Alaska Governor Bill Walker. Northern Gas Pipelines File Photo by Dave Harbour

GOVERNOR TALKS FOR 17 MINUTES ABOUT ALASKA’S TORTURED HISTORY WITH GAS

by

Suzanne Downing, www.mustreadalaska.com

Alaska Gov. Bill Walker, through the state gasline agency he now firmly controls, reported earlier this month that Alaska paid $25,000 to be a silver sponsor of the CWC World LNG & Gas Series 8th Asia Pacific Summit.

Other silver sponsors were ExxonMobil, BP, and Cheniere Energy.

What did Walker get for his silver sponsorship? And what did he deliver for the people of Alaska?

There was the sponsored break during the conference for the usual social capital part of the event: Coffee, juice, and a chance to talk to the governor’s team.

Beyond that, Walker got a crack at the podium.

What did he talk about during his third time at the annual conference?

The storytelling was classic Walker. While the substance did not appear to advance Alaska’s actual economic realities, we’ll unpack his telling for the busy reader:

His 17-minute speech started off with an introduction of his co-travelers, Alaska Gasline Development Corporation President Keith Meyer, Department of Natural Resources Commissioner Andy Mack, Walker’s oil and gas chief cabinet adviser John Hendrix, and First Lady Donna Walker.

Next came the perfunctory ice breaker, which consisted of the irresistable Alaska ribbing of the petite state of Texas.

Walker transitioned into a folksy account of his rustic upbringing: He was born in the Territory days and lived in a house that was heated only with wood; the cold mornings of his Alaska youth.

He described how Alaska became an “owner state “in 1959:

“The federal government said you are a long ways away from Washington. You have to live off the land. You have to live off the resources. You cannot sell those resources in the ground. So we can’t. We don’t. If the resources don’t get developed, we don’t have an income in our state. So it’s very critical that those resources become developed. ”

The speech cost Alaska $1,470 a minute, or $24 a second. Walker appeared acutely aware of time, and spoke quickly — rushing at times, stumbling at others, sticking to notes at times, improvising at others.

He criticized the immediate past governor for not responding to Walker’s many overtures to get a gasline built to Valdez. There was a bit of revisionist history as he described the Alaska Gasline Port Authority project that he worked on for years for Valdez, and his frustration with Gov. Sean Parnell for not pursuing it:

“Finally, I just couldn’t take it anymore. I just turned off my computer and said I just can’t watch all these projects around the world be developed and ours continued be reinjected into the ground. I turned off my computer, I sold my company and ran for governor.”

That was $1,000 worth of storytelling, because he had also run for governor earlier, but when every word in a speech is costing $10 bucks, one might be tempted to compress history into a concept.

Walker described how Alaskans in 2000 voted overwhelmingly for a state-owned gasline project. That is why he was excited when, as he described it, the former partners of the AK-LNG project asked him to take over the whole thing this year.

“I accepted that offer without hesitation,” he told the room.

The governor then inserted a last-minute addition: His disappointment in a recent ForbesMagazine article that proclaims the Alaska LNG project has crashed and burned. It was as though he just had to address the elephant in the room.

“What I say about the crashing and burning part, I guess it’s all how you view it,” he said.
“We’ve tried absolutely everything else except the State of Alaska standing up and acting like a sovereign as other countries have around the world and made sure their projects get to market.”

The timeframe for the project? Walker told the gathering that it is on track for the 2023-2025 schedule and that “we are for the first time in our state’s history acting like a sovereign.”

“It’s really is time we dismiss study hall and go to work and build this project,” he said.

WOOD MACKENZIE REPORT

The governor’s speech referenced an August, 2016 Wood Mackenzie report on the project’s competitiveness. That report says: “Of the peer group of projects, Alaska LNG has amongst the highest break-even cost of supply, even at the lowest capex estimate.” That’s not what you’d want to read, if you were launching a $55-65 billion project.

The report speculated that the cost could come down if the project was entirely State owned and attained tax-exempt status. But under that scenario, the report noted: “Even the removal of all taxes on pipeline and plants is insufficient to reduce the cost of supply below the current level of LNG prices.”

Interestingly, a Wood Mackenzie report completed for Walker’s dormant Alaska Gasline Port Authority in 2011 said the project was viable: “From an economic perspective, Alaska LNG exports are competitive, viable across scenarios, and could generate between $220 and $419 billion for Alaska.” To view that five-year-old report, see the AGPA website here.

To flip through the highlights of the current Wood Mackenzie report on the projected competitiveness of the project, which is less rosy, click here.

To view the 17-minute, $25,000 speech, click here.

Or here for another slice of reporting on Walker’s history with gas, by KTOO’s energy reporter Rachel Waldholz.