Monday, October 19, 2015

Gov Wants Special Legislative Session To Do Three Things

Alaska's governor has sent the legislature an 'agenda' for the special legislative session that begins in Juneau on Saturday.  Here are the three key things he wants:
"The three items for consideration in this special session are: 
(1) passage of legislation lifting the tax holiday on real property leased from the State containing threshold volumes of gas in order to ensure that producers are incentivized to commit their gas to Alaska LNG, or to make gas available for purchase if Alaska LNG does not proceed with all current project participants on previously established timelines; 
(2)  an appropriation to pay TransCanada its development costs and terminate its participation in Alaska LNG, so that AGDC can take over TransCanada’s current equity position in the gas treatment plant (GTP) and pipeline;  and
(3) appropriations for the State to make cash calls on the GTP and pipeline components of Alaska LNG to continue pre-front end engineering and design (FEED) work necessary to reach a FEED decision, and for the other State agencies involved in Alaska LNG to fund the work to continue efforts to negotiate and reach final agreements necessary to reach a FEED decision."

He offers a little more detail in the rest of the letter, but no numbers.  That's coming later, the letter says.  If I were a legislator, I'd want as much time as possible to read all the numbers and try to figure out the implications, though in today's political climate, from the governor's perspective, that means more time for opponents to attack.  But really, we want all the questions to be asked and then answered. 

Item #1:  I think ending the tax holiday is easy to understand.  The gas is in the ground, but the oil companies don't have to pay property taxes.  The initial exemption from property taxes was that the oil companies would pump the gas.  But the governor argues, as have others in the past, that without the tax, they have no incentive to do anything.   

Item #2:  I generally like the idea that the state acts as a real partner in this and I guess buying out TransCanada's share is part of doing that.  But, how much does TC want to sell?  If they are happy to to get rid of it, shouldn't we be able to get a discounted price?  Are there any other potential buyers?

I also like that unlike Parnell and Murkowski, Walker seems to represent Alaska and not the oil companies.  That doesn't mean he's making good decisions, but it does mean he's not playing patsy to the oil companies. 

This is going to be big money.  And you need big money in the oil and gas business.  But the state has a history of bad investments in enterprises from the Matsu Dairy to the Seafood Processing Plant in Anchorage.   Is this different?  If so, what can the governor tell us to convince us?  How long will a pipeline take before gas flows?  Will it come on line before ice melts enough for tankers to just fill up directly on the North Slope? 

And, I for one, need assurance that Walker plans to run for reelection, so all this doesn't fall apart.  Should another oil company lackey become governor again, this would all be for naught. 

Item #3:  Some specifics and some numbers would help out here.

Now, the Republican majority in the legislature is full of oil company supporters, even some oil company employees.  Walker has to entice them to vote his way.  The special session on Medicaid expansion earlier this year wasn't exactly a show of bi-partisan support. 

But let's all remember that this is precisely what Walker campaigned on.  A politician who is keeping his promises.  From the EnergyWire last December:
During the campaign, Walker suggested that, if elected, he might renegotiate the gas line contracts to give the state a leadership role. Industry supporters warned that such a step could set the project back by a decade (EnergyWire, Nov. 6).
Continued tensions over the pipeline issue were apparent last month when Walker's team held a town-hall-style transition meeting in Anchorage to draft recommendations for the new administration.
During oil and gas panel discussions, industry representatives called for Walker to endorse the Alaska LNG contracts that Parnell signed with BP Alaska, ConocoPhillips Alaska, Exxon Mobil Corp. and TransCanada Corp.
But Walker supporters protested that the incoming governor shouldn't be asked to sign off on contracts that neither he nor the public has seen in their entirety. Instead, they wanted Walker to push the oil companies to guarantee they'll build the pipeline.
"We'd like to achieve a commitment to build because the agreements we have right now aren't binding," noted Anchorage energy attorney Robin Brena, who served as chairman for the transition conference's oil and gas panel.
Despite their differences, Walker spent the days after the final votes were counted reaching out to Alaska oil industry groups. He held private meetings with the Alaska Oil and Gas Association and the Alaska Support Industry Alliance.

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