Yesterday, Alaska Governor Bill Walker appointed three new board members to the AGDC (Alaska Gasline Development Corporation, aka. “ASAP”).
Video: note sound volume low in beginning, becomes normal after a few minutes.
STATUS: Interior Energy Project (Government project to establish a new, natural gas LNG / transmission / distribution system for Fairbanks Alaska.)
Here is our “links page” to the IAP for quick reference.
On February 12 we had become confused about status of the multi-hundred million dollar government program to provide one Alaskan community with low cost energy.
Since a previous administration had tried and failed to make such a project financially feasible, we wondered how a different administration would use the same agency (AIDEA, Alaska Industrial Development and Export Authority) to reinvent the project in a way that might serve the broad public interest.
We also include a reference to the regulatory docket, containing a full array of background information.
AGDC is the governmental corporation charged with building a small in-state gas pipeline down from the Alaska North Slope to South Central Alaska. It would serve consumers from the Interior community of Fairbanks to the largest population in the state, centered in Anchorage. The AGDC also serves as the state’s representative to the larger, Alaska LNG project supported by TransCanada (i.e. of Keystone XL and Energy East fame), ExxonMobil, ConocoPhillips and BP. Most experts believe that only one of the projects will be built and that the AGDC project serves as a ‘back up’ project to serve consumers and provide smaller export volumes in case the larger project is never built.
The new AGDC board members replace three appointees of the previous Parnell administration whom Walker fired upon taking office.
During this video press conference, our readers will note that the qualification Walker most heavily counted on was the qualification of being an “Alaskan” (While the popular and provincial word, “Alaskan” refers to a fact of citizenship, it also connotes an emotional reference that, in this case, apparently substitutes for educational and professional credentials). This is an important reflection to investors, international trading entities and the federal government of the new governor’s philosophy of governing.
Below is the text of yesterday’s news release issued by legislative leaders whose original law created AGDC.
We will leave the video and press release record for our readers to digest. (Segments below, See the full release here….)
Thursday, February 19, 2015, Juneau, Alaska – House Speaker Mike Chenault (NGP Photo-R) and Representative Mike Hawker (NGP Photo-R-below), architects of the legislation creating the Alaska Gasline Development Corporation, urged a diligent review of the qualifications of three new board members appointed today by Gov. Bill Walker. The three appointees are former state Senator Joe Paskvan, a Fairbanks lawyer; former state Senator Rick Halford of Dillingham, a retired pilot; and Hugh Short of Bethel, a businessman and former mayor.
“AGDC’s original board members, some with international pipeline expertise, were a tremendous asset to AGDC,” Hawker said. Along with directing the organization, the public members added value by serving on subcommittees along with AGDC staff on commercial, engineering, and governance topics.
AGDC is not the only state corporation/entity to require specialized expertise in board members. The Alaska Aerospace Corporation, Alaska Housing Finance Corporation, Alaska Industrial Development and Export Authority, Alaska Permanent Fund Corporation, and Alaska Railroad Corporation statutes all require certain qualifications in board members.
In the case of AGDC, the presence of two cabinet-level commissioners on the board, not their designees, is designed to ensure the board as a whole considers the broader interests of the state and of all Alaskans in directing the organization.
The three fired AGDC board members were:
- Al Bolea of Big Lake, brought insights into governance and the oil and gas industry through his former roles as a BP executive; chairman of Alyeska Pipeline Service Company, and CEO of Dubai Petroleum in the United Arab Emirates.
- Drue Pearce of Anchorage, brought a wealth of expertise in federal rules related to permitting, a deep history of Alaska oil and gas development, and a comprehensive understanding of Alaskans’ needs through her former roles as a state senator; the Department of Interior’s Alaska advisor; and the federal coordinator for Alaska natural gas transportation projects.
- Richard Rabinow, of Texas, brought decades of experience in major pipelines, through his former work as President and CEO of Longhorn Pipeline Partners; as President of Exxon Mobil Pipeline Company; chairman of the Association of Oil Pipe Lines; and membership on the TransAlaska Pipeline System Owners Committee. See the full release here….
Our Friday IEP Commentary:
On February 12 we had become confused about status of a revised, multi-hundred million dollar government program to provide one Alaskan community with “low cost energy”.
Since a previous administration had tried and failed to make an Interior Energy Project (IEP) financially feasible (i.e. for the Interior Alaska community of Fairbanks), we wondered how a different administration would use the same agency (AIDEA, Alaska Industrial Development and Export Authority) to reinvent the project in a way that might serve the broad public interest.
We were further confused about how the state could be considering such a huge new spending venture (i.e. even with funds obtained by an “Independent” public corporation of the state), when:
- it had already invested hundreds of millions of dollars into two gas pipeline projects that would flow gas right by the Fairbanks community, if built, and
- its operating budget, 90% dependent on Alaska North Slope (ANS) revenue was operating billions of dollars in the red, even before last year’s 50% oil price drop, and
- its remaining savings accounts after this fiscal year will add up to approximately $9 billion, when the unfunded liability of the State’s personnel retirement system is almost $10 billion, and
- when Alaska is the highest per capita debtor state in the nation, and
- Alaska is the highest per capita spending state in the nation, and
- the oil price drop is likely to guarantee a continued drop in ANS production upon which the state’s government and economy are based.
Those realities pretty much beg for citizens to ask of their government, “Why are you undertaking any huge, new spending program — no matter how well motivated it may be — when the state simply cannot afford any new expenditures or risk?”
Since the logic defied our analysis, we sent questions to AIDEA. Some were admittedly better than others. As a former regulatory commissioner we posed some questions that may have been important, but without fully understanding all of the history and nuances. As a former oil industry executive and consultant to many of the large companies operating in the state, we asked several questions. And as a grandfather whose kids will end up inheriting the result of our state and national governmental decisions, we had questions, and still do, about the intergenerational equity of Alaska’s rather cavalier, decades-old pattern of deficit spending.
So, please ignore the questions you find unhelpful and, please, feel free to send us your own questions which we will append to this commentary for reference of decision makers.
NGP February 12, 2015 Questions to AIDEA Below (slightly edited for this viewing) – AIDEA escaped answering our query and questions in this way
|Note: Yesterday we received a copy of Harvest Alaska’s position, provided here for your review. Harvest seems relatively unconcerned about the transfer of LNG facilities directly to AIDEA, believing that AIDEA is bound by a sale and purchase agreement. Their greater concern probably rests with an Attorney General position to which the letter refers.|
2. Did the Administration ask AIDEA to change the focus from North Slope Gas to Cook Inlet gas? Does AIDEA believe Cook Inlet reserves — as suggested in FNG’s TA — can now support both South Central Alaska and Interior demand? In the event that the new, Interior demand causes gas shortages or higher prices in South Central Alaska, is AIDEA comfortable with the obvious necessity of importing LNG (i.e. in the event a large ANS gas pipeline is delayed or found to be infeasible under prevailing market conditions)? How does AIDEA see the RCA process affecting its own project planning (i.e. the June 1 deadline for a final TA order)? Does AIDEA plan to involve Harvest Alaska in its planning process? Please explain.
|Since we are no longer privvy to the inner workings of the Regulatory Commission of Alaska (RCA) we asked one of the most foremost regulatory attorneys for a quick summary and links. His response is here….|
4. While state statutes allow for ‘self regulation’ of a municipal utility, does AIDEA see any value in having a more objective third party like the RCA economically regulate the FNSB utility–other than a local elected officials and/or a board of political appointees?
13. Since GVEA will, hopefully, be a major base load customer, how has AIDEA addressed CEO Cory Borgeson’s concern expressed in a Journal of Commerce interview that, “As to whether or not AIDEA should look to Cook Inlet for a gas supply, Borgeson said the low wholesale cost of North Slope gas is hard to overcome.” Has AIDEA acted to respond to that concern?
RCA Re: IEP LNG Sale Process
Since we are no longer close to the RCA’s regulatory process, we asked one of the state’s best respected regulatory attorneys to summarize the regulatory aspects of a proposed sale of LNG assets to Harvest Alaska, a Hilcorp affiliate.
Docket U-15-002 is FNG’s application (through Tariff Advice Letter TA37-514) for approval of a LNG supply agreement (LSA) with Hilcorp’s subsidiary, Harvest Alaska. The LSA is conditional upon the AG’s approval and upon the closing of the sale of the Pt. MacKenzie liquefaction plant and related assets from Pentex (FNG’s parent company) and Titan (FNG’s sister company) to Harvest. Attached to this email is FNG’s TA and the RCA’s Order No. 1 opening the docket. The link to the RCA web site for Docket U-15-002 follows: http://rca.alaska.gov/RCAWeb/
The liquefaction plant was transferred last year from FNG to Titan for no consideration, and is now being transferred from Titan to Harvest for undisclosed consideration. FNG has not requested, nor has the RCA approved, the recent transfer of control of FNG, the transfer of the plant to Titan, or the transfer from Titan to Harvest.
AIDEA politely answered our query and questions this way:
Good Afternoon Dave,
Please see the attached public documents. These should answer your questions.