The state’s liquefied natural gas pipeline export project with China can continue regardless of whether Governor Bill Walker is elected to a second term in November. Walker, an independent seeking reelection, has made the megaproject a top priority, while Republican challenger Mike Dunleavy has expressed skepticism about the state’s ability to manage it.
Alaska Gasline Development Corporation senior vice president Frank Richards says the AGDC was set up by the legislature to transcend election cycles.
”We were created as an organization that would be somewhat apolitical,” Richards said. “The goal was that the project would move forward based on its merits and economic viability.”
Richards was in Fairbanks yesterday to update the community on the project, which faces a self-imposed year-end target date to sign a binding agreement with three Chinese government owned companies, under which they would finance 75 percent of the $44 billion project in exchange for 75 percent of gas line output.
”So I would say we’re actively engaged with that. It’s a negotiation with the very astute buyer of LNG,” Richards said. “So we are doing our due diligence to make sure that we’re getting the best contract for Alaska and our resources.”
Richards says the agreement will guarantee the Chinese buyers a discounted natural gas price over the 20-year life of the financing.
”That’s where we have to make sure that we’re gonna acquire debt financing that is not too expensive,” Richards said. “And then we’ll be able to utilize our equity portion to be able to sell to the remainder of the Asian markets to acquire higher returns for the 25 percent remaining.”
Richards emphasizes that the Chinese companies will not own the gasline, but notes that the AGDC is required to offer up equity shares of the project.
”We’re gonna develop an equity offering that we’ll take out to the world markets, including Alaskans, individual Alaskans, Alaska municipalities and Alaska Native corporations, the opportunity to invest in this project,” Richards said.
Richards says the offering is expected to be issued this fall. On another front, Richards says the AGDC is negotiating with North Slope producers Conoco Phillips and Exxon Mobil to supply the gas line. It already has a contract with BP.