Governor Submits Legislation to Advance Alaska LNG Project

Following through on his pledge to bring Alaska’s gas to Alaskans first and then to markets beyond, Governor Sean Parnell introduced legislation to advance the Alaska liquefied natural gas (LNG) project. The governor’s bill comes after a commercial agreement was signed by the state, the Alaska Gasline Development Corp. (AGDC), the producers, and TransCanada that laid out the roadmap for an Alaska gasline.

“With this legislation, we’re taking a vital step toward building an Alaska gasline,” Governor Parnell said. “Historic progress has been made on the Alaska LNG project, and this legislation ensures that it’s on Alaska’s terms and in Alaskans’ interests. I look forward to working with legislators in the coming months on finally achieving the state’s long-sought goal of fueling our homes and businesses, while also commercializing North Slope gas.”

Governor Parnell’s bill provides the necessary framework to empower the state to pursue an equity position in a large-diameter gasline. The bill expands the purposes of AGDC to allow it, through a separate subsidiary, to advance a large-diameter natural gas pipeline project by carrying the state’s equity interest in the infrastructure, particularly the liquefaction and marine facilities. Importantly, the legislation ensures that AGDC will continue to aggressively pursue advancement of the Alaska Stand Alone Pipeline.

“A natural gas project of this scope is a new chapter in state resource development, and it will be enhanced by the state’s equity participation in either project,” Governor Parnell added. “Given the momentum, we must act now to ensure that our laws provide the appropriate authorities and tools to allow the state to advance these critical projects.”

The legislation allows the commissioners of the Department of Natural Resources and the Department of Revenue to negotiate terms, subject to legislative approval, for project services. It also provides authority to modify certain lease terms on property that commits gas to a natural gas project in order to facilitate commercialization.

Finally, the bill includes provisions that relate to the oil and gas production tax, specifically to the tax levy on gas, changing it from a net tax to a new gross tax on gas.

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Press Release, January 27, 2014; Image: alaska.gov