Officials: Parties moving ahead on Alaska gas project

  • By Becky Bohrer
  • Wednesday, February 18, 2015 10:53pm
  • News

JUNEAU — Representatives of the companies pursuing a major liquefied natural gas project with the state said Wednesday that the project remains on track for a decision next year on whether to proceed to the next phase.

But Bill McMahon with ExxonMobil said that given the project’s magnitude, it will be essential to take the time needed to satisfactorily come to terms on issues.

Some members of the Senate’s Republican-led majority have said they are setting aside time in October for a special session on gas-line issues. Other lawmakers have said they would prefer the parties take the time needed to produce solid agreements that can be brought back to the legislature for consideration rather than have the parties bound to a rigid schedule.

McMahon told the Senate Resources Committee it’s possible that agreements could be ready for consideration at the end of this year. But he said the parties want to temper the desire to meet deadlines with the recognition that a quality product is needed to make decisions.

Dave Van Tuyl, with BP, noted there are some things not completely within the companies’ control, such as how quickly a municipal advisory group, charged with making recommendations surrounding property taxes and ways to mitigate the financial effects to communities affected by the project, completes its work. That will help inform fiscal arrangements, he told the panel. The advisory group is scheduled to meet on Friday.

Sen. Bill Wielechowski, D-Anchorage, asked if the state should expect the companies to ask for cuts in oil and gas taxes. The state overhauled its oil tax system in 2013, a move supported by the industry.

Van Tuyl said the changes made in 2013 “are doing the things that they need to do. We’re seeing increased activity and increased production.”

“We have no plans to request oil tax reductions,” said Darren Meznarich, with ConocoPhillips.

The project is being pursued by the state, BP, ConocoPhillips, ExxonMobil, TransCanada Corp. and the Alaska Gasline Development Corp. The companies involved have said the project, as proposed, would be the largest of its kind ever designed and built.

That’s if it gets built.

For the state, there’s a lot at stake. Many see the gas project as the state’s best hope for significant additional revenues. Alaska, which relies heavily on oil revenues to fund state government, is facing projected multibillion-dollar budget deficits, exacerbated by the crash in oil prices. A report on financing options for the state is in the works.

Company representatives along with officials from the departments of Natural Resources and Revenue gave updates to the House and Senate Resources committees on Wednesday.

Deputy Natural Resources Commissioner Marty Rutherford told the House committee the parties were moving forward aggressively. The goal is to be able to reach a decision on whether to move to the next phase of the project early in the second quarter of 2016, she said.

It’s a goal that Rutherford said she thinks can be accomplished, given the amount of cooperation that she has seen and the willingness to find ways to address challenges.

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