and pipeline companies, Revenue Commissioner Randall Hoffbeck told legislators Tuesday.
Hoffbeck said that while an alternate gas project recently proposed by Walker would be a competing project, it lags behind the other project in terms of development and essentially would act as a backup as long as the major project, known as Alaska LNG, continues to move forward.
The comments came during Hoffbeck’s confirmation hearing before the House Finance Committee, in which lawmakers sought clarity on Walker’s gas line plans. Walker caused a stir with an opinion piece last week in which he called for increasing the size of a smaller, in-state gas project to give the state another option as it pursues Alaska LNG with BP, ConocoPhillips, Exxon Mobil Corp., TransCanada Corp. and the Alaska Gasline Development Corp.
Whichever project is first to produce a “solid plan,” with conditions acceptable to the state, will get the state’s full support, Walker wrote in the piece, which was posted on several newspaper websites. He also noted the two projects also might be combined at some point.
Some lawmakers worried Walker’s proposal would create an atmosphere of uncertainty over efforts to bring Alaska’s gas to market. A major gas project is seen by many as this oil-dependent state’s next best shot for significant revenues as oil production declines.
Hoffbeck said having an alternate project would level the playing field with the companies, which have their own competing projects, and strengthen the state’s hand in negotiations.
“I think the governor needs to convince everybody that we are still negotiating in good faith, which we are,” Hoffbeck said. “But I think the initial shock of the announcement probably has set people back.”
If there is an economic benefit to the companies in building Alaska LNG, there is no reason for them to not continue forward, he said. “They compete all over the world,” he said.
A short-term issue for the state will be to ensure that information doesn’t leak from one project to the other, Hoffbeck said.
The hearing also touched on a range of topics, including the long-running valuation fights over the trans-Alaska pipeline system and the state’s revenue outlook. Alaska faces projected multibillion-dollar budget deficits this year and next amid the worldwide crash in oil prices. The state plans to use savings to get by, and some legislators have said they expect to propose deeper budget cuts for next year than Walker has recommended.
Hoffbeck said during questioning that there will need to be a discussion within the next year on whether the state needs to look at such things as broad-based taxes, making changes to fee structures and perhaps revisiting oil and gas taxes.
The committee forwarded his nomination to a joint session of the Legislature for consideration.