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Governor introduces legislation on LNG project

Gov. Sean Parnell on Friday introduced legislation to move ahead on his proposal to make the state a financial partner with Alaska's oil producers and pipeline company TransCanada in a liquefied natural gas project.

The state already has signed commercial agreements with the industry players, and Senate Bill 138 aims to put that framework into law.

The 49-page measure calls for a new subsidiary of the public Alaska Gasline Development Corporation to own shares in an LNG plant and marine terminal proposed for Nikiski where the liquefied gas would be shipped out on tankers to Asia. But the state may not end up owning a piece of the pipeline itself.

The legislation also changes the tax rate on North Slope natural gas from 35 percent of the net value -- subtracting out transportation and production costs -- to 10.5 percent of the gross value, before those costs are deducted. Natural Resources Commissioner Joe Balash says the new rate should bring in the same amount of revenue to the state over time but will be more stable and predictable for oil and gas producers. The measure also allows producers to pay their tax in the form of gas, which gives the state a bigger share of the project.

Hearings haven't yet been set on the legislation but on Monday the Senate Finance Committee and the House and Senate resources committees are holding hearings on the already signed agreements.

Democrats and Bill Walker, an oil and gas lawyer and independent candidate for governor, have raised concerns about Parnell's new approach. Some Republican legislative leaders have said it's promising.


Anchorage Daily News /