Alaska Gov. Bill Walker (I) called the state legislature into special session starting Oct. 24 to discuss natural gas pipeline issues. He asked lawmakers in his Sept. 24 proclamation to consider reinstating a tax on undeveloped Alaska North Slope gas reserves, and exercising the state’s option to acquire TransCanada Corp.’s interest in the Alaska LNG Project.
“With a $3.5-billion budget deficit, this [gas pipeline] project has gone from a wish-list item to a must-have,” Walker said. “Under the negotiation process I inherited, very little has been accomplished on the commercial agreements. It is time to make the necessary legislative changes so a single party cannot delay the production of Alaska’s gas resources and sway our destiny.”
Acquiring TransCanada’s stake is critical to assure Alaska a seat at the negotiating table, Walker stated, adding that he wants a tax on unproduced ANS reserves similar to a law his predecessor William A. Egan (D) signed in 1975 allowing the state to collect crude oil revenue while the Trans-Alaska Pipeline System was being built.
“For far too long, Alaska’s gas has been treated like milk with no expiration date, and it never gets to the front of the cooler,” Walker said. “Without this insurance policy, Alaska runs the significant risk of never monetizing our gas resources for the benefit of all Alaskans and future generations.”
Walker also released his administration’s review of the Alaska LNG project, which provides a brief history of the state’s prior efforts to produce ANS gas, and outlines reasons why Alaska must take a more aggressive role in future gas pipeline negotiations.
He said he was releasing the report, which highlights challenges the project faces under the negotiating framework established by SB 138, a month before the special session begins so state lawmakers can consider its findings.
“This legislation will vastly improve the probability of an Alaska [gas pipeline] being built,” Walker said. “It ensures that, if one or more producers delay [its] construction, Alaska still receives critical tax revenue from our natural gas resources—but only if we have the political will and courage to do so.”
A recent American Council for Capital Formation report concluded that declining crude production and growing economic challenges make it urgent for Alaska business and government leaders to move more quickly on getting a major LNG export project up and running in the state (OGJ Online, Aug. 12, 2015).
Contact Nick Snow at [email protected].