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Legislature poised to approve Parnell gas line plan on Sunday

Dermot Cole

JUNEAU — The Legislature moved toward final action late Saturday on a gas pipeline bill aimed at setting the stage for future negotiations with major oil companies and an agreement for the state to invest billions in the project.

In the state House, Democrats put forward a handful of amendments Saturday afternoon and evening, all of which failed by a two-to-one margin. The final vote is expected Sunday.

Amendments dealt with various aspects of the deal reached by the Parnell administration with TransCanada and the three major oil companies, calling for revisions of the ground rules for the next stage of negotiations.

One amendment would have raised the gas production tax from 13 percent to 16 percent, putting Alaska in the middle of the liquefied natural gas projects around the world, according to Anchorage Rep. Les Gara. He said Gov. Sean Parnell told the Legislature it could not set a tax rate higher than anything reached in talks between the oil companies and the administration.

“This amendment sends the message to the governor and establishes it in statute that we want a fair share -- at least an average share,” Gara said.

Chickaloon Rep. Eric Feige, co-chairman of the House Resources Committee, said raising the tax would increase the state’s ownership in the project to about 28 percent and require that the state put up $1.4 billion to $2 billion more.

He said it would likely cause the oil companies to back away from the agreement made with the Parnell administration. And it would put Alaska in a less competitive situation. Then, “we’d be back to square one” with a gas pipeline project, he said.

Due diligence task force?

Another amendment dealt with the provision that says if the deal fails in the early stages, the state would reimburse TransCanada for its expenses, plus 7.1 percent. Democrats sought to lower that interest rate. “We have to be very considerate of trying to micro-manage the detailed elements” of the agreements reached so far by the administration, Anchorage Rep. Mike Hawker said.

He said the state has to start acting like a responsible commercial party, not a “dictatorial government.”

Another amendment called for creation of a “due diligence task force” that would review the contracts expected to be presented to lawmakers in 2015.

Anchorage Rep. Chris Tuck said the plan “sets the groundwork for determining whether the contract that comes back to the Legislature is the right deal for Alaskans.”

He said the next time the Legislature votes on a gas pipeline, it will be on terms negotiated by the administration for a deal that would last for 25 years after a pipeline is built. He said that assumes the negotiations are a success. If the talks fail, the contract “will set us back for years,” he said.

Guttenberg recommends more research

He said the task force would keep meeting while the administration negotiates with the oil companies, an idea that Republicans said won’t work. Feige said there are requests in the bill for reports on such things are whether a larger pipe size might be worth the investment.

He said public presentations would take place so that Alaskans can find out more as the negotiations progress.

“We’re going to bring them along as part of the bill,” he said.

Fairbanks Rep. David Guttenberg said the task force would be an opportunity to test the assumptions about the gas pipeline to verify or prove them wrong. He said with a project this size the state should do as much research as it can.

 

 

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