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Business/Economy

Alaska completes $65 million buyout of TransCanada in LNG project

  • Author: Alex DeMarban
  • Updated: July 7, 2016
  • Published November 24, 2015

The state on Tuesday completed the buyout of TransCanada's interest in the Alaska LNG project, a $65 million expense that gives Alaska the same stake in the $55 billion effort as ExxonMobil, BP and ConocoPhillips.

Gov. Bill Walker hailed the move as "historic," calling the gas line project the best "get-well card" for a state facing a $3.5 billion deficit.

"By gaining an equal seat at the negotiating table, we are taking control of our destiny and making significant progress in our effort to deliver Alaska gas to the global market," he said in a press statement.

First production of the pipeline-liquefied natural gas project is not scheduled until 2025, assuming the companies, and the state, agree to spend the billions of dollars that must be advanced to move the project in the coming years.

Under terms established in 2014 under former Gov. Sean Parnell, TransCanada made upfront investments and held the state's 25 percent stake in the proposed 800-mile pipeline and a gas treatment plant on the North Slope.

In the recent special session called by Walker, the administration argued a buyout would produce up to $400 million more a year in revenue for Alaska, and give the state more of a say across the entirety of the project. Called a "gigaproject" because of its size, the effort includes other major facilities in which TransCanada did not hold an interest, such as the proposed liquefaction plant in Nikiski.

The deal will give the Alaska Gasline Development Corp. access to engineering studies and other documents related to the gas treatment plant and pipeline documents, said Elizabeth Bluemink, a spokeswoman with the state Department of Natural Resources.

The Legislature provided the money for the deal as part of a $170 million appropriation to advance the state's participation in Alaska LNG, with $68.5 million specifically for the buyout.

The lower-than-estimated termination amount, paid by the Department of Natural Resources, covers known expenses as of Nov. 17. Costs could change a bit.

"TransCanada will provide a final cost report to the state in January and a follow up review will be done by the state that could result in an additional payment to TC or a refund to the state," Bluemink said.

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