With Alaska LNG project, how secret is too secret?

The Alaska legislature on Thursday officially gaveled out of its third special session of the year. A pair of votes in the House and Senate that gave Gov. Bill Walker almost unanimous support for his effort to buy out TransCanada.

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But the session also revealed divides — both between the governor and lawmakers and between the state and its partners in the Alaska LNG gas line project.

One divide is over how much of the project should be kept secret.

One thing you heard over and over again during the special session was that the state of Alaska needs to start acting like a business. Here’s Rep. Lynn Gattis, R-Wasilla:

“If we’re going to be in business and participate with business, why wouldn’t we act like business?”

It’s one of the things that makes the Alaska LNG project different from the TransAlaska Pipeline — this time, the state will own part of the pipe. That means it’s playing a dual role — as the regulating and taxing authority, and as a commercial partner.

And that raises some sticky issues, as the state walks a fine line between acting like a business and the responsibilities of government.

One of the stickiest issues is secrecy.

“It is clearly in the state of Alaska’s interest to have more sunshine and transparency in this process,” says attorney general Craig Richards, speaking to the House Finance Committee about negotiations with the state’s three partners: ExxonMobil, BP and ConocoPhillips.

“…it is in the producers’ interest not to have more transparency and sunshine in this process, because the more information that they control, and the more information that they can limit being out to the Alaska people, gives them more control in the process.”

Gov. Bill Walker came into office pledging to bring transparency to the gas line process. In particular, he criticized the Alaska Gasline Development Corporation, or AGDC, the entity the state set up to represent it in the project.

This fall, AGDC released draft regulations to implement the governor’s pledge. The response from the three oil companies was… blistering.

Rep. Cathy Munoz, R-Juneau, read aloud from those comments during the House Finance hearing.

“…And finally, Bill McMann from ExxonMobil, said, we believe if enacted these regulations would prohibit AGDC from continuing its participation in AKLNG.”

Attorney general Richards was unmoved.

“Keep in mind, that whenever you’re dealing with, for instance, the three individuals that read that public testimony. I deal with those three individuals all the time. They’re world-class negotiations. And they’re negotiating with you right now.”

AGDC vice president of external affairs Miles Baker has another take on it:

“I try to avoid the word secret, because it implies that we’re sort of hiding things or doing things that were the public to otherwise know about them, they wouldn’t support, and that’s not what we’re talking about.”

He says there are agreements whose very existence is secret. There are even confidentiality agreements whose existence is …confidential. He says that’s not uncommon in the private sector, where the simple fact that you’re in conversation with one company could be a key piece of information for a competitor.

In the business world, Baker says, the assumption is everything is confidential, and you make things public on a case-by-case basis. AGDC’s regulations take the opposite approach: Things are assumed to be public unless they fall into specific categories.

“We’ve been working to see if we can’t come up with some regulations that, to use your words, square the private sector concerns of our partners…with the governor’s desire for us to do as much of the public’s business in public as possible,” Baker says.

“It’s really about preserving competitiveness — it’s not about being secret, it’s not about hiding information,” Lydia Johnson says. She’s the technical manager of the Alaska LNG project, and an ExxonMobil employee. She says most vendors won’t even sit down and talk about their technology without everyone at the table signing a nondisclosure agreement.

By the time the project is over, she says, there will be hundreds of them.

“Our understanding is that AGDC would not be able to sign these agreements, so their staff would not be able to participate in these discussions.”

That struck a chord with Republicans in the House. After weeks of demanding more information about the project, lawmakers found themselves demanding less. Rep. Lance Pruitt, R-Anchorage, summed up his concerns this way:

“Mr. Chair, the last thing is just a comment: as someone who’s been in a lot of sun, when you get too much sun, you get burned.”

AGDC’s regulations are still in draft form. The corporation expects to take another round of public comments before making any decision on whether to adopt the regulations, or revise them further.

Either way, they are likely to be on the agenda again, the next time lawmakers meet in Juneau.