The head of the Alaska Gasline Development Corp. said his board would approve another year of work Thursday on the state’s share of the proposed $55 billion gas pipeline, even as lawmakers and the industry worry that the project might be doomed.
The board of the state-owned corporation is scheduled to meet Thursday morning with an agenda that includes whether to authorize paying the state’s quarter share of next year’s $225 million project budget. If the project continues in 2016, the full budget would be split with ExxonMobil, BP and ConocoPhillips, the three oil company partners of the state in the pipeline.
The AGDC meeting will be followed by a Thursday afternoon closed-door session of all four partners in which each will have to approve the project budget.
One crucial unanswered question from Alaska’s perspective is whether the three oil companies, the main producers on the North Slope, would part with enough gas to make the pipeline viable long into the future even if they were to back out of the partnership — though the budget approval, agreeing to spend more than $50 million apiece, would be a sign of their commitment to the project. If any other signs of the oil companies’ commitment — or lack of commitment — emerge Thursday, they probably will be veiled by the meeting’s secrecy.
A few months ago, there appeared to be little doubt that the spending plan would get unanimous approval by the four partners. But Gov. Bill Walker raised concerns in a news conference last month that the state might veto the budget if it didn’t get written guarantees from the oil companies that they would sell gas to the project regardless of their participation in the pipeline.
In a prepared statement Wednesday, Walker’s spokeswoman, Katie Marquette, said negotiations over those guarantees were “still ongoing.” But in an interview Wednesday, Dave Cruz, AGDC’s acting chair, said the budget would be approved in Thursday morning’s board meeting.
“We are moving forward with that,” Cruz said. He said he couldn’t, however, confirm whether Walker’s administration had received the written commitments of gas. None of the three oil companies would, either.
Cruz’s statement came as lawmakers and industry were intently watching to see what the board would do.
Legislators in the Republican-led leadership of the House and Senate have opposed any tinkering with the existing framework for the pipeline project that they designed with former Republican Gov. Sean Parnell. Walker has favored a more aggressive negotiating stance toward the oil companies, saying it’s needed to ensure the project proceeds under terms favorable to the state.
On the website of the Republican-led state Senate majority, a “partner vote countdown” clock has been ticking away for more than a week.
In a phone interview Tuesday, Sen. Cathy Giessel, R-Anchorage, said she expected that Walker’s board appointees would end up authorizing the money for the project Thursday. But Giessel, an avid pipeline project booster, said she was “alarmed” when the board postponed its approval during a meeting last month, the same meeting it announced the resignation of its president, Dan Fauske.
That day, House Speaker Mike Chenault, R-Nikiski, a Fauske ally, issued a statement saying that there was a “real cloudy outlook as to whether the project will continue after Dec. 4.”
The postponement, Giessel said, “does raise the question: What will they vote on Thursday?”
“I’ll be there watching,” she added.
She denied, however, that her caucus’ ticking clock was a reflection of anxiety about the project, and a spokeswoman followed up with an emailed clarification to say that the countdown was “not meant to convey a doomsday scenario, but to build public energy” for an “exciting milestone.”
Meanwhile, Arctic Slope Regional Corp., which is doing some preliminary environmental work on the pipeline, has been running a radio ad since Monday. It urges listeners to call Walker and his board appointees to ask them to approve the project’s budget “for our economic future” — a request that generated more than 40 phone calls and emails to AGDC’s office by Wednesday afternoon.
The corporation’s chief executive, Rex Rock, also sent a letter to Walker on Monday asking him to “stay the course.”
Asked how confident the corporation was that the budget would be approved, a spokesman, Ty Hardt, responded in an email: “The word is ‘hopeful.’ ”
“But I’m not sure it’s close to unanimous at this stage,” he added.
The gas pipeline, which would run from the North Slope to the Kenai Peninsula, is still years away from construction, if it’s ever built. But the state’s role in the project has been the subject of bitter disputes between Walker and Republican legislative leaders over the past year.
None of the oil companies would say how they planned to vote on the budget Thursday, with a spokeswoman for each one saying the votes would be confidential. And the governance and voting procedures for the pipeline are outlined in a document that itself is confidential, said Kim Fox, a spokeswoman for the project partnership.
If the state and the oil companies can’t agree on the budget by the end of the week, “they have the ability to work together in order to try to reach consensus,” Miles Baker, a spokesman for AGDC, said in an email.
If they can’t reach consensus, the project’s management team “will begin winding down,” Baker added. And if a budget isn’t agreed to by the end of the year, the project will lose $75 million of its funding that lawmakers set aside during a special legislative session last month, plus another $15 million set aside for pipeline work that would be done by the Walker administration.
In her statement, Marquette, Walker’s spokeswoman, didn’t answer a question about how the state would proceed with the pipeline project if the governor’s appointees decided to vote against the budget Thursday.
Sen. Bill Wielechowski, D-Anchorage, said he didn’t support the original Parnell-era legislation that guided the state’s participation in the pipeline project, and he “wouldn’t be too upset if we went in a different direction.”
But, he added: “I would be very surprised if they voted not to go forward.”
This article was written by NATHANIEL HERZ from Alaska Dispatch News, Anchorage and was legally licensed through the NewsCred publisher network.