Members of the Alaska House majority speak to members of the media on the first day of the Legislature's third special session this year on Saturday, Oct. 24, 2015, in Juneau, Alaska. The focus of the special session is on the proposed buy out of TransCanada Corp. from the gas project the state is pursuing. Pictured from the top are Reps. Mark Neuman, Mike Chenault and Steve Thompson. Neuman and Thompson are co-chairs of the House Finance Committee; Chenault is the House speaker. (AP Photo/Becky Bohrer)

Members of the Alaska House majority speak to members of the media on the first day of the Legislature's third special session this year on Saturday, Oct. 24, 2015, in Juneau, Alaska. The focus of the special session is on the proposed buy out of TransCanada Corp. from the gas project the state is pursuing. Pictured from the top are Reps. Mark Neuman, Mike Chenault and Steve Thompson. Neuman and Thompson are co-chairs of the House Finance Committee; Chenault is the House speaker. (AP Photo/Becky Bohrer)

Legislative session’s focus narrowed to TransCanada buyout

  • By Becky Bohrer
  • Saturday, October 24, 2015 10:10pm
  • News

JUNEAU, Alaska — Gov. Bill Walker’s administration began making its case for why the state should buy out one of its partners in a proposed liquefied natural gas project as legislators opened a special session on the issue Saturday.

A decision on whether to buyout TransCanada Corp. and approve buyout-related costs is all that remains on the agenda after Walker announced Friday that he was pulling the other agenda item — a gas reserves tax — after receiving written assurances from two of the state’s producer-partners, BP and ConocoPhillips, that they would be willing to make gas available to a gas project if they are not participating. Terms still must be finalized.

Walker said he hoped the remaining producer partner, Exxon Mobil Corp., would make a similar commitment.

Saturday began with an overview briefing by the administration and consultants on gas project-related issues, with the administration arguing that a buyout of TransCanada would give the state a greater say in the project.

The House Finance Committee held its first hearing on the proposal Saturday afternoon.

As a candidate last year, Walker was critical of the process under which the state was pursuing the project with BP, Exxon Mobil, ConocoPhillips, TransCanada and the Alaska Gasline Development Corp.

Under the arrangement, TransCanada would hold the state’s interest in the pipeline and gas treatment plant. The state can exercise an option by year’s end to buy a portion of that interest, but Walker wants a full buyout, in which case the state would reimburse the company for its development costs, plus 7.1 percent interest.

Walker’s bill seeks about $158 million in buyout- and project-related costs, including $13.6 million for state agency work on the project.

While a buyout could mean higher investment costs for the state of $7 billion to $8 billion, Alaska could get to up to $400 million more a year in cash flows during operation based on an expectation that the state could finance cheaper than TransCanada, legislators, aides and others were told during the overview by Deepa Poduval, with consultant Black and Veatch, which is working with the administration.

During legislative debate surrounding the pipeline project in 2014, TransCanada’s involvement was cast as a way for the state to not have to bear as much in upfront costs. It also gave the state and TransCanada a way out of a prior, failed gas line arrangement without a messy fight.

Senate Minority Leader Berta Gardner, D-Anchorage, said TransCanada effectively is acting as a banker under the arrangement. In fiscal terms, she said she doesn’t see a downside at this point to buying their position out.

Republican legislative leaders said they need to better understand the implications of any buy out and the assumptions used by the administration.

The Legislature has its own consultants that will help review the administration’s proposal.

Senate Finance Committee co-chair Anna MacKinnon, R-Eagle River, said the Legislature has to look at such things as whether this would advance a pipeline and how the state will pay for its share of the financial obligation.

House Speaker Mike Chenault, R-Nikiski, said the Legislature needs to make sure the decision made is sound for business, “because if it’s not, it puts Alaska in more jeopardy than what we currently are in.”

Alaska is grappling with multibillion-dollar deficits amid low oil prices.

The long hoped-for gas line is seen as key to Alaska’s future fiscal fortunes.

More in News

Sockeye salmon. (Photo via Alaska Department of Fish and Game)
Fish and Game seeks comment on 2022 sport fish stocking plan

The Sport Fish Division plans to release approximately 7 million fish into the Alaska water systems over the next five years.

A map shows which parts of the Chugach National Forest are open to motorized winter recreation use for the 2021-2022 season. (Map courtesy of the U.S. Forest Service)
Parts of Chugach National Forest open to snowmachine use

The 2021-2022 winter motorized season will run through April 30.

Kenai Police Department Chief David Ross explains the purpose of a grant to be used for new radios during a meeting of the Kenai City Council on Wednesday, Dec. 1, 2021 in Kenai, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Kenai Police to update radios using grant money

The department received almost $260,000 through the U.S. Department of Homeland Security.

Democratic Party candidate for governor Les Gara attends a Zoom meeting with Homer residents on Nov. 18, 2021, from his Anchorage, Alaska, home. (Screen capture)
Gara makes election pitch to Homer

Democratic Party candidate for governor Gara visits virtually.

A man missing for more than 40 years was identified by the Alaska Bureau of Investigation as a Chugiak resident who was last seen in 1979. The man’s body was discovered on an island near Anchorage in 1989. (Courtesy photo/Alaska Department of Public Safety)
Body found in 1980s ID’d through DNA analysis

The body, found in 1989, had been unidentified until now.

COVID-19. (Image courtesy CDC)
COVID continues decline; 1 new death

The state had an estimated rolling average of 253.3 cases per 100,000 people over the past seven days.

U.S. Census Bureau Director Steven Dillingham addresses state and Alaska Native leaders Friday, Jan. 17, 2020, in Anchorage, Alaska. Dillingham will travel to Toksook Bay, on an island just off Alaska’s western coast, for the first count on Tuesday, Jan. 21, 2020. (AP Photo/Mark Thiessen)
Census reports minimal state population growth

The Kenai Peninsula Borough’s population grew by about 3,400 people between the 2010 and 2020 census.

The old Homer intermediate school building, showing the Homer Boys & Girls Club and gym on the south side of the building at the corner of the Sterling Highway and Pioneer Avenue.
The old Homer intermediate school building on the corner of the Sterling Highway and Pioneer Avenue, as seen in October 2010. It’s now known as the Homer Educational and Recreational Complex, or HERC. (Homer News file photo)
Homer awards contract to study use of rec complex site

The goal is to help the city understand the maximum use of that property.

Genna Stormer gives Santa a hug during Christmas Comes to Nikiski at the Nikiski Community Recreation Center on Dec. 14, 2019. (Photo by Brian Mazurek/Peninsula Clarion)
December brings the holiday cheer

Groups across the peninsula get into the spirit of the season with public events.

Most Read