|
 Natural Resources Commissioner Joe Balash said Gov. Sean Parnell's
administration views a potential equity stake of 20 percent to 30
percent favorably. But he said any level of participation would
depend on legislative buy-in and the terms the companies pursuing
the project are willing to accept.
Assuming the project costs $45 billion — a figure at the lower end
of the range previously announced by the companies — the state would
be looking at $9 billion to $13.5 billion for such a stake.
Balash said he's hoping that range narrows significantly over time
as the idea gets more scrutiny.
The option stems from a report commissioned by the state to see how
Alaska could protect its royalty interest and ensure it receives the
maximum value possible for its natural gas.
The North Slope's three major players — Exxon Mobil Corp., BP and
ConocoPhillips — are working with TransCanada Corp. to advance a
liquefied natural gas project that would be capable of overseas
exports.
The proposed line would run 800 miles from the slope to
south-central Alaska and could cost from $45 billion to more than
$65 billion, according to company estimates. The companies haven't
committed to building it and have repeatedly said they needed
competitive, predictable and durable terms on oil and gas taxes and
royalties.
Alaskans have long dreamed of a gas line as a way to create jobs,
provide energy for residents and shore up revenues as oil production
declines. While there have been fits and starts over the years,
state officials believe the current project has momentum, and Balash
said it's reaching the point where the state needs to start making
decisions about its terms.
Black & Veatch Corp., in its report for the state, found that
changes to Alaska's royalty and tax structure and to the project's
cost structure could improve the economics of the project and make
it more competitive. Balash said the project economics seem "fairly
good overall," though he said levels of government take might be a
little high and company returns a bit short of what they might
expect in other places.
"While we may have some work to do on the details, like I said
before, we don't think we need to go down the road of big
concessions," he said, adding that "big concessions" might be a
relative term.
The state has already committed up to $500 million to TransCanada
for reimbursable costs associated with advancing a project, and
Parnell has said the state is willing to make commensurate,
proportional steps with the companies to keep the project on track.
The Legislature at some point will have to revisit the issue of gas
production taxes, which was left unresolved during the recent
rewrite of the state's oil tax law. Balash said it's premature to
say whether there will be gas tax legislation during the next
session, which starts in January, but he said some legislators and
others are expecting to have that discussion then.
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He said he considers a royalty reduction "one of the worst things we
can possibly do," since it's through the royalty that the state
gains benefit to the treasury or in terms of energy for Alaskans. He
said the other alternative might be reducing taxes, but he said a
reduction now might not be considered a reasonable level of taxation
later, when the project gets underway.
The study found an equity stake could be more beneficial to the
state than a mere reduction in fiscal take and could create more
transparency in the project, greater alignment of economic interests
among the companies and the state, and allow the state to have
influence in granting outside parties access to the line. It would
not necessarily guarantee a vote in the decision-making process,
though, the study said.
Larry Persily, the federal coordinator for Alaska natural gas
pipeline projects, said having the state as an equity owner could
lessen the risk to the other partners and make a difference. But he
said that alternative is not without its own risk to the state, such
as in the case of possible construction delays or cost overruns.
He said the markets and ability to deliver gas at a competitive
price also will be important for the project's fortunes.
BP Alaska spokeswoman Dawn Patience, who had not yet seen the
report, said the company sees an equity stake by the state as an
important consideration.
"Certainly, it's going to take everybody working together, including
the state of Alaska, to make the project feasible," she said.
Natalie Lowman, a spokeswoman for ConocoPhillips Alaska, said
company officials had not yet reviewed the study and couldn't
comment on specifics. But she noted that historically, the company
has been supportive of the state taking an equity position.
The prospect of the equity stake comes at a time when the state is
looking at budget cuts to account for declining oil production and
the oil tax cut — aimed at spurring new production — that was passed
earlier this year. The gas line is one of several big-ticket items
the state is pursuing, along with a major dam project in
south-central Alaska and an in-state gas pipeline to provide gas to
Alaskans.
Balash said any big decisions about a possible state stake in the
pipeline would likely need to be made in 2017 or 2018, when he
expects the companies to make their final decisions about whether to
move forward.
___
Online:
Alaska North Slope Royalty Study:
http://dnr.alaska.gov/commis/priorities/ak_lng.htm
[Associated
Press; BECKY BOHRER]
Copyright 2013 The Associated
Press. All rights reserved. This material may not be published,
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