With replacements and resignation, Walker consolidates control of gas line project

One doesn’t usually associate “state gas line corporation” and “drama” — but this weekend, the state-owned Alaska Gasline Development Corporation was the source of all kinds of drama.

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The corporation, known as AGDC, is responsible for the state’s share of the massive Alaska LNG project to bring natural gas from the North Slope. And in the space of 24 hours starting Friday, Gov. Bill Walker removed two board members — including the chairman — and the president resigned.

With these changes, Walker has consolidated control over an agency — and a gas line project — originally created by his predecessor, Sean Parnell.

The sun wasn’t even up on Saturday morning and already the Alaska Gasline Development Corporation was making news. When board members gathered for their early morning meeting, there were two new nameplates at the table.

And then, within minutes of the meeting being called to order, board member Hugh Short said he had an addition for the agenda: discussing the resignation of AGDC president Dan Fauske.

Fauske had led the organization since its founding in 2010 as a unit within the Alaska Housing Finance Corporation, which he oversaw for the better part of two decades. His resignation letter didn’t give a reason for his departure. But it was clear to everyone in the room why he left.

Here’s Governor Bill Walker, speaking at a press conference Saturday afternoon.

Walker: I let them know that I think we need to have a person there with different qualifications. There’s no question about that. Did I give a directive that they must do that? No, I don’t give directives, but they certainly knew my belief.

Walker couldn’t hire or fire Fauske directly. But he made it clear he wanted new leadership: someone with more natural gas experience — and someone who fully supports his approach.

“We need to bring some alignment to this project, internally,” Walker said. “We have agencies sometimes at cross-purposes, and we need to make sure that that’s not the case.”

Walker was a fierce critic of AGDC and the gas line project during his campaign last fall, arguing it wasn’t transparent enough, and handed too much power to the state’s partners, ExxonMobil, BP and ConocoPhillips.

In January, just after taking office, he removed three board members. With the recent changes, he has now replaced six of seven board members in the last year.

There are several other state agencies involved in the gas line project – the Departments of Natural Resources, Revenue and Law. Each of their heads are appointed by the governor. With Fauske’s resignation, almost no one in the gas line leadership is from the previous administration.

Republican lawmakers expressed unease about the changes.

“I think it creates instability in the project,” said State Sen. Anna MacKinnon (R-Eagle River). “And this administration has continued to insert instability into the project.”

MacKinnon said it’s the governor’s prerogative to change board members, but this kind of reshuffle worries her. The governor also recently said he was looking for a different role for the state’s lead negotiator, Rigdon Boykin. MacKinnon said between that change and Fauske’s ouster, she isn’t sure who to go to on the gas line.

“I have no idea who’s leading this project,” she said. “Absolutely not.”

“Think what your reaction would be if this went on with the Permanent Fund corporation,” said oil and gas consultant Brad Keithley. He pointed out that these changes come as the state is trying to negotiate key agreements with the oil companies.

“Firing the president, and going out and having a search for a new president, at a time when we should be keeping on track to get those contracts done…” Keithley said. “I think the governor has the right to appoint the people he has trust in, but it’s the timing in the process that’s troublesome to me.”

The board meeting on Saturday was originally called for two very different reasons. Board members were scheduled to take a final vote to buy out TransCanada. That passed unanimously. But a second vote was postponed. That was to authorize work on the Alaska LNG project for another year. All four partners must vote yes by Dec. 4 for the project to move forward.

Until the recent shake-up, the state’s vote was a foregone conclusion. But at the press conference Saturday, Walker said the state isn’t yet ready to cast that yes vote. First, he says, he wants assurances from the state’s partners that if any company pulls out, it won’t then withhold gas it controls from the project.

“By approving the work plan and budget today, there’s no incentive for us to receive those assurances or not,” Walker said. “We do have leverage. Leverage is not a bad thing.”

The board is scheduled to vote on whether to continue the project Dec. 3.