Gas pipeline is focus of Alaska special session

Mark Thiessen, Associated Press

Gov. Bill Walker on Thursday called lawmakers into special session to kick-start stalled consideration of the Alaska natural gas pipeline project.

ANCHORAGE, Alaska (AP) — Gov. Bill Walker on Thursday called lawmakers into special session to kick-start stalled consideration of the Alaska natural gas pipeline project.

Walker, who spent last week touting Alaska's liquefied natural gas potential to customers in Japan, is also proposing that the state buy out a Canadian partner in the project.

The session will start Oct. 24 in Juneau, Walker said in a news release and video on his website.

The pipeline and gas treatment facility are seen as a way to inject new revenue into state coffers as oil production from the North Slope continues to dwindle and oil prices plummet.

"It's only bold because it hasn't been done before," Walker told The Associated Press in a phone interview on Thursday. "Had it been done some years ago, we might be looking at a gas line."

The partners in the proposed pipeline are Exxon Mobil, BP, ConocoPhillips and TransCanada.

Walker will propose the state buy TransCanada's share of the natural gas pipeline to give the state a seat at the negotiating table.

"With a $3.5 billion (state) budget deficit, this gas line project has gone from a wish-list item to a must-have," Walker said. "It is time to make the necessary legislative changes so a single party cannot delay the production of Alaska's naturalgas resources and sway our destiny."

The proposed $45 billion to $65 billion liquefied natural gas project is still in a phase of preliminary engineering and design, with no decision by its partners on whether to build it.

Under an agreement that predates Walker's administration, TransCanada, a Canadian pipeline company, would hold the state's interest in the pipeline and gas treatment plant, with the state having an option to buy back part of that interest.

"If we get the authority from the Legislature, we'll just exercise an option that they (TransCanada) always knew was available, so we're not doing anything that's any big surprise," Walker said. "We always should have had a seat at the table, and we have an option to get one."

During the legislative debate on the issue in 2014, before Walker took office, the arrangement was cast as a way for the state to not have to bear as much in upfront costs as it would without that partnership.

Walker also intends to push for a legislative package to reinstate a reserve tax on North Slope resources in the ground that are not developed. His office said former Gov. Bill Egan in 1975 signed a similar bill to allow the state to collect oil revenue before the trans-Alaska pipeline was built.

Walker couldn't accept a scenario in which a company keeps its gas off the market, and he said this was a way to make sure companies know there are consequences if they withhold their gas. "It's time Alaska acts like the sovereign that we are, and make sure we have some leverage and act as an owner state," Walker said.

House Speaker Mike Chenault, R-Nikiski, said he was surprised by the reserve tax being included in the call.

"We are shocked, frankly," Chenault said in a statement. "This reserves tax proposal wasn't mentioned by the governor, at all, during our meeting to discuss special session options this past Monday. Why now?"

State Sen. Cathy Giessel, R-Anchorage, the chairwoman of the Senate Resources Committee, said the administration will have a "tremendous burden to justify" the reserves tax.

"The special session is necessary for project progress," Exxon Mobil spokeswoman Kim Jordan said in an email to The Associated Press. "Regarding the proposed gas reserve tax, we have not seen the legislation and therefore cannot comment."

Natalie Lowman, a spokeswoman for ConocoPhillips, said they were still reviewing the governor's documentation. However, she added: "We agree that commercial agreements are critical to the project, and we're working to get transparent and equitable agreements in place."

Dawn Patience, a spokeswoman for BP, said they had just received the paperwork and were reviewing it.

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