State gasline corporation raises specter of eminent domain

Members of the unincorporated Kenai Peninsula community of Nikiski are weighing their options after the Alaska Gasline Development Corporation filed for federal permitting of a massive LNG project, raising the possibility of using eminent domain to get the land it needs for the project to go forward. (Photo by Rashah McChesney)

The rumor mill in the Kenai Peninsula community of Nikiski is up and running again after the Alaska Gasline Development Corporation (AGDC) mailed letters to landowners last week. The letter laid out details of the state-run corporation’s application for federal permitting, the environmental review process and where people could weigh-in on the whole thing. It also raised the possibility of the project using eminent domain to get the rest of the property it would need to build the project.

The corporation took control of the estimated $45 billion mega-project last year. And it has been negotiating for control of the land needed to build a pipeline from the North Slope to Cook Inlet, and a plant and dock in Nikiski.

“I think it’s a psychological tactic,” said Steve Bush, who works as a contract negotiator for some landowners in Nikiski who could sell their property to the LNG project.

Bush said the letters — and the prospect of eminent domain — got people’s attention. He’s heard from clients who want to know if they’re going to lose their land.

“It scares people around here,” Bush said.

But not everyone in town is worried about the specter of losing their property.

Mike O’Toole and his family own nearly 40 acres of land in Nikiski in an industrial area where the pipeline’s liquefaction plant would need to be built.  He said that when ExxonMobil, BP and ConocoPhillips were heading up the gasline project, the partners’ property management firm made an offer on his land.

“I studied the offer and I studied my relocation costs and it didn’t work out for me. So I stayed,” he said.

But since the state took over the project in 2016, O’Toole hadn’t heard any updates. That is, until last week when he got the letter. He wasn’t surprised to see the state talking about using eminent domain to get some of the remaining land it needs to move the project forward.

“I think that there’s people that fear eminent domain, but I think the fear is of the unknown,” O’Toole said.

He said he’s had a good experience with the LNG project so far and trusts that the negotiation process will be fair. He thinks the project has been forthright with people up to this point. 

“They could have come in here, bought a whole bunch of property and then announced the project and everybody could have gone ‘what just happened here?’”

The Kenai Peninsula Borough got a letter as well. It owns land in Nikiski that would be needed for the final project. The borough’s Chief of Staff, Larry Persily, said he started getting calls from landowners after the letters went out last week. But, he’s told them not to worry too much about it.

“AGDC has no money to acquire land. They don’t have any customers, any financing. So, yes. If the project went ahead, at some point in life, they may need to use eminent domain if there is a holdout that blocks the entire thing. But, as I told one person, go ahead and remodel your bathroom and enjoy it in the meantime and worry about the schedule for the project at some other time.”

And at the Alaska Gasline Development Corporation, officials say that they don’t currently have any plans to go through the eminent domain process. Currently, they’re negotiating with the state’s former oil-company partners for control of the 630 acres of land the project already bought in Nikiski. They’ll need about 300 more acres for the project to go forward.

Corporation president Keith Meyer said that typically projects can come to an agreement with the landowner without having to resort to eminent domain.

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