10-24-17 Alaska Gasline Development Corporation Rests Hopes On "Letters of Intent"

10-24-17 Alaska Gasline Development Corporation Rests Hopes On “Letters of Intent”

Alaska Gasline Development Corporation (AGDC) Hopes Rest On “Letters of Intent”

We would offer a comment that “LOIs” — especially those with long terms and huge uncertainties and many conditions — are not very useful. They are not relatively straight forward gas sales contracts with take-or-pay or ship-or-pay provisions. LOIs can be called, “binding”, but an “agreement to maybe agree someday” is full of problems no matter what you call it. In short, more public money should not be poured into this socialized, politically-controlled, bureaucrat-run LNG/800 mile pipeline scheme until: 1) gas prices recover sufficiently to support the many more economic LNG projects, plus this one, and 2) the private sector is enamored enough with the project to take it over and develop it properly.

Furthermore, we’re tired of hearing bureaucrats saying that negative media reports and blogs are ‘harming’ the project’s marketing effort. If the project were economically feasible, had a Final Investment Decision-grade financing plan and were run by a world-class private sector, marketers would not have to worry about project critics.

When bureaucrats trying to force a private sector project into being criticise project critics, it looks a lot like they are searching for a face saving way of bailing from their failure. We can hear the whining, blame game now, “We bureaucrats and politicians had a good project going but critics back home spoiled the market.” -dh)

Here is an October 16 report from KTOO’s Rashah McChesney

File photo by Rashah McChesney/Alaska’s Energy Desk. Sen. Natasha Von Imhof, R-Anchorage, questioned representatives from the Alaska Gasline Development Corporation during an earlier Senate Finance meeting: 2-14-17.

The Alaska Gasline Development Corporation has another deadline looming.

Board Chairman Dave Cruz told lawmakers in Anchorage on Monday that the corporation’s board is operating under a December 31, 2017 deadline to find a customer for Alaska’s natural gas.

It has been 10 months since the state took the lead on the mega-project that would transport natural gas from Prudhoe Bay to Cook Inlet, then ship it to buyers in Asia.

Members of finance and resources committee in both the state House and Senate met to hear a quarterly report on the progress of the project. Corporation President Keith Meyer was not at the meeting, Cruz said he is in Asia marketing the state’s gas.

So, Cruz started the meeting. And he began by asking lawmakers to consider the impact that their discussions with members of the media can have on the corporation’s efforts to market the project. (Emphasis added, -ed)

“The world is watching us. This is not just some little project in Alaska that the world doesn’t know about,” Cruz said. “And every local news story that is picked up by our industry and world press it places a great challenge on our team when they have to first defend the project against the negative comments before being able to sell it on its merits.”

For the next hour, lawmakers peppered Cruz and other members of the corporation’s executive board with questions about project finances, employee turnover and how much money the state expects to make on its share of the project.

Sen. Natasha Von Imhof, R-Anchorage, and Sen. Anna MacKinnon, R-Eagle River, both accused employees of evading questions on the project’s finances.

Von Imhof said she met with employees at the corporation last week and they “danced around her questions,” on how fast the corporation is burning through the roughly $102 million it has budgeted to spend on building a gasline project. She said she spent the weekend digging through documents and determined that it has about $70 million left to spend.

That is a fraction of the roughly $45 billion needed for the project to be built. Richards said the corporation is currently spending about $3 million a month, though the board has authorized it to spend more than $6 million monthly.

Lawmakers also asked about deadlines. Last year, Gov. Bill Walker gave the project until September, 2017 to generate enough activity to justify continuing to spend millions on the project.

The state corporation held an open-season asking potential customers and investors to show formal interest. And while it did not result in any firm commitments, Walker said he is encouraged by how well the state has engaged with potential buyers .

But, he stopped short of saying the state should put more money into the project.

When lawmakers asked Corporation Senior Vice President Frank Richards if the corporation plans to come to the legislature for more money during the next session — he said it all depends on whether it finds a customer.

About the Author: wpnorthern

Dave Harbour, publisher of Northern Gas Pipelines, is a former Chairman of the Regulatory Commission of Alaska, a Commissioner Emeritus of NARUC, NARUC's Official Representative to IOGCC and Vice Chairman of NARUC's Gas Committee. He served as Gas Committee Chairman of the Western Conference of Public Service Commissioners. He also served as commissioner of the Anchorage Bicentennial Commission and the Anchorage Heritage Land Bank Commission. He earned a Bachelor of Arts Degree: English, at Colorado State University, a Master of Science Degree: Communications-Journalism at Murray State University and graduated from Utility Regulatory School for Commissioners at Michigan State University. He served as a Vice President for Communications and Public Affairs at Alaska Pacific University, taught bank marketing classes at the University of Alaska and was an English teacher at Los Alamos High School. Harbour served in ranks of Private - Captain during a 4-year assignment with the Army in Korea, Idaho, Georgia and Fort Meade and received the Meritorious Service Medal among other commendations. Harbour is also a past Chairman of the Alaska Council on Economic Education, the Alaska Oil & Gas Association Government Affairs Committee, the Anchorage Chamber of Commerce, the Export Council of Alaska and the Department of Commerce's District Export Council. He is a past President of the Alaska Press Club, American Bald Eagle Foundation, Consumer Energy Alliance-Alaska and Common Sense for Alaska. Harbour was instrumental in founding the American Bald Eagle Research Institute (UAS), the Alaska Support Industry Alliance, the Downtown Anchorage Business Partnership, and Arctic Power. He also served as CEO of several small Alaska organizations, including the Anchorage Parking Authority and Action Security, Inc. Harbour is also Chairman Emeritus of the Alaska Oil & Gas Congress. Harbour's wife, Nancy, is a professional, performing arts administrator and his three boys, Todd, Benjamin and William work in the fields of environmental management, energy marketing and medicine.