It was a not-quite-midnight purge. At 9 p.m. on Tuesday, Gov. Bill Walker announced via press release that half the Alaska Gasline Development Corporation board of directors was being dismissed. And in the process, he put the oil and gas industry on notice that he would be doing things differently from his predecessor.
The announcement came just 36 hours before the board tasked with representing Alaska’s interests on the natural gas megaproject was set to get an update on how the work was going. Of the five public members, three — Drue Pearce, Al Bolea, and Richard Rabinow — were notified they should not plan on attending a Thursday meeting in Anchorage.
All three were appointed when the board was created in 2013 by former Gov. Sean Parnell. Pearce heads an oil spill response company in Anchorage, and previously served as the federal coordinator for an Alaska Natural Gas project and as president of the Alaska State Senate. Bolea is a retired BP executive who once chaired the Alyeska Pipeline Services Company board. Rabinow is a former president of the ExxonMobil Pipeline Company. Rabinow’s appointment was opposed by a bloc of Democrats because of his status as a Texas resident, and legislation explicitly permitting out-of-state board appointments was passed to allow him to serve.
Walker says his reasons for removing these members was not personal. He says he mainly wants to see more geographic diversity on the board, and plans to make sure rural areas are represented.
“I think we need to spread out a bit,” says Walker.
The original announcement did not provide a reason for the dismissals, except for to say the changes were part of a “paradigm shift in the way the state will conduct business with Alaska’s gas.” In addition to the board dismissals, Walker announced that the two cabinet members — Labor Commissioner Heidi Drygas and acting Commerce Commissioner Fred Parady — who represent the administration on the board have been directed not to participate in discussions that require confidentiality agreements.
“There’s certainly appropriate times to go into executive session, and organizations do that all the time. But it’s unusual to layer on top of that a confidentiality agreement,” says Walker. “It just seems like it’s one more step of keeping the public away from what’s going on, and I’m not sure that’s the way to do business.”
The state is currently in talks with Exxon, BP, ConocoPhillips, and TransCanada to develop an 800-mile pipeline to get North Slope natural gas to market. The project is expected to cost at least $45 billion. In 2014, the Legislature passed and Parnell signed a bill that would allow legislators to review specific terms of negotiations so long as they sign non-disclosure agreements. The producers involved say the confidentiality rules are needed to prevent competitors from learning proprietary information about the project.
Walker is allowing his natural resources deputy commissioner, Marty Rutherford, to participate in confidential meetings.
“We will participate in AKLNG with our representative,” says Walker. “That’s a different entity and a different process.”
Walker’s announcement was met with a mix of surprise and apprehension by key Republicans in the state Legislature.
“The three people that have been removed, of course, have decades of expertise and experience,” says Sen. Cathy Giessel, an Anchorage Republican who chairs the resources committee. “To let them go — it was just kind of breathtaking.”
Giessel is worried that rehauling the board puts the Alaska LNG megaproject at risk.
“I’m concerned it’s going to slow it down,” says Giessel. “As we miss windows of achievement on that timeline, this could jeopardize the project altogether.”
Giessel is also concerned that refusing the confidentiality terms could make it hard to work with the partners on a project.
“To reject that means rejecting a seat at the table. It doesn’t make sense,” says Giessel.
House Speaker Mike Chenault agrees.
“Without confidentiality agreements, I just can’t see this process going forward,” says Chenault.
Chenault says Walker’s actions raise questions about his strategy for moving ahead with a gasline.
“Nobody was informed on what was transpiring,” says Chenault. “By sending out that message, I have no clue which direction the governor wants to go. Is he wanting to keep these two projects online, or is he wanting to kill these to come up with some other project? I don’t know.”
Meanwhile, Alaska’s partners in the LNG project are staying quiet on Walker’s announcement. A representative from Exxon declined an interview on the subject, while ConocoPhillips and BP each offered brief written statements saying that their positions on the project had not changed.
But even if the producers are not commenting on Walker’s actions, they’re still watching them closely.
“I would expect industry is waiting to hear more details on what Walker’s ‘paradigm shift’ means,” says Larry Persily, the federal coordinator for an Alaska North Slope natural gas pipeline.
Persily notes that Walker’s recent actions signal he will take a more confrontational approach with industry than his predecessor.
“Proponents of the Parnell administration would say he made great strides — new investment on the Slope, new investment in Cook Inlet. Critics of Parnell would say he was too cozy with the industry and the state needs to stand up more. And my guess is the industry is waiting to see how Walker goes about things,” says Persily. “The important person in all this is not any of the individual AGDC board members or the head of AGDC or the deputy commissioner of natural resources or revenue. It’s the governor. He sets the policy. He sets the tone, and makes the important decisions. So, the announcement about a ‘paradigm shift’ in dealing with the industry is much more important than changing some board members or getting into a debate over who signs the confidentiality agreement.”