Energy

Alaska gas line project left out of Biden administration’s massive infrastructure proposal

It appears officials in Alaska’s gas line agency are starting from scratch in their effort to secure more than $4 billion in federal money to jumpstart the Alaska LNG Project.

While still in concept only, the $2 trillion-plus infrastructure plan unveiled by President Joe Biden at the end of March makes no mention of pipelines and discussion about natural gas infrastructure is limited to $16 billion for plugging and abandoning orphaned oil and gas wells and mines.

The latest plan to develop an LNG export project for North Slope natural gas backed by Gov. Mike Dunleavy’s administration hinges, at least initially, on a federal subsidy to cover 75 percent of the nearly $6 billion Alaska Gasline Development Corp. officials believe it would cost to construct a large-diameter gas line from Prudhoe Bay to Fairbanks.

AGDC President Frank Richards said when the idea was formally pitched to the corporation board of directors in early February that leaders of the state-owned corporation were in confidential negotiations with a “world-class pipeline operator” to potentially lead the pipeline portion of the integrated North Slope gas-to-pipeline-to-LNG effort and also contribute the remaining roughly $1.5 billion for construction of the first pipeline phase.

Along with a yet-to-be-built, approximately 60-mile feeder pipeline to draw gas from the Point Thomson field, installing the first few hundred miles of the 807-mile pipeline would provide access to lower-cost natural gas to communities along the pipeline corridor and the Fairbanks area — where the focus is as much on cleaner heat sources as it is cheaper energy — first, and greatly de-risk the rest of the project for private investors, according to the Dunleavy administration.

By late January AGDC had identified “likely” lead parties for the North Slope gas treatment plant and pipeline, and corporation officials were working to get the attention of a firm to lead development of and own the LNG plant, which accounts for roughly half of the overall $38 billion Alaska LNG price tag, Richards said at the time.

AGDC officials had also informed the members of Alaska’s congressional delegation of their desire to participate in a federal infrastructure and stimulus program and briefed Biden’s transition team on the potential benefits of the project, according to Richards.

Approximately two weeks after the president first presented his American Jobs Plan, AGDC spokesman Tim Fitzpatrick wrote via email that corporation officials had no updates on progress to get the Alaska LNG Project included in the massive spending plan because it was still so early in the legislative process and bills have not yet been filed.

“We’re confident the project meets the jobs, energy and environmental goals on the table and that we have a number of different legislative paths forward,” Fitzpatrick wrote.

Dunleavy spokesman Corey Young wrote in an emailed response to questions about lobbying efforts for the project from the administration that the governor has advocated for the gas line to elected leaders nationwide.

“The governor will continue to fight for Alaska resource projects including Alaska LNG as federal legislative opportunities develop and evolve. No one in the world knows how to effectively develop their resources for the benefit of our citizens as well as Alaskans do,” Young wrote.

However, congressional delegation staffers working on getting funding for Alaska’s infrastructure priorities said in interviews that securing a $4 billion to $4.5 billion grant for Alaska LNG is an immensely challenged endeavor on several fronts, some more obvious than others.

First, the Biden administration has shown little interest in promoting anything related to fossil fuels; it suspended the federal oil and gas leasing program shortly after taking office.

And though AGDC leaders have pitched the project as a cleaner source of energy to displace coal, particularly in Asian markets, Dunleavy has taken a highly adversarial approach to addressing his dislike of the Biden administration’s energy policies while at the same time seeking billions of dollars in construction funding for the pipeline.

Even if leadership in Alaska and Washington, D.C., can reach a philosophical compromise over what energy is clean enough to warrant federal support, there currently is no legislative avenue to fund the Alaska LNG pipeline — absent an earmark newly revived by Congress last month — because there is no existing federal pipeline development program, according to delegation staff.

Some of the earmark appropriations secured by Alaska’s congressional delegation through much of the 2000s drew nationwide scrutiny and provided momentum for a prohibition on earmark funding that lasted roughly a decade before the rule was rescinded by Congress in March.

According to the staffers, Alaska Natural Gas Pipeline Act passed in 2004 still contains $18 billion in federal loan authority for an Alaska gas pipeline, but it is only for a project through Canada as currently written, the export route preferred at the time.

State level lawmakers consumed by navigating the pandemic and the state’s structural budget problems have spent little time evaluating the most recent Alaska LNG funding scheme since it was first publicized but the federal subsidy request was met with skepticism in the one Senate hearing that covered the topic.

Republican legislators who have supported Dunleavy’s desire to pass the project back to the private sector also questioned the realism of the plan to get more than $4 billion in federal funds for a fossil fuel project given the political realities.

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