After six hours of debate, the state Senate voted in favor of a bill advancing a natural gas megaproject where Alaska is a part owner. While the legislation passed with a clear majority, there was opposition from Democrats who had problems with the deal brokered by the Parnell administration.
“Historic.” “Momentous.” Those were the words legislators used in the lead up to the vote.
Senate President Charlie Huggins: By a vote of 15 yeas and 5 nays, committee substitute for Senate Bill 138 finance amended has passed the Senate.
The yeas came mostly from Republicans and rural Democrats. Four Anchorage Democrats and Sitka Sen. Bert Stedman – a key Republican critic of the Parnell administration’s energy policy – voted against it out of concern that the state is not getting enough out of the arrangement.
The legislation authorizes the state to partner with the North Slope producers, the Alaska Gasline Development Corporation, and TransCanada in construction of a natural gas pipeline that would cost at least $45 billion. The gas transported on the pipeline would be sold on the global market and a portion would be reserved for Alaska consumers along the 800-mile corridor stretching from the North Slope down to Southcentral Alaska. Some of the revenue from the gas would also be set aside to offset rural energy costs.
Sen. John Coghill, a Republican from North Pole, said that while the legislation is complex, he sees it as a way of accomplishing a popular goal in the state.
“It really comes down to some really simple basics, right? We have gas. We want to sell it. And we want to get the benefit of it here in Alaska, whether it’s in molecules or in cash.”
But while the goal may be popular, some senators have issues with how the Parnell administration is going about it. A group of Anchorage Democrats offered 16 amendments to the bill. Though none of those amendments were adopted, the minority used them to highlight what they saw as weak spots all while stressing they wanted to see a gasline built.
A number of changes had to do with TransCanada’s involvement in the project, an arrangement that has irritated some members of both parties during committee hearings.
The state has been in contract with TransCanada and making payouts to the company since the Palin administration, when the last effort to develop a high-volume pipeline happened. Under the new plan, TransCanada would help the state finance the project and get a portion of the state’s share in the pipeline in exchange.
Minority Leader Hollis French said the state was giving them too much in this arrangement. He suggested it might even be time to break off the relationship and put the work out to bid.
“It’s just not working out, you know, it’s just not working out. It’s time for us to go back to the drawing board, I think, to separate and let this process go forward without them taking 60 percent of my share of this pipeline.”
Sen. Cathy Giessel of Anchorage was one of the Republicans who opposed that idea. She said trying to find a new partner could slow the project down and potentially make it more expensive.
“$800 million a year adding up,” Giessel said of the added costs. “We don’t know who else would bid. Under AGIA, there was one bidder – one complete bidding package, and that was TransCanada. Why would we expect different today?”
Democrats also wanted a guarantee that municipalities along the pipeline route would not lose the ability to negotiate property taxes on land used. And they argued for upping the state’s equity in the project from 25 percent to 51 percent, in order to make Alaska a majority owner.
During that amendment, Democrats hit on two themes with their speeches. One, that the bill was not being properly vetted. And two, that the Legislature was being asked to rubber-stamp a deal already agreed to by the Parnell administration and the oil companies.
“What I heard was we can’t support this amendment because it’s outside the terms of the HOA – the heads of agreement,” said Sen. Bill Wielechowski.
“That’s exactly what’s wrong with this whole agreement, Mr. President. We have given our sovereignty over to four huge multinational corporations.”
In the end, none of their amendments attracted more than a couple of Republican defectors.
During the closing speeches, Soldotna Republican Peter Micciche stressed that all projects like this come with a risk. The highest projected costs for the state are upward of $10 billion, and the highest levels of returns are forecast at $4 billion. In this case, Micciche thinks the risk is worth it.
“Will it come to a final investment decision? I don’t know. We still have the AGDC project as a backup. I don’t have a crystal ball. Neither does anyone in this room. I think what’s missing from the opposition here are ideas to move us forward. And I think I have a difficult time with that.”
The bill now goes to the House. They have one month to review the bill before the Legislature gavels out.
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