Legislators: Is AGDC ready?

Leaders of the state-owned Alaska Gasline Development Corporation were the subjects of a legislative inquiry on Tuesday as lawmakers consider whether the AGDC is fit to take over from pipeline giant TransCanada in the natural gas megaproject known as AKLNG.

Tuesday was the fourth day of a special session devoted to deciding whether the state should buy out TransCanada’s share of the $45 billion to $65 billion project in order to be assured of more profit once it begins operating.

“I think members of the Legislature would like assurances that whether it’s Gov. (Bill) Walker or some other governor down the road … that AGDC is fully autonomous … from any administration that may be in power at the time,” said Rep. Mark Neuman, R-Big Lake and chairman of the House Finance Committee.

The official question on lawmakers’ agenda in this special session is whether to allocate $157.6 million to pay for the state’s share of the first phase of AKLNG, which would bring natural gas from the North Slope to Cook Inlet for export.

To avoid paying up front for its one-quarter share in the project, the state entered into a contract with Canadian firm TransCanada. Under the terms of the agreement, TransCanada pays all of the state’s direct costs until construction begins, then half of the state’s share of construction costs. In return, the state gives TransCanada a cut of its revenue once gas starts flowing.

If the pipeline deal falls apart for any reason, or if TransCanada wants to walk away from it, the state must repay TransCanada every dollar plus 7.1 percent interest.

That’s a high interest rate compared to the open market, which is why the state is considering a buyout and has earmarked $68 million of the legislative request to take an “offramp” built into the TransCanada contract. If the state doesn’t act by Dec. 31, its next offramp is years (and hundreds of millions of dollars) later.

Lawmakers seem to have been convinced of the financial benefits of such a decision, and they’re now focusing on what would come after a buyout, when AGDC takes TransCanada’s spot.

Can the state borrow the $12 billion to $16 billion needed for its share of the pipeline? Can AGDC effectively manage the effort? And what happens if the worst happens and the deal falls apart?

Early in Tuesday’s House Finance Committee meeting, AGDC vice president Joe Dubler firmly killed any question about whether the AGDC has the legal ability to take TransCanada’s role. Neuman had questioned that ability on Monday.

Armed with a legal opinion from one of the state’s assistant attorneys general, Dubler explained that Senate Bill 138 — which began the AKLNG project — allows AGDC to “acquire an ownership or participation interest in an Alaska liquefied natural gas project” among other things.

“AGDC has statutory authority to acquire TransCanada’s interest in the AKLNG Project,” wrote assistant attorney general Martin Shultz.

The AGDC questioning will continue today in the Senate Finance Committee, which meets at 9 a.m.

The most anticipated meeting of the day will come in the afternoon, however, as TransCanada major projects director Vincent Lee speaks to the House Finance Committee.

More in News

Drummers perform during a celebration of the 10th anniversary of the Dena’ina Wellness Center in Kenai, Alaska, on Friday, July 12, 2024. (Jake Dye/Peninsula Clarion)
Kenaitze tribe celebrates 10 years of ‘far-fetched dream’ at wellness center

Community members recognized the work done at the Dena’ina Wellness Center over the past decade

The Kenai Safeway is seen on Wednesday, July 20, 2022. (Camille Botello/Peninsula Clarion)
Kenai and Soldotna Safeways may be sold under proposed Kroger-Albertsons merger

The local stores will be sold to CS Wholesale Grocers only if the merger overcomes suit from the FTC

Sockeye salmon caught in a set gillnet are dragged up onto the beach at a test site for selective harvest setnet gear in Kenai, Alaska, on Tuesday, July 25, 2023. (Jake Dye/Peninsula Clarion)
Draft plan published for disbursement of $11.5 million in 2021 and 2022 ESSN disasters

Public comment will be accepted for the draft spend plan until July 24

The Kasilof River is seen from the Kasilof River Recreation Area, July 30, 2019, in Kasilof, Alaska. (Photo by Erin Thompson/Peninsula Clarion)
King salmon fishing closed on Kasilof starting Monday

The emergency order is being issued to protect returning king salmon, citing weak returns

Soldotna City Hall is seen on Wednesday, June 23, 2021, in Soldotna, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Soldotna’s city council appropriates funds for FY 2025 capital projects

Improvements are described for streets, police facility, Soldotna Creek Park and Soldotna Community Memorial Park

Gina Plank processes sockeye salmon caught on the first day of Kenai River dipnetting with her table set up on the bank of the Kenai River in Kenai, Alaska, on Wednesday, July 10, 2024. (Jake Dye/Peninsula Clarion)
Kenai River open for dipnetting

As of Tuesday, a total of 226,000 sockeye had been counted in the Kenai River’s late run

Assembly Vice President Tyson Cox speaks during a meeting of the Kenai Peninsula Borough Assembly in Soldotna, Alaska, on Tuesday, June 18, 2024. (Jake Dye/Peninsula Clarion)
Assembly won’t pursue further discussion on tabled bed tax resolution

Members say they’re going to work on a new version of the idea this winter

Gov. Mike Dunleavy pictured with members of the House majority after signing the fiscal year 2025 budget bills, Thursday, June 27, 2024, in Anchorage, Alaska. From left to right: Reps. Stanley Wright, Tom McKay, Thomas Baker, Craig Johnson, Kevin McCabe, Julie Coulombe and Laddie Shaw. (Photo provided by Office of the Governor)
Dunleavy signs capital budget with $3.7M in state funding for Kenai Peninsula, vetoes $3.3M

Roughly $90 million in federal funding also allocated to Kenai Peninsula

Alaska State Troopers logo.
Soldotna man arrested Friday after 30-minute police chase

The man had an outstanding warrant for felony probation violation

Most Read