Walker says he plans to boost viability of stand-alone gas line while pursuing LNG project

EnergyAssociated Press

Gov. Bill Walker said he plans to retool an in-state natural gas pipeline project into an export project, prompting concerns from some lawmakers about the message that sends as Alaska continues to pursue a separate major gas line.

In an opinion piece published on newspaper websites, Walker said he's pleased with the progress that has been made on the major liquefied natural gas project the state is pursuing with BP PLC, Exxon Mobil Corp., ConocoPhillips, TransCanada Corp. and the Alaska Gasline Development Corp., or AGDC. It would include an 800-mile pipeline to move North Slope gas to a plant where it would be chilled, loaded onto tankers and shipped to Asia.

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He told reporters Thursday that the state would continue to assist that project any way it can, and if there is any way to speed the effort, he looks forward to doing that. But he also said he didn't want to pin all the state's hopes on it.

He said the administration would pursue the major project while also moving to increase the size and volume of the smaller project. A larger volume would make it economic to provide energy for Alaskans and meet export market needs, he said in the opinion piece.

Whichever is first to produce a "solid plan" with terms acceptable to the state would get full state support, he wrote. Or, he said, the two might be combined.

Walker's opinion piece was posted online Wednesday night, hours after company representatives told lawmakers that the project was on track to meet the target for making a decision in the second quarter of next year on whether to move forward. Deputy Natural Resources Commissioner Marty Rutherford said given the amount of cooperation she has seen, the target is achievable.

"Given our financial situation, we can no longer afford to stand by and wait while Alaska's future is decided in the boardrooms of international corporations that have competing global interests. It is time to develop the option for a large-volume natural gas project with Alaskans in control, with the decision-making based on what is best for Alaska," Walker wrote.

In materials to lawmakers last month, AGDC, which also has been pursuing the in-state Alaska Stand Alone Pipeline, indicated that final investment decisions for both projects were expected around 2019.

The state faces projected multibillion-dollar budget deficits amid a crash in oil prices, and the stand-alone project is among the big-ticket projects for which Walker has halted new spending pending a review of them.

Under the prior administration, the stand-alone line had been seen as a fallback should the big project falter. The possibility of the two projects merging at some point also has been raised.

But a bill passed by the Legislature last year, setting the state's participation in the liquefied natural gas project, also laid the groundwork for releasing the size restrictions that had been placed on the stand-alone pipeline as part of a prior, failed effort to bring about a gas project. Walker said that was a factor in his change of tone on the stand-alone line.

Natural Resources Commissioner Mark Myers said in an interview last month that whatever pipeline is built has to be economically viable. Should the big project not work out, the stand-alone project would have to be heavily modified, he said.

Many lawmakers see the liquefied gas project as the state's next best chance for significant revenue. House Speaker Mike Chenault, a supporter of AGDC's efforts, told reporters Thursday that the state should do everything it can as a partner to move that project forward.

Others saw Walker's proposal as a good move.

Walker said he spoke with officials from the companies and got no pushback.

On Thursday, Walker also announced three new appointments to the AGDC board. Walker had removed three members after taking office, saying he wanted Alaskans on the board and more geographic representation.