Walker Seeks To Scale Up State Gasline Project

When Gov. Bill Walker was elected, there were questions about the fate of the Alaska Stand Alone Pipeline project. The proposed $10 billion state-owned gasline was viewed as a backup plan to the large line currently being pursued alongside the North Slope producers, but Walker had criticized the project as being redundant.

Now, Walker plans to keep the ASAP project alive — and scale it up. APRN’s Alexandra Gutierrez reports.

The original Alaska Stand Alone Pipeline would have been able to transport half a billion cubic feet of natural gas a day. While that sounds like a lot, it’s really only enough to service Alaska consumers.

“I’m looking at upsizing that,” says Gov. Bill Walker.

Walker would like to substantially grow that project, so the state could sell gas to Asian buyers, too. It’s a change that makes the new version of ASAP look a lot like another gasline project the state is pursuing — the AKLNG project.

“We continue with parallel projects, but pretty darned close in size,” says Walker. “Envisioning whether it’s going to be a 42- or 48-inch line is something to be yet determined.”

So, if the projects basically look alike, and both have the same goal of getting North Slope natural gas to market, what’s the difference? And why have both of them in play?

The distinction is that with the AKLNG line, Alaska has a 25 percent share at most, with the pipeline company TransCanada getting a cut. The rest of the equity is split by Exxon, ConocoPhillips, and BP.

They way the ASAP project is currently structured, the state has total ownership. To scale it up, the state could court Asian buyers and offer them equity in the project in exchange for their investment. By pursuing a scaled-up version the ASAP project, Alaska would be positioned to be the majority stakeholder.

Walker would not definitively say which project concept he preferred, though he advocated for majority ownership in a gasline while campaigning. He also says only one large-diameter gasline will be constructed, describing the new iteration of the project as a backup in case the AKLNG project falls through.

Walker says he consulted with the North Slope producers on his new plan for ASAP, and that he did not face opposition from the North Slope producers when he informed them of his plans.

“I just couldn’t bet on one particular project,” says Walker. “I didn’t really receive any pushback from them on this.”

When contacted, a ConocoPhillips said they were still reviewing the changes to determine what they mean for the project, while a spokesperson for BP referred questions to the governor. Exxon offered a written statement.

“ExxonMobil management did receive a call from Governor Walker advising that an announcement was forthcoming on a State of Alaska ‘back up plan’ for gas development. The governor clearly stated that he was committed to Alaska LNG and only wants one project to proceed. ExxonMobil responded that the Alaska LNG team were actively engaged with his administration in progressing the project,” wrote Exxon spokesperson Kim Jordan. “Now that the governor has announced that the State of Alaska is sponsoring a project in direct competition with the Alaska LNG Project, we are assessing the impact on our forward plans.”

Meanwhile, members of legislative leadership are skeptical of Walker’s plan. Rep. Mike Hawker, an Anchorage Republican, is one of the architects of the bill that created the ASAP project. He says taking on majority ownership creates extra risk for the state, and that the proposal could put the AKLNG line in jeopardy.

“The governor has introduced a great deal of uncertainty into my mind into what the state’s intent and mission is, and I know it has introduced that same uncertainty into our business partners minds,” says Hawker.

Rep. Craig Johnson, an Anchorage Republican, also has concerns about how the project would work if the producers who control the gas leases are not major players in a project. He says that raises the question of whether Alaska would have an actual product to put on the market, and whether it would get a good price for it. His preference would be to partner with the producers, rather than the end buyers, to get a project built.

“I think if you align yourself with buyers, their main mission is to get the lowest price they can possibly get. Which translates into the lowest price for Alaskans,” says Johnson. “On the other hand, if you’re doing producers, they’re involved with negotiating the highest price, which means a better price and more money for the state of Alaska.”

At a press conference on Thursday, Walker said he did not believe any legislation or additional money was needed to move the ASAP project in a new direction. Legislators are currently reviewing that statement.

agutierrez (at) alaskapublic (dot) org | 907.209.1799 | About Alexandra

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