Click here to find today's Alaska LNG project legislative activities and videos, archived and live streaming!
- See this excellent comparison of Alaska's 1980s economic recession, compared to the current and projected economy and an ADN story by Jeannette Lee Falsey.
- Juneau Empire by James Brooks.
RT. Putin builds large Arctic military base as America fiddles.
What is Alaska LNG? Part 2: Meet the liquifaction plant. Alaska Public Radio Network…Oct. 25, lawmakers will gather in Juneau for the start of a special session on the Alaska LNG project, which would carry natural gas from the … (See Part I, here.)
… If the state borrows from the open market, it will be asking for money at a time when it has a multibillion-dollar gap between revenue and expenses.
“We expect that, absent revenue, that’s going to put pressure on the state’s credit rating,” said Steven Kantor, managing director of First Southwest, which the state hired to analyze the financial aspects of the project. “The state’s credit rating may decline as we issue so much debt without corresponding revenue.”
In addition, there’s no way to know whether the price of gas in 20 years — when AKLNG is operating — will be high enough to make the project pay off.
Banks may decide that they’re willing to loan the state money, but the state’s credit rating might suffer just as yours would if you have too many loans. If that happens, the state will pay more to finance things like schools and port projects as well as AKLNG. ….
Peninsula Clarion Editorial. The Alaska Legislature is set to convene its third special session of the year, this time to take up Alaska LNG Project issues. Gov. Bill Walker has proposed that the state buy out TransCanada’s stake in the project, and pitched a gas reserves tax measure for lawmakers to consider.
Unfortunately, lawmakers aren’t yet sure what they will be considering as the administration had not yet released any bills on either subject. And on Wednesday, legislative leaders announced the session would start with committee hearings at the Capitol, rather than the hours-long briefing planned by the administration.
And here we go again.
For Whom The Bell Tolls
- Alaska's government operates with a $3-4 billion annual deficit and its leaders display pitifully little determination to restrain spending; and
- its accessible savings accounts will be dry, unable to support deficit spending within a couple years; and
- it has not been able to pay down a nearly $10 billion unfunded liability of its state and local government employee and teacherunfunded pension liability; and
- its $50 billion+ Permanent Fund (PF) corpus cannot be tapped by the Legislature without a Constitutional amendment, which its PF Dividend-addicted citizens are loathe to give; and
- its deficit situation grows worse as the nearly 3/4 empty Trans Alaska Pipeline System (TAPS) continues to lose oil throughput at a 5-6% annual rate; and
- its state budget is 90% dependent on that dwindling TAPS throughput; and
- its entire economy is over 1/3 dependent on TAPS economic activity, and
- the credit rating agencies are beginning to downgrade the credit worthiness of the state, thus compounding its troubles as the cost of borrowed money increases. (Yesterday, if you were watching the Legislative video, you heard financial advisers warning that borrowing money now would be at the most favorable time, before further rating downgrades occur…but that if the state had to borrow later to support failing Alaska LNG project equity commitments, the whole world would know its financial problem and lenders would require still higher risk premiums in return for their investments.)
We would wonder how a state in such circumstances would waste even a weekend discussing the possibility of providing a multi-billion dollar 'deficit investment' in an project when 1) payback is not likely to occur for a decade, and 2) the depletion of deficit supporting savings accounts and perhaps the termination of TAPS operations could occur within just a few years, and 3) completion risk of an LNG project in today's world environment is sky high.
Meanwhile, caught in the quagmire of these circumstances amid a perfect economic storm, the Alaska governor is pressuring the Legislature to pass a contingent natural gas reserves tax on the very companies he hopes will build an LNG project.
The federal hostility against Alaska is cutting off sources of new TAPS-replenishing, Arctic oil income and a hostile state administration cannot help but have the effect of further discouraging, if not alienating, investors.
New readers might ask of us: "For whom does the bell toll?"
Don't forget to tune in after church. This will be interesting.
Read more here….