Alaska gas line leaders ask lawmakers to support year-end deadline for signs of progress

Top board members for the Alaska Gasline Development Corp. are asking the Alaska Legislature for another year of funding to keep the challenged Alaska LNG gas line project alive. The request comes as lawmakers raise concerns about the struggling project, including the high salaries of the executives in charge.

The board members have also instructed project staff to find adequate private funding to pay for the huge project or at least a major first phase of it. If either of those can’t be done, the project should be shut down and either sold or mothballed by the end of this year, according to an April 22 letter board members wrote to legislative leaders.

The letter is signed by gas line corporation Chair Warren Christian, Vice Chair Janet Weiss and board member Mike Chenault, the former House speaker who in 2013 championed the bill that created the gas line agency.

The letter was sent to legislative leaders and state officials involved in the budget process, a spokesperson with the gas line agency said.

The $44 billion Alaska LNG project has been in the works for about a decade. The state-led project calls for an 800-mile pipeline carrying natural gas from the North Slope so it can be liquefied in Southcentral Alaska and exported to Asian markets in oceangoing tankers. So far, it’s been the latest in a long line of failed attempts by state leaders and businesses to build a pipeline that capitalizes on giant North Slope gas reserves.

The Alaska LNG project has been unable to secure investments from potential private partners to support project costs.

But the Alaska gas line corporation has pitched a new pipeline-first approach to lawmakers this year, in an effort to meet Southcentral Alaska’s energy needs. The region faces a looming energy crisis due to dwindling gas production in the aging Cook Inlet basin near Anchorage. The phased approach calls for initially building a pipeline, and later building other aspects of the project to support the gas exports. The pipeline phase is estimated to cost about $11 billion, and also needs private funding.

The board members said in the letter that they “share the legislature’s frustration with the progress in attracting private capital for the Alaska LNG Project.”

But they believe that phasing the project and constructing the pipeline first will have a “high degree of success,” their letter says. The gas deliveries could start as early as 2029, it says.

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They say they have instructed staff with the gas line corporation to “secure commitments” to initiate remaining studies, cost estimates and construction preparation as part of a phase known as front-end engineering and design, or FEED. The step is needed before a final investment decision on the project can be made, the letter says.

If the gas line agency “fails to secure funding for the entire project or for the initial pipeline phase of the project” by the end of the year, staff has been instructed to start the process to shut down, sell or put the project into storage “if there is insufficient value realized for the state,” the letter says.

The letter says gas line agency staff are engaged in “multiparty negotiations” to launch the $50 million of additional engineering studies and design needed for the pipeline-first phase of the project. The agency also is advancing agreements with a North American pipeline developer that could do the additional work, the letter says.

Agency staff are working with North Slope oil producers to secure the needed gas for that first phase, and working with Southcentral utilities and industrial companies that would buy the gas and underpin support for the needed private funding, says the letter, which was shared by the Alaska Landmine on Wednesday on social media.

Gov. Mike Dunleavy said in a press conference in Juneau on Wednesday that he believes there’s “a real opportunity” for a gas line. But he said the Legislature is within its bounds to consider not funding it next year if it cannot lock down the funding.

“I think there’s a real opportunity here for a gas line. I truly believe that. But also, to be fair to the Legislature, we’ve been having those discussions for years — very close to coming to something, but no fruition,” the governor said.

”The budgetary process is not over,” Dunleavy said. “I’m hoping we get money back in there for AGDC to do its job this year, but I do understand the concerns of many that AGDC can’t be a permanent fixture on the scene. At some point, we do all we can and then we hope that the private sector jumps in. We’re seeing some of that activity now.”

Lawmaker: ‘Time to move on’

The gas line agency is seeking $3.1 million in operating funds from the Legislature, said Tim Fitzpatrick, a spokesman with the state agency. That funding has been flat for three years after it was significantly reduced by the Legislature.

It’s seeking $4.5 million in capital funds to help support payment for the front-end engineering and design effort, largely to unlock federal funds to help pay for engineering studies, he said.

The House so far has provided about $2.5 million, after cutting $600,000 from the request related to salaries.

The gas line agency is home to some of the highest-paid executives in Alaska, including top earner Frank Richards, the agency’s president.

Richards’ salary in 2023 was $389,000, Fitzpatrick said.

That figure does not include additional compensation such as retirement or health benefits, Fitzpatrick said.

The Senate so far has not provided money for the agency.

Sen. Bert Stedman, a co-chair of the Senate Finance Committee, said discussions over the funding for the corporation are set to take place at upcoming budget conference committee between the House and Senate.

Stedman, a Sitka Republican, said in an interview that the corporation’s salaries are “appalling.”

“At some point, you’ve got to wind it down if there’s not a project, and those discussions will go on between now and when we wrap up conference committee with the administration,” Stedman said.

Anchorage Democratic Sen. Bill Wielechowski said Alaska LNG and the gas line corporation should probably be “shut down.” He said a variety of trans-Alaska gas line projects have come and gone over the decades, never to be built.

“Time to move on to something else,” he said.

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The gas line agency has received its state and federal permits, including the federal approval to export the gas overseas, Fitzpatrick said.

Fitzpatrick said the agency continues to work with private investors to secure funding for the project.

The agency is hopeful that will happen within the timeline shared with the Legislature, he said.

Natural gas is likely “the best source for abundant low-cost” energy for Southcentral Alaska for generations, he said.

The gas line agency one year ago successfully urged Alaska lawmakers to provide funding to stay alive to this point.

Richards, the president, signaled then that the agency was closing in on deals to secure funding for Alaska LNG.

He said in a letter last year to lawmakers that he was looking forward to bringing them “exciting news regarding securing investors” before the current legislative session began in January.

Alex DeMarban reported from Anchorage, and Daily News reporters Sean Maguire and Iris Samuels contributed from Juneau.