Head of Alaska gas line corporation resigns

The president of the Alaska Gasline Development Corp. resigned Friday, officials announced Saturday, in another move by Gov. Bill Walker to reshape the leadership of the state's proposed $55 billion natural gas pipeline.

Dan Fauske's resignation capped a hectic 24 hours that also saw Walker replacing two members of the corporation's board of directors.

The state-owned company is charged with guiding construction of a gas pipeline from the North Slope, and Fauske has led it since its creation in 2010.

In a letter dated Friday that was read at a Saturday meeting of the company's board, Fauske said he was proud of his work but offered no explanation for his departure.

Walker said at a subsequent news conference that he'd asked his board to install new leadership.

"I let them know that I think we need to have a person there with different qualifications. There was no question about that, and I do firmly believe that," he said. "I felt we needed a change."

Walker, a Republican-turned-independent, is an attorney who's made the gas pipeline his life's work. He appears to be staking his term on the project's success, even though construction isn't expected to begin for years, if it happens at all.

Walker made his vision for the pipeline part of his platform — and a basis for attacks on former Republican Gov. Sean Parnell — during his gubernatorial campaign last year.

Parnell is a former oil company lobbyist who, along with Republican legislative leaders, worked collaboratively with the three oil companies that are partners in the proposed pipeline. Walker has favored a more assertive approach, arguing that one of the companies, ExxonMobil, needs to be pressured to build the pipeline and supply gas for it since it has competing projects in other countries.

One month after his election, Walker fired three of Parnell's appointees to the board of the state-owned pipeline corporation, including one who was a former ExxonMobil executive. And on Friday, Walker removed board chair John Burns, also a Parnell appointee, and replaced him with former Fairbanks North Star Borough Mayor Luke Hopkins.

With that move, six of the seven board members are Walker appointees. The lone Parnell appointee remaining is acting chair Dave Cruz, who owns a construction company based in the Mat-Su region.

Cruz will be in charge of the pipeline corporation until it finds an interim president. The board will conduct a "worldwide" search for Fauske's permanent replacement, it said in a prepared statement after its meeting Saturday.

Fauske's resignation was greeted with dismay by House Speaker Mike Chenault, R-Nikiski, who worked closely with Parnell to create a state agency that could build a pipeline.

In a prepared statement, Chenault said it was a "dark day in Alaska's history."

"Dan has been a proven asset to the state of Alaska on many projects, and he has done a great job trying to negotiate his way through the quagmire of a $65 billion project," Chenault said in a phone interview. The resignation, he added, "sends a very poor message" to the state's partners on the project and to the banks that may be asked to lend Alaska money to build it.

Chenault was just one of Fauske's allies in the Legislature, where he had powerful supporters. Fauske first attracted lawmakers' attention as executive director of the Alaska Housing Finance Corp., where he was hired in 1995 after working for the North Slope Borough.

Jewel Jones, AHFC's board chair early in Fauske's career there, described him as adept at negotiating financial details of housing projects and at borrowing money at low rates, and she said he delivered cash back to the state in the form of the corporation's dividend.

After Fauske was hired, Jones said in a phone interview Saturday, "Everything for the corporation went up."

"Nobody could do it better than Dan," she said. "He was just amazing."

Fauske also had a knack for explaining complicated subjects to policymakers, and a sense of humor, Jones said.

Lawmakers noticed, as Sen. Pete Kelly, R-Fairbanks, put it in a hearing at the Capitol last month: "I think I speak for a lot of legislators when I say the name Dan Fauske carries a lot of weight in this building."

Fauske's performance was rewarded with a salary that started at AHFC at $120,000 and grew to $297,000 by 2009, the year before he was tapped to lead the newly formed Alaska Gasline Development Corp.

His most recent salary was $366,000, with a $145,000 benefits package, which Walker criticized during his gubernatorial campaign.

In recent weeks, GOP lawmakers had expressed fears that Fauske was being sidelined, particularly in light of $120,000 monthly payments being earned by a Walker administration consultant, Rigdon Boykin, and with the disclosure that Fauske had been instructed not to travel to Juneau to testify before the Legislature last month.

Fauske's Mercedes was parked at the corporation's Midtown Anchorage headquarters Saturday morning, with a pile of papers in the backseat along with a souvenir: the nameplate that identified him at board meetings.

But he didn't appear at Saturday's meeting, and he didn't respond to repeated requests for comment, including phone calls, text messages and a note left on his car late Friday.

Hugh Short, one of the corporation's board members, wouldn't directly say whether Fauske was asked to resign.

But he said the board will look for a new president who has experience with global liquefied natural gas projects and "knowledge about the markets."

When Fauske was initially brought on to the project, the planned pipeline was far smaller than the one Walker wants, and there was also deep skepticism about whether it would be economically feasible.

Sen. Bill Wielechowski, D-Anchorage, put it bluntly. People trusted Fauske's financial skills, he said, but the president of the state's pipeline company — at least when he started that job in 2010 — "had no pipeline experience."

The new president of the corporation will oversee a state's ownership stake in the pipeline that recently grew to 25 percent after lawmakers this month approved Walker's request to buy out the share of the project held by a pipeline company, TransCanada.

Larry Persily, the former federal gas pipeline coordinator who now serves as an oil and gas adviser to the Kenai Peninsula Borough mayor, said that a new executive with more technical expertise and experience seems to match Walker's vision for an expanded role for Alaska in the pipeline project.

But the shakeup in the corporation's board and management, he added, is creating turmoil for the project. So are other recent changes made by the Walker administration, including to the positions held by a pair of highly paid consultants who were heading Alaska's efforts to negotiate the details of the project and sell the state's gas.

"Markets (and) buyers don't care for turmoil," Persily said in a phone interview. "It needs to be settled; the market needs to be reassured that this isn't going to happen on a frequent basis."

One other source of uncertainty was a move by the state corporation's board Saturday to postpone a vote on the pipeline project's budget for next year.

A key meeting to approve that budget is scheduled with the oil companies for Dec. 4, and the board rescheduled its own vote to Dec. 3.

Walker said at his news conference that he is "very optimistic" that the board will approve the budget at its Dec. 3 meeting. But he said that he views the state's authority over the budget as leverage to make sure the oil companies sign formal agreements making their gas available to the pipeline project if they decide not to continue as participants.

"By approving the work plan and budget today, there's no incentive for us to receive those assurances," he said. "We'll see what we get. We'll make that decision when we get to that point."

Nathaniel Herz

Nathaniel Herz is a reporter for the Anchorage Daily News. He’s been a reporter in Alaska for nearly a decade, with stints at ADN and Alaska Public Media. He’s reported around the state and loves cross-country skiing.