Alaska News

Walker and legislators can't bridge their divide over Alaska natural gas pipeline

JUNEAU -- A Republican-controlled Senate committee on Friday brushed off efforts by Gov. Bill Walker to soften his conflict with legislative leaders and tone down his own rhetoric about his plans for a natural gas pipeline from the North Slope.

While it's far from certain that any project will ever be built, a contest of pipeline ideas is threatening to escalate into a fight over bills and vetoes in the last weeks of the Alaska Legislature's session.

The power struggle between Walker and House Speaker Mike Chenault and his allies over their competing visions for the project could end up overshadowing other issues in the Legislature, like the state's multibillion-dollar budget shortfall or the expansion of the Medicaid health care program.

Chenault, a Republican from Nikiski, is pushing legislation, House Bill 132, that would effectively thwart Walker's plans for the pipeline project. The bill has moved with unusual speed through the Legislature: After the House approved it Monday, it moved out of the Senate Resources Committee late Friday with just one member, Sen. Bill Wielechowski, D-Anchorage, objecting -- and with Senate President Kevin Meyer, R-Anchorage, in the audience.

The full Senate is expected to consider the bill next week. Walker has already said he'll veto the measure if it passes.

The governor is trying to scale up the smaller, state-owned backup pipeline project to make it more like the parallel, larger project that Alaska is simultaneously planning with three North Slope oil producers and a pipeline company.

The big project has been a dream of lawmakers for decades and is viewed as a way to unlock North Slope gas reserves to prop up the state's shaky finances.

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Walker says the smaller pipeline won't pencil out as planned. He argues that his proposal would give the state a viable backup in case the oil producers decide to put their money into competing projects elsewhere, like Canada. But Chenault and his allies maintain that Walker's proposal is generating uncertainty and could drive the producers away.

The governor angered top Republicans last month when he wrote an opinion piece outlining his idea to upsize the smaller, state-owned pipeline, known as ASAP. It would be planned alongside the larger project, which is known as AKLNG and is aimed primarily at exporting gas to Asia.

"Whichever project is first to produce a solid plan, and at conditions acceptable to the state, will get the state's full support," Walker wrote.

Exxon, one of the state's partners in AKLNG, then released a skeptical statement saying it viewed Walker's proposal as being in "direct competition" with AKLNG.

Walker has moved this week to address his plan's critics and to articulate his proposal, first on Wednesday in an interview with Alaska Dispatch News, then Friday in a letter to Sen. Cathy Giessel, R-Anchorage, who chairs the Senate Resources Committee.

In a 75-minute interview in his Capitol office, Walker said that he met with Exxon and worked out the company's concerns. And he stressed that his plan to scale up the ASAP pipeline does not aim to compete with the state's other project with the producers -- only to make sure that Alaska has a fallback plan ready immediately if AKLNG fails.

"No one's going to take care of Alaska better than Alaska, and we just have to make sure that we have that opportunity," Walker said. "One could say Alaska's competing with Exxon in Canada, and vice versa. I'm not trying to do that. I just want to have something that says in the event that it doesn't advance, we don't start over again. We don't have time to start over again."

Walker made similar points in his letter to Giessel, saying he wants an "economically viable backup," a term he used several times.

The Republicans on the committee -- and the House leaders who testified in support of the bill -- remained unmoved. Chenault testified that the governor's letter "probably answers as many questions as it brings up more."

Asked about Walker's remarks made in the interview Wednesday, the state's oil company partners offered a range of reactions.

In a brief statement, a spokeswoman for oil producer BP, Dawn Patience, said the company remains committed to an AKLNG project "that includes the state of Alaska as an equal participant and co-investor."

A spokeswoman for ConocoPhillips, Natalie Lowman, wrote in an emailed statement that the company "understands the state's desire to have a backup plan in place in the event the Alaska LNG project does not move forward."

"We do not believe that causes a problem for the Alaska LNG project," the statement read. "ConocoPhillips does not believe that the state's backup plan should compete with the AK LNG project, but by definition, should provide a fallback option."

Exxon, however, said it sticks by its original, skeptical statement about the governor's plans. And a spokeswoman, Kim Jordan, added in a new statement that increasing the size of the ASAP pipeline -- as Walker wants -- would "create confusion and uncertainty with federal regulators, potential buyers and the public about the state's intention to fully support and participate in the Alaska LNG project."

Chenault says his bill is aimed at mitigating uncertainty. It bars the state's Alaska Gasline Development Corp., or AGDC, from working on the ASAP project if more than half of its gas would be exported -- effectively prohibiting the corporation from executing Walker's plan.

"It's the way the Legislature protects itself, and protects the project," Chenault said in an interview. "Uncertainty is what kills projects."

Chenault was one of the original boosters of the ASAP pipeline in its smaller form. The project was originally geared toward delivering natural gas inside the state.

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Since then, the Cook Inlet natural gas industry has seen a resurgence. AGDC's own estimates show that gas from ASAP, as it's currently envisioned, wouldn't be competitive with current prices in Anchorage.

Chenault nonetheless remains optimistic about the project and maintains that it could ultimately be enlarged to include some natural gas for export, which he says would bring down in-state costs.

Senate leaders have said they expect to pass Chenault's bill. But Walker -- who rarely weighs in on pending legislation -- says he'll veto the measure and called it "un-Alaskan" in a news conference earlier this month.

The Legislature, meeting in a joint session of all 60 state lawmakers, could override the veto with 40 votes, but Chenault may not have enough support to do so. He would need all but one of the 41 members of the two majority Republican caucuses.

Both Chenault and Walker said they're trying to avoid a confrontation, which could be a political embarrassment to the loser and also complicate the closing days of the legislative session.

"I don't want to get in a veto fight with the governor. I can't tell you if I've got the votes to override a veto, or if he's got the votes -- I don't know. But counting's going on, trust me," Chenault said. "We have to have some type of resolution to this issue, because the Legislature's not comfortable and the governor's not comfortable. And how you fix a problem is you sit down and you talk about it."

It's not clear, however, just what a compromise would look like -- and the possibility of one seemed less likely after Friday's hearing.

Alaska needs a backup plan that can be immediately executed if its partners opt out, Walker said. Otherwise, the state could miss out on what he said are dwindling opportunities to sell its gas if there are delays in getting a backup project up to speed, he added.

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Chenault, meanwhile, describes AKLNG as more viable than any of the other proposed gas line projects in Alaska's decadeslong history of them.

"To me, it's an issue of trust," he said. "We have all the players singing on the same sheet of music, and that's something we've never had before."

Chenault added that while he trusts the oil companies "as far as I can throw 'em," the producers have "their A-team here."

"Are these guys investing hundreds of millions of dollars to try to drag us down the road farther?" Chenault asked. "I don't believe that's their intention."

The Senate will need to move quickly if it hopes to settle the pipeline fight before the end of the legislative session. Monday -- with 20 days remaining -- is the earliest the bill could pass, and Walker can take up to 15 days to veto it, not including Sundays.

If the Senate delays and Walker runs out the clock until after the session, lawmakers would have to wait until the next session to attempt an override, unless there's a special session.

Nathaniel Herz

Anchorage-based independent journalist Nathaniel Herz has been a reporter in Alaska for nearly a decade, with stints at the Anchorage Daily News and Alaska Public Media. Read his newsletter, Northern Journal, at natherz.substack.com

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