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Feds Stealing Alaska? Canadian LNG Projects Under Fire!

Continued concerns over governor


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We continue to be concerned that Alaska governor Bill Walker so energetically pursues questionable priorities.
 
Today, we hear -- but have trouble believing -- he may be allowing the federal government to "steal" another 100 million acres of the state without a fight.  We also note his administration continues to seek a way to provide Southcentral Alaska's natural gas supply to a new market in Fairbanks.
 
 
Meanwhile, Governor Walker seems to be so distracted by his desire to control a world class gas pipeline -- however economically infeasible it may be at this time -- that he ignores the realities of the state's fiscal crisis caused by its outsized government.
 
A year ago we addressed the Governor's priorities.
 
This week we received a news release regarding his travel to the Republic of Korea.    
 
We wondered why he would place a priority on an expensive entourage traveling to Singapore last week and then to the Republic of Korea.
 
Alaska's gas/LNG project has no proven feasibility, no final engineering and no financing plan.  Asia and the whole energy world know that Alaska's major producers have concluded now is not the time to aggressively pursue this new LNG export project.  Sure, Alaska's energy experts have confidence in the state's gas export potential.  But the world has scores of new and planned LNG export facilities all trying to succeed in a low cost environment -- most with lower cost projects than Alaska's is liable to be.  
One marvels at how a chief of state could schedule a costly trip like this when his state is running a deficit budget, and spending the last of its savings accounts.
 
Shouldn't he be busy working -- frantically working -- with his advisors to prepare a skinny, sustainable budget for submission to the Legislature?
 
In Singapore he said of Alaska's gas pipe dream, "As we secure more customers, we lower the cost of the project...," stating the obvious.  But we've always thought you don't "secure ANY customers" until your project's cost and feasibility have actually been proven, a final investment decision has been made and sales and transportation agreements (i.e. not to be confused with non-binding "Memoranda of Understanding") are in hand.
 
How can gas sellers and buyers rely on an Alaska LNG project when the Governor resisted the requirement to put on the November ballot some sort of constitutionally guaranteed fiscal certainty?  If gas sales contracts require buyers to pay taxes, the buyers will demand fiscal certainty before signing on the dotted line.  If gas sellers carry the responsibility for tax payments, they will require fiscal certainty to assure their taxes won't go through the roof once a gas pipeline is frozen into the permafrost.  In short, there is no fiscal certainty now for a gas project.   We would conclude no parties are now in a position to talk seriously about actual investments, partnerships or gas purchases.  If Alaska cannot talk seriously about a gas project, why would it's leaders go on any investment/marketing/partner recruitment/gas sales promotional junket?
 
Walker's highly publicized international travel seems, therefore, to be a low priority spendthrift expedition: premature, pretentious, irrational and even somewhat embarrassing.
 
Are our concerns logically or factually unrealistic?  Please comment at the bottom of the page, here
 
Sincerely,
 
Dave
 
Commissioner Emeritus, 
NARUC
Chairman Emeritus, 
Alaska Oil & Gas Congress

   

 

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