Alaska’s Legislative Budget & Audit committee laid their cards down for the LNG pipeline developers in no uncertain terms Wednesday when developers asked for fiscal stability - something several said they didn’t know they could assure.
ANCHORAGE, Alaska - Alaska lawmakers expressed deep skepticism Wednesday about covering potential losses for liquefied natural gas pipeline developers if the state raises taxes or changes regulations that hurt the project’s economics.
“We don’t have any of this,” House Speaker Bryce Edgmon, NA-Dillingham, said, referencing laws that are not in place to assure pipeline progression. “If it’s unsuccessful, it could be detrimental for generations,” warned Senate Finance Committee Co-Chair Bert Stedman, R-Sitka. The developers want what’s called “fiscal stability” — essentially a promise if Alaska changes its tax or regulatory policies later, the state would make up any financial losses to investors, according to GaffneyCline, the energy consulting firm that presented to lawmakers. Those guarantees, slides from a presentation GaffneyCline showed during the more than three-hour meeting, can mean a “tax freeze,” or freezing the tax system for the project’s life. If changes are made, “the government makes other beneficial adjustments or otherwise compensates investors to retain the original economic impact.” Alaska’s property tax alone could cost the project $1 billion and add 9% to the cost of delivered gas, according to GaffneyCline’s presentation to the Legislative Budget and Audit Committee. The presentation showed examples from other states that have provided billions in tax breaks to LNG projects. Louisiana has provided property tax abatements worth $4.9 billion to Sabine Pass, $3.7 billion to Cameron LNG, and $2.9 billion to Calcasieu Pass, according to the GaffneyCline presentation. “Will the project even come unless we present the right scenario?” House Majority Leader Rep. Chuck Kopp, R-Anchorage, asked Nick Fulford, senior director and global head of gas & LNG for GaffneyCline. “You mentioned the buyers want 20 to 30 years of stability ... our fiscal framework might be a little bit out of alignment, if I’m hearing you correctly. “If those things are all true, our needs, our situation, us being out of alignment, we’re going to have to look at possibly a reality that this line doesn’t even get .”“One way the state can approach this is to start with a clean sheet of paper, and evaluate all these different features, including, affordable energy for the state, and design a framework which is fit for purpose, and creates that equitable split between the product developers and the state,” Fulford said. Adam Prestidge, president of Glenfarne Alaska LNG, the majority owner and lead developer of the project, told the committee the stability guarantee was an important one. GaffneyCline told lawmakers that pipeline revenue could represent nearly 20% of Alaska’s GDP, which measures the total value of goods and services produced in the state. “For Alaska, it’s very substantial,” Fulford said. “In relation to GDP, it comes to 20%, so we’re very much moving the needle for the state here.” “I understand the potential, huge, multi-generational impact of the state, as well as being very positive,” Stedman, the Senate Finance Committee co-chair, added during the meeting. “Concentrating on the benefit of the project that we know, if it’s successful, it’s going to be very beneficial. And if it’s unsuccessful, it could be detrimental for generations.”The request comes as both LNG supply and demand are expected to boom globally, according to GaffneyCline’s presentation. Liquefaction, or the process of turning gas into liquid, is expected to increase by 42% by 2030, reaching about 594 million tons per year, the presentation showed. So, too, is demand expected to rise, growing by 56% by 2035, though the report does not say exactly how much LNG that would mean.“The oil situation has deteriorated,” Dunleavy said in a video statement before his budget was revealed. “The price of oil has gone down. Therefore, our revenue is going down.” “Basically, we don’t have enough money to pay for all of our obligations. So, as a result of that, you’re going to see some reductions in this year’s budget,” the governor added., which the administration says prioritizes “the development of Alaska’s liquefied natural gas potential, including the sale and transportation of Alaskan LNG to other regions of the United States and allied nations within the Pacific region.”and some Alaska Native groups have also raised concerns about the pipeline’s potential impact on wildlife and traditional lands.Anchorage is getting ready to open a village of tiny houses for people experiencing homelessnessMayor LaFrance’s sales tax proposal public hearing set for Dec. 2
LNG Liquid Natural Gas Liquefied Natural Gas Pipeline LNG Pipeline Rep Bryce Edgmon Sen Bert Stedman Rep. Chuck Kopp Adam Prestidge Gov Mike Dunleavy President Donald Trump Unleashing Alaska’S Extraordinary Resource Potenti
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