Port authority says accusation that Walker lined his pockets is baseless

Members of Gov. Sean Parnell's re-election campaign and a cabinet member are blasting the governor's opponent, Bill Walker, for work he's done for the Alaska Gasline Port Authority, claiming the organization is shadowy and that Walker has represented the group simply to stuff his pockets.

But board members of the small authority say Walker, the group's general counsel and project manager, has not made much money off the effort. They say he has often volunteered his law firm's services, including for the last three years. The donations have included Walker's time during several trips to Asia to line up buyers for the natural-gas reserves that have sat locked on the North Slope for decades.

The attacks have included insinuations that Walker pocketed huge sums of money. A Parnell campaign press release sent Friday suggested that, among other things, Walker's law firm made up to $2 million in a single year in 2011. But after a reporter questioned the payment, the campaign said it had erred. In fact, the payment for legal and administrative services that year was actually $200,000, audits show.

"The campaign apologizes for the error," said a statement emailed to reporters by the Parnell campaign on Wednesday.

Audits provided by Walker show that in its 15 years, the authority's biggest donor was Sempra Energy, which gave about $7.25 million about a decade ago -- the company wanted to invest in the gas line project and buy gas. The next largest donation was $1.3 million, coming from Mitsubishi, which also expressed interest in investing and buying gas.

The Parnell campaign and Joe Balash, commissioner of the Department of Natural Resources, also hammered the authority and Walker for failing to create a natural-gas liquefaction project.

Authority officials point out that every natural-gas project has failed in Alaska for decades, and argue that the group's primary impediment to seeing a project through has been the oil industry and past governors' unwillingness to give up the gas needed to diversify the state's economy.


"Shame on Joe Balash for being so grossly incorrect," said Jim Whitaker, former mayor of the Fairbanks North Star Borough and a port authority board member, responding to a recent op-ed by Balash that ran in Alaska Dispatch News.

"Bill Walker has worked tirelessly for years with no compensation," said Whitaker in an emailed statement. "When fees were paid to his firm, those fees not only paid him, but also paid staff, overhead, travel and all other expenses related to his port authority work."

"Joe Balash has made statements which are no more than baseless political innuendos on behalf of his boss. To have done so belittles the office he has been appointed to," Whitaker said.

Audits show Walker donated his law firm's services in 2012 and 2013. Walker estimated that his law firm received about $4 million in compensation from the authority in 15 years.

Whitaker said that was not money for Walker but gross income to the law firm that was primarily used to pay staff assisting the authority, including up to 12 employees about a dozen years ago during a busy time when the firm worked on renewing federal environmental permits held by a previous gas line project.

"You break that down over 15 years and that's $266,000 a year," Whitaker said, adding that's less than what Dan Fauske, the head of the Alaska Gasline Development Corporation, makes annually. That state entity is working on two other state-funded gas line projects, including the mega-LNG project promoted by Parnell.

What is the port authority?

The port authority was created in 1999 by voters with the city of Valdez, the North Slope Borough and the Fairbanks North Star Borough to support or build a gas line from the North Slope to Valdez, where the gas would be liquefied and shipped overseas to Asia.

Audits and statements from municipal officials show the authority received a little more than $2 million in public funding from the entities over its existence. The North Slope Borough group, which provided the smallest chunk, left the group in 2010.

The authority's six-member board did what it could to piece together private funding to stretch their public funds, members say. They say they were successful in bringing potential natural-gas buyers to Alaska, including Kogas in South Korea, which imports more natural gas than any other company in the world.

They say that while state leaders and the state's three major oil companies spent years and hundreds of millions of dollars pursuing a failed pipeline route through Canada to the Lower 48, they knew all along the LNG-export concept to Asia was the right choice because that's where the demand was.

The Parnell administration began pursuing an LNG-export plan in 2011, after eyeing the overland route for two years. That's now called the Alaska LNG project, with the state and pipeline builder TransCanada partnering with ExxonMobil, ConocoPhillips and BP.

That effort -- estimated to cost $45 billion to more than $65 billion -- is moving ahead in an early study phase. It will be four to five years before the gas owners -- the oil companies and the state -- decide whether they'll spend tens of billions of dollars to build the project.

Gas is not expected to begin flowing for at least a decade.

Balash slams Walker

Balash targeted Walker in his column, saying he has "profited handsomely" from representing the authority all these years and his intent has been to "follow the money."

Balash's article provided no specific numbers about what the authority had paid Walker, saying it could not be discerned from the group's records. Members of the Parnell campaign said the authority has not been forthright with its information.

Rena Delbridge, who is on leave from her role as a legislative staffer for Rep. Mike Hawker to work for the Parnell campaign, said the authority has dragged its feet on public records requests from the campaign and a member of the public. The authority directed the campaign's request for records to the Fairbanks North Star Borough and Valdez, she said.

Merrick Peirce, the group's treasurer, said the authority thought it would be easier and quicker for the information to be retrieved from the cities.


"Since the request was for records I do not possess (a combination of digital records, and for records that go back 15 years), to make this information available I directed the requester to where he could obtain them," he said. "The law does not require that we compile lists, or create new records."

Whitaker said the audits are publicly presented to the municipalities and he'll provide audited forms to anyone who asks.

"Call me and I will get them for you," said Whitaker.

Mike Prax, who served a single term on the Fairbanks North Star Borough Assembly and voted in support of creating the port authority in 1999, said he has also had difficulty getting records from the authority.

"For an entity headed by Walker, who talks a lot about openness and transparency in his campaign, we find it disturbing that his own organization would be so secretive with the public," said Delbridge.

Balash also said Walker received "hidden" cash payments associated with IOUs to the private companies that hoped to be repaid if the authority ever got the money to launch a project.

Port authority representatives say they accepted private money and in-kind services from several companies in an effort to keep public investment to a minimum. Those companies were to be repaid with interest, if project financing ever became available.

Had those billions ever arrived, the repayment would have been relatively small, given that the project would be worth tens of billions or hundreds of billions of dollars, with the North Slope's proven gas reserves giving it a big competitive advantage over other projects.


"This was a way of advancing the project without having to spend public money, which we are very proud of," said Peirce.

The total amount donated by private companies to the authority -- for both in-kind services and in money -- amounted to less than $30 million, according to officials.

The board, like Walker, volunteers its time and has survived on small infusions of money, Peirce said. Today it has about $30,000 in the bank.

"No one is getting rich," Peirce said.

A sharp insinuation

Balash said in his column that Walker's law firm, which represents Valdez and other municipalities, had received $14 million from the city of Valdez over the last five years. Balash suggested that some of that money may have gone to Walker to promote a gas line.

Balash wrote that those millions were surely for "normal city business," but in the same sentence added that the authority's "generalized reporting of expenses" makes it impossible to truly know Walker's compensation from the authority.

John Hozey, Valdez city manager, replied strongly to that attack.

The "wild accusations of millions and millions of dollars being paid to Mr. Walker, either directly or via AGPA, to promote a gas line is sheer fiction," said Hozey, who is not on AGPA's board.

More than 90 percent of the $14 million went to Walker's law firm in its successful legal battle for a higher valuation of the trans-Alaska oil pipeline, said Hozey. The rest went to municipal support.

Hozey said most of that money didn't go to Walker's law firm, because the firm paid numerous costly experts needed to win the cases in administrative hearings and in court. "We've had to hire some pretty high-priced consultants and industry experts to testify and add merit to the argument," said Hozey.

The higher valuations, in opposition to the lower values sought by pipeline owners ExxonMobil, BP, ConocoPhillips and the state, brought more property tax revenue for the municipalities and the state.

"This is the litigation that resulted in more than $1 billion more revenue to the state of Alaska," Walker said.


The overall value of that revenue to the state is reduced because the oil producers can use a higher valuation to increase deductions from production taxes.

Parnell campaign hits Walker

The Parnell campaign made some of the strongest allegations against Walker, saying that in 2001 the authority had paid Walker and another firm a "whopping $125,000 a month -- without a project on the table."

The Parnell campaign backed up that allegation by sending a budget statement for part of 2001.

Walker said the authority often didn't have the money to meet its budget. Audits list legal fees that year at $45,000.

The Parnell campaign kept up its attack on the authority on Wednesday, issuing a statement that said the authority has had a "deeply disturbing" financial past.

The statement said that AGPA was seriously in debt in 2010, and that it "was lining up corporate sponsorship money to bail it out of $264,000 in debt identified by auditors in 2009."


"What motivated the companies to give money to AGPA? It's hard to say," said Parnell campaign manager Tom Wright in the statement. "Walker never spent enough to engineer and design a project worthy of serious market consideration."

Whitaker said some money may have been paid back in 2010, but there was no bailout.

"It was money to move the project forward," he said, adding that companies were motivated by the project's economic promise. "We were always up-front that those companies could have an opportunity to invest in a project and buy the gas."

Alex DeMarban

Alex DeMarban is a longtime Alaska journalist who covers business, the oil and gas industries and general assignments. Reach him at 907-257-4317 or alex@adn.com.