Legislature(2025 - 2026)BUTROVICH 205
04/15/2026 03:30 PM Senate RESOURCES
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| SB280|| SB275 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 275 | TELECONFERENCED | |
| += | SB 280 | TELECONFERENCED | |
SENATE RESOURCES STANDING COMMITTEE
APRIL 15, 2026
3:31 P.M.
INITIAL VERSION DRAFT
FOR
BILLS AND PRESENTATIONS
GERMANE TO 2ND SPECIAL SESSION
MEMBERS PRESENT
Senator Cathy Giessel, Chair
Senator Bill Wielechowski, Vice Chair
Senator Matt Claman
Senator Forrest Dunbar
Senator Scott Kawasaki
Senator Robert Myers
Senator George Rauscher
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Donna Mears
COMMITTEE CALENDAR
SENATE BILL NO. 280
"An Act relating to the taxation of certain natural gas pipeline
property; relating to municipal taxation limitations;
establishing an alternative volumetric tax on natural gas
throughput; relating to the allocation of revenue from the
alternative volumetric tax; and providing for an effective
date."
- HEARD & HELD
SENATE BILL NO. 275
"An Act relating to natural gas and natural gas projects;
relating to the Alaska Gasline Development Corporation; relating
to the powers and duties of the Legislative Budget and Audit
Committee; relating to the value of certain oil and gas;
relating to an income tax on certain natural gas-related
entities; relating to the oil and gas production tax;
establishing a surcharge on gas processed in the state; and
providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 280
SHORT TITLE: OIL & GAS PROPERTY TAX; MUNI TAX
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
03/20/26 (S) READ THE FIRST TIME - REFERRALS
03/20/26 (S) RES, FIN
03/23/26 (S) RES WAIVED PUBLIC HEARING NOTICE,RULE
23
03/27/26 (S) RES AT 3:30 PM BUTROVICH 205
03/27/26 (S) Heard & Held
03/27/26 (S) MINUTE(RES)
03/30/26 (S) RES AT 3:30 PM BUTROVICH 205
03/30/26 (S) Heard & Held
03/30/26 (S) MINUTE(RES)
04/13/26 (S) RES AT 3:30 PM BUTROVICH 205
04/13/26 (S) Heard & Held
04/13/26 (S) MINUTE(RES)
04/14/26 (S) RES AT 9:00 AM BUTROVICH 205
04/14/26 (S) Heard & Held
04/14/26 (S) MINUTE(RES)
04/15/26 (S) RES AT 3:30 PM BUTROVICH 205
BILL: SB 275
SHORT TITLE: NATURAL GAS PROJECTS/INCOME TAX/SURCHARGE
SPONSOR(s): RESOURCES
03/05/26 (S) READ THE FIRST TIME - REFERRALS
03/05/26 (S) RES, FIN
03/13/26 (S) RES AT 3:30 PM BUTROVICH 205
03/13/26 (S) Heard & Held
03/13/26 (S) MINUTE(RES)
03/18/26 (S) RES AT 3:30 PM BUTROVICH 205
03/18/26 (S) Heard & Held
03/18/26 (S) MINUTE(RES)
03/20/26 (S) RES AT 3:30 PM BUTROVICH 205
03/20/26 (S) Heard & Held
03/20/26 (S) MINUTE(RES)
04/14/26 (S) RES AT 9:00 AM BUTROVICH 205
04/14/26 (S) Scheduled but Not Heard
04/15/26 (S) RES AT 3:30 PM BUTROVICH 205
WITNESS REGISTER
NICK FULFORD, Senior Director
Liquid Natural Gas and Energy Transition
GaffneyCline
Houston, Texas
POSITION STATEMENT: Provided the presentation: Comments on SB
280.
BRIAN KASSOF, Lead Regulatory Analyst
Alaska Public Interest Research Group (AKPIRG)
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of SB 275.
MIKE CHENAULT, Board Member
Alaska Gasline Development Corporation (AGDC)
Nikiski, Alaska
POSITION STATEMENT: Testified in support of SB 275.
SEAN MCDERMOTT, Energy Policy Analyst
Fairbanks Climate Action Coalition
Homer, Alaska
POSITION STATEMENT: Testified in support of SB 275.
MADDIE HALLORAN, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 275.
DOUG WOODBY, 350 Juneau
Juneau, Alaska
POSITION STATEMENT: Testified in support of SB 275.
BEN BOETTGER, Energy Policy Analyst
Cook InletKeeper
Soldotna, Alaska
POSITION STATEMENT: Testified in support of SB 275.
ACTION NARRATIVE
3:31:06 PM
CHAIR GIESSEL called the Senate Resources Standing Committee
meeting to order at 3:31 p.m. Present at the call to order were
Senators Rauscher, Myers, Kawasaki, Dunbar, Wielechowski and
Chair Giessel.
SB 280-OIL & GAS PROPERTY TAX; MUNI TAX
SB 275-NATURAL GAS PROJECTS/INCOME TAX/SURCHARGE
3:31:44 PM
[CHAIR GIESSEL announced the consideration of:
SENATE BILL NO. 280 "An Act relating to the taxation of certain
natural gas pipeline property; relating to municipal taxation
limitations; establishing an alternative volumetric tax on
natural gas throughput; relating to the allocation of revenue
from the alternative volumetric tax; and providing for an
effective date."
and
SENATE BILL NO. 275 "An Act relating to natural gas and natural
gas projects; relating to the Alaska Gasline Development
Corporation; relating to the powers and duties of the
Legislative Budget and Audit Committee; relating to the value of
certain oil and gas; relating to an income tax on certain
natural gas-related entities; relating to the oil and gas
production tax; establishing a surcharge on gas processed in the
state; and providing for an effective date."]
We are going to start out first of all with a presentation from
GaffneyCline. Public testimony was noticed for today's meeting,
and we will take that up probably around 4:30-ish. Anyone who
might be on the line or here in the room wishing to testify,
we're going to hear from GaffneyCline first.
I will welcome Nick Fulford. He is the Senior Director of LNG
and Energy Transition with GaffneyCline. Mr. Fulford, thank you
for joining us today. I know you were listening in yesterday as
well. I'm hoping you have some comments to share with us about
yesterday. So welcome.
3:32:29 PM
NICK FULFORD, Senior Director, Liquid Natural Gas and Energy
Transition, GaffneyCline, Houston, Texas, provided the
presentation: Comments on SB 280.
Really to start off today's dialogue, I would draw those viewing
at home to the basis of opinion [on slide 2]. I'll leave that to
read at your leisure.
3:33:07 PM
MR. FULFORD moved to slide 3:
Agenda - Topics to be Covered
Today's discussion is formulated in three parts:
The first main area deals with what I would describe as the
fiscal framework around how an LNG project typically evolves,
and the pros and cons of making decisions around that while the
project is still in a formative stage.
Secondly, I wanted to talk about some of the mechanisms that
have been used elsewhere to recognize the impact of LNG projects
on communities and their infrastructure. For that, I'll recap
briefly on Texas and Louisiana, which we've spoken about before.
I also wanted to highlight how the approach differs when the
impact of the project is arguably that bit more.
Finally, really picking up the tail end of yesterday's committee
hearing, I also wanted to talk about the economics and the
impact of the six cents and how it fits in more broadly with
other features.
Before continuing, I also wanted to highlight, particularly for
those viewing at home, I know Chair Giessel and I think Senator
Wielechowski will be very well aware of the work that was done
under Governor Parnell and then under Governor Walker on the
Municipal Advisory Gas Project Review Board back in 2014.
It's a good reminder that the question of property tax and its
structure has been under review for quite some time. Several
revenue commissioners have dealt with this in different ways,
and certainly from my perspective, back in 2014 I worked with
quite a number of the boroughs and those affected, so I do have
a sense of how important these property taxes are for the local
communities.
With that, maybe we can move ahead to slide 5, which is really
the start of the content.
3:35:06 PM
MR. FULFORD moved to slide 5:
Potential Approach to Fiscal Framework
I think to frame today's discussion, it might be useful to think
about SB 280 really in two ways. The first is the way in which
the alternative volumetric tax works compared with existing law,
and the second is to then consider the level of tax, the six
cents.
But the first question is much more strategic. It concerns the
basic fiscal architecture of the project, which developers,
buyers, and lenders typically like to see in a reasonable level
of detail before progressing the project toward FEED [Front-End
Engineering Design.]
What is fiscal architecture? I would describe that as the main
interfaces with the host government and the way in which taxes
and so forth are organized.
Examples of fiscal architecture are shown on the left of this
slide, starting with upstream taxes. Obviously, Alaska has
decades of experience in determining a framework for resource
development. It's based on a combination of royalty and tax, and
it's something that is reviewed from time to time and indeed may
be reviewed in the context of this project. The basic framework
is there and well understood.
I'd also include corporate income tax under that heading, both
federal and state. Again, there's an existing framework, albeit
with some changes under discussion, but these features are well
understood, and the different scenarios can be modeled
effectively.
Next, we have the question of federal support. For the LNG
project what we're talking about here is whether or not loan
guarantees are offered. It's a key feature of the project
economics. It's potentially worth about half the property tax
question that's under discussion today.
If you look at Mr. Stickel's presentation, page 36, you'll see
that the change in project economics with a move from 5 to 7
percent cost of debt, which is roughly the order of magnitude
involved, the impact is also fairly significant. So that's an
interesting question in terms of how property tax and federal
loan guarantees impact one another.
3:37:54 PM
In one scenario, both a change to property tax and federal loan
guarantees might be needed to get the project over the line. A
question for the legislature may be how those two features
interact with one another.
Moving on, we've talked before in this committee about fiscal
stability and the fact that some LNG developers enter into a
contractual commitment with host governments. For Alaska, that's
unlikely to be the case. An investor would look instead at the
decades of governance and resource management that Alaska has
experienced over the years.
It's also interesting to note that the very bill we're debating
today would be seen as an important step, I think, toward
establishing the fiscal stability that developers and other
stakeholders would want to see.
Next, we have the important question of in-state supply. For the
most part, the regulatory controls that would apply to tariff
setting and so forth are in place, some conceivably under FERC,
others under the RCA. Even if changes are needed, the basic
premise is set out there for people to see.
That leaves us with property tax. You've heard other testimony
on what is effectively a lack of compatibility between the
structure and framing of the existing legislation in the context
of what is an exceptionally large capital-intensive project that
is also highly exposed to front-end costs. This is the one
element of the fiscal architecture that really remains to be
resolved. It will be a concerned bias for project developers,
lenders, and others. As I mentioned, this has been under
discussion for quite a few decades.
3:40:07 PM
CHAIR GIESSEL
I'm just going to comment on your second-to-the-last bullet. I
appreciate the last one you had, of course. The RCA, the
Regulatory Commission of Alaska, does have some interest in the
regulatory process, which may not be as clear-cut as you may
assume. They will be presenting to us next week.
I mentioned to the committee previously that the Alaska Oil and
Gas Conservation Commission (AOGCC) has a process for gas
offtake authorization, so that also is a topic that will be
pertinent here.
3:40:52 PM
SENATOR MYERS
I just kind of want to revisit the fiscal stability bullet that
you've got on there. I recognize that we've been doing this for
50-odd years or so, and we've got some experience in it, but I
still wonder if we're as stable as other places, or as stable as
we could be.
You mentioned that some places do this contractually. We can't
because of our Constitution, Article IX, Section 1. We've
changed our tax structure around. We've talked about some
changes on both the upstream and the corporate tax side this
year. I believe a few meetings ago the chair mentioned we did
some tax breaks for Cook Inlet a dozen or so years ago, and then
we turned around and changed and rescinded some of those.
So, I'm really wondering if, compared to the global benchmark,
we really have the fiscal stability that we need for a project
of this size.
3:42:00 PM
MR. FULFORD
Clearly, this is a topic that frequently comes up in the context
of Alaska, so I'll keep my comments short.
I think in testimony provided by myself, my colleagues, and
other individuals, investors don't like change, particularly on
the tax front. You can divide those changes into fundamental
structural changes and then changes to rates.
With a resource-rich economy like Alaska's, it's not unusual to
see changes in tax. Interestingly, I was doing some research on
this the other day. The UK is actually the least stable oil and
gas regime at the moment because of the significant changes that
have been undergoing there. Norway, I know you've looked at that
in this committee, is one of the most stable. It's a very high-
taxation regime, but it's been like that for many, many years.
It's a major topic. Indeed, one I'm sure we'll return to, but
I'll leave my comments at that.
3:43:27 PM
SENATOR RAUSCHER
This question is for you. He's got the last one here, property
tax community impacts. I know we heard from the mayors in the
past. I'm wondering, have we gotten anything in writing from
each one of the mayors on how it was going to impact their
communities for us to review from time to time, or have we not?
I was just wondering.
3:43:52 PM
CHAIR GIESSEL
No, I have nothing in writing.
3:44:04 PM
MR. FULFORD moved to slide 6:
Approaches to Mitigating the Risks of Early Decisions
Just a reminder that there are about 130 LNG export terminals
around the world today, in 22 countries. Each of these projects
has gone on a very similar journey to the one we're talking
about here in Alaska. Each has lessons and experience from which
to draw. Fundamentally how these projects come together depends
a great deal on the specific, unique features of the project and
the host government.
One of the most encouraging features of all this is that while
the projects are complex and challenging, they've all managed to
navigate their way through some of the complexities and
challenges that we've been hearing about over the last couple of
days in these hearings.
The other feature I would add from years of experience on many
LNG projects is that they typically encounter very tough
financial hurdles with very thin margins, at least initially.
That's another feature that we're seeing here in Alaska that's
quite common. Of course, the real value tends to come in the
following decades, where they can become a huge contributing
element to the economy.
Listening to the previous testimonies and other committee
meetings so far on this bill, the intricacies of how it would be
applied really show quite clearly, I think that as the project
develops, new features will emerge that need to be addressed.
For example, given the importance of in-state supply and the
potential for equity, the number of moving parts is quite
significant, especially at this early stage.
As you think about the approach and the decision-making that
goes into this, one very common characteristic of all these big
projects is that they are iterative in nature as they reach the
final stage of FID [Final Investment Decision]. As the various
features of the project come together, things start to fall into
place.
Glenfarne and AGDC are also working on the project in this kind
of iterative way. They're securing technical and contractual
milestones while working on a complete set of documents.
3:46:43 PM
MR. FULFORD continued comments related to slide 6:
Coming back to my comments on the previous slide, it is really
at these earlier stages of the dialogue between the project
stakeholders that this kind of basic framework in which the
project has to operate needs to have a reasonable degree of
definition. It isn't typically until the project has been
through the FEED process that ultimately precise terms evolve.
By the time the project reaches FID, you'd expect both the
fiscal mechanisms and the precise tax rates to be in place. It
wouldn't be unusual to see a number of iterations of these
details as the FEED process evolves and the EPC and construction
contracts and so forth are put in place. Market changes have to
be incorporated. In fact, even when the project is past FID and
into its operational phase, sometimes these features have to be
adjusted or recalibrated to refine how they work. For example,
this is quite frequently done when an LNG project is expanded
and moves from three to four trains and so forth.
There's a little bit of a parallel here in terms of what's
happening on the other side of the equation. LNG sale and
purchase agreements for the last 10 years or so typically come
with some kind of reopener or trigger to examine how things are
working. Just to be clear, these reopeners and triggers are
within very constrained mechanisms. Nevertheless, there's a
recognition that sometimes the contract can't foresee or take
into account every change that a project has to go through.
Another way to mitigate the risks of these early decisions is to
include what are sometimes called "conditions precedent." You'll
see them referred to as CPs. This could include a requirement
that certain things happen or certain outcomes are achieved, or
it may simply be a time constraint. These sorts of things are
quite common in commercial sales contracts. Ultimately, these
are mechanisms that are available to the legislature as well. At
the end of the day, the legislature clearly has considerable
discretion in the passing and repealing of laws.
Interestingly, you've heard me refer many times to the LNG
Canada experience. The British Columbia (BC) government repealed
and replaced LNG-related laws twice and changed the tax
allowances for the project before the final package was agreed.
That's a good example of how the tax framework evolved with the
project as things became better defined.
3:49:59 PM
MR. FULFORD moved to slide 7:
Pros and Cons of Early Fiscal Commitment
So much of the debate around SB 280 has been the pros and cons
of agreeing to what is a fundamental change to tax law in Alaska
compared with the benefits of providing greater clarity to the
project.
Firstly, as we look at what some of those could be, and I
highlighted this a few minutes ago in the context of fiscal
stability, progress on the property tax challenge is clear
evidence of a working dialogue between the project developer and
the state. A shared goal to create a suitable economic framework
for the project. This goes further than the property tax
question and basically adds momentum to the project. It will
encourage buyers, it will encourage lenders, and it will
demonstrate that there's a collaborative process underway to
essentially get the project over the line.
Secondly, it helps define the economics and financing features
of the project. That helps to progress pricing negotiations with
buyers and dialogue with lenders and finance providers. In that
way, it arguably helps pave the way as the dialogue with buyers
moves from a letter of intent to heads of agreement and finally
a sale and purchase agreement.
Thirdly, and there's been evidence of this in the dialogue
around the DOR presentation, it will help the state manage its
budget and some of the potential challenges and longer-term
implications of making a change like this. That was starting to
come out in the dialogue and, obviously, with a decision on
moving to an AVT, for example, some of these budget-planning
features can be addressed in more detail.
The other thing, as I mentioned, is that as things come
together, there will be other features of taxation that need to
be adjusted or altered in some way. With the [alternative
volumetric tax] AVT mechanism that then helps you move to other
features like upstream tax or corporate income tax and so forth,
and establish a basis for those at the same time.
So, in general, it creates a much better planning horizon.
3:53:06 PM
MR. FULFORD continued comments related to slide 7:
If we look at the other side of the equation, what are some of
the challenges?
The biggest challenge, of course, is that the legislature is
being asked to consider this change without a detailed insight
into the project, its economics, and how both the structural
move to the AVT and the level of tax set alter the balance
between government take and profits being put into the private
sector. This speaks to the heart of the constitutional
obligation that you have, and in an environment without that
full pricing mechanism, it's hard to take a decision.
I would add, though, that obviously for Glenfarne and AGDC, the
same applies. We heard yesterday, I think, that they've yet to
get their Class 2 cost estimates for the processing plant and
the liquefaction. So, to some extent they have some exposure
too. They'll be going through a similar process of iteratively
trying to put the building blocks in place for the project.
Related to this loss of option value, any trader or decision-
maker will always tell you that the best time to make a decision
is right at the last minute, when you have as much information
at your disposal as possible.
It's one of those things where the decision to move to an AVT
can be seen as a positive step toward the broader project, but
at the end of the day making a decision early does have risks.
3:55:17 PM
MR. FULFORD continued comments related to slide 7:
The other feature here is clearly something everyone on the
committee, and more widely in the state, is aware of: property
tax is a topic of great interest to a lot of people. It affects
the boroughs and many others quite fundamentally.
As the debate continues, it wouldn't be surprising to see
continuing pressure to revisit this issue or look at it again.
That's one of the things I'll come back to later in my
presentation where we talk about some of the mechanisms that
have been put in place elsewhere.
Interestingly, on incentive misalignment, I spoke on the last
slide about the federal government initiatives, such as loan
guarantees or grants that may be available, and the state's
decision around property tax. Those two elements are so
separated in terms of policy and decision drivers that it's hard
to see one affecting the other. Nevertheless, there are features
where a decision on property tax could affect something else.
The question of revenue distribution and transparency has
clearly come up a lot. It came up in some of the comments
received from the boroughs. The bill provides considerable
discretion for the state to work on how those funds are
distributed, but again, I'll come back to that a little more
later on.
So that's really the end of my comments on this slide, I think.
In the next part of the presentation, we move on to some of the
more specifics and the numbers.
3:54:59 PM
SENATOR CLAMAN joined the meeting.
3:57:28 PM
MR. FULFORD moved to slide 9:
Host Government Approach Depends on Economic and Legislative
Drivers
As you think about the population of LNG projects, they kind of
fall into three buckets. The nature of the dialogue between the
developers and the host government, and indeed communities, is
quite different depending on where you are in terms of these
constraints.
In the simplest examples, you have a host government with a
privately funded LNG project and no particular policy goals that
impact how the state enters its dialogue with the developer.
Great examples of this would be Texas and Louisiana.
A single LNG project makes very little difference to the state
economy. It obviously does impact the communities involved, but
typically the dialogue between the state and the project would
be limited to things like property tax changes and so forth.
Then you move to other countries, or states indeed, where
there's a clear constitutional requirement to manage resources
in a way that is demonstrably in the interests of the citizens
and the ultimate benefit of the state.
Immediately, with that constitutional duty, comes a much higher
hurdle in terms of diligence, understanding the economics of the
project, and being very clear about the division of wealth
between the host nation or host state and the project.
3:59:30 PM
MR. FULFORD continued comments related to slide 9:
I think I've spoken about some of these features previously, but
they have a very different characteristic from the much more
straightforward discussion in the first example.
Then we move on a step further, which is where there's not only
some kind of constitutional obligation on the state to ensure
that things are being done appropriately, but the state is
acquiring potentially equity in the project.
With that, you move to the kind of due diligence that you would
see in a commercial LNG project where, for example, a Japanese
buyer might be interested in taking equity in an LNG export
project. There's a very considerable process of due diligence
that goes on behind that. The same is true with a lender. Any
large lender.
I want to set the scene with that explanation because it does
explain why the dialogue between the LNG project and the state
here in Alaska is so different from how it would be
characterized in Texas or Louisiana. It's the constitutional
element, and it's also the fundamental impact that the project
would have on the state and its economy.
4:01:09 PM
SENATOR MYERS
You said the rest of the United States and Canada are in the top
category there. I think in our other discussions we've made it
pretty clear that most places outside of North America are in
the bottom category, the bottom box in your chart. Alaska is the
one in the middle. Is there anybody else in the oil and gas
field that functions in that middle place besides Alaska?
4:01:41 PM
MR. FULFORD
I'd have to refer back to some of our previous analysis. I could
remind myself of the detail and respond in writing to that
question.
4:02:02 PM
SENATOR WIELECHOWSKI
In other jurisdictions that are similar to Alaska, where
there's: an obligation to develop the resources for the public
good, and closer collaboration and information sharing with the
project developers and other stakeholders is required, how would
you say Alaska compares in this project to those jurisdictions
in terms of the information that we're getting and the
collaboration that we're having?
4:02:38 PM
MR. FULFORD
One of the features that you typically see in some of these
other jurisdictions is a state oil and gas company, which
typically has extremely close eyes into the energy ministry and
the functions of government.
In this example, AGDC was created through SB 138 and so forth,
and so it has a role which is akin to a state-owned oil or gas
company, but is also different.
One of the differences, I think, would be in the way that AGDC
is set up and how that plays into this question of the dialogue
between developers and the state.
4:03:47 PM
SENATOR WIELECHOWSKI
But do you think the Alaska Legislature is getting the
appropriate amount of information needed to make the decisions
that we need to make? Do you think we should just be relying on
AGDC? Or do you think there should be more information than
we're getting?
4:04:14 PM
MR. FULFORD
One of the features which I've talked about and we've discussed
is this question of the open-book economic model, which is
typically an Excel-based model of the project that is accessible
by all the stakeholders, including the host government, or at
least certain individuals within the host government.
Listening to the testimony over the last couple of days, I
noticed in the DOR presentation and the comments that Mr.
Stickel made, he referred a number of times to receiving
guidance from AGDC on certain assumptions or how his model had
been structured.
My sense, without having discussed any of this with the
individuals concerned, is that Mr. Stickel's model, the DOR
model, is starting to approach what I would describe as an open-
book economic model, or an OBEM. As that develops and as the
project starts to benefit from better definition around budget
cost estimates and so forth, I would expect potentially that
economic model, and the discussions around it, to form an OBEM-
like dialogue.
In some ways, it's not surprising that the detail of the project
isn't being fully shared with the legislature, although clearly
AGDC has access to some or all of that.
We're obviously on a journey, and as we go down that road, more
and more information will be shared. But we are still at a
relatively early stage of the project, and I think there's a way
to go before those details can probably be shared.
4:06:35 PM
SENATOR WIELECHOWSKI
Do you think the legislature has the information that it needs
in order to make the decisions that we need to make, or do you
think we should wait until the information is more closely
defined, whether it's FID or FEED? Do you think we should wait
until those numbers are fleshed out a little bit more, or do you
think we should just go ahead and make the decision and hope
we're right?
4:07:05 PM
MR. FULFORD
Obviously, there are a whole range of policy implications
involved in a decision by the legislature. As I said at the
start of the presentation, I think it might be helpful to look
at SB 280 in two different ways.
One is a structural change in the property tax mechanism, which
aligns the mechanism much better with what would be needed for
the true economic basis of the project.
The second is the question of the tax rate.
The first, I would say, is an imperative for the legislature to
resolve because the lack of a resolution on that is, I suspect,
potentially holding up the dialogue with interested
stakeholders.
The second, the setting of the rate, is a more complex question.
If you look at other jurisdictions, were you to settle the rate
now, you may wish to revisit it at the point where FID is
approaching.
As I mentioned before, there's an iterative process going on
where quite significant changes in project economics could occur
between now and FID. Ultimately the legislature will want some
discretion in terms of setting the tax rate and so forth such
that it's done appropriately prior to FID, when the project is
actually launched.
4:09:04 PM
SENATOR WIELECHOWSKI
That is an extremely helpful statement, at least for me.
I want to restate what you said, because I think it's important
and I want to make sure I got it right. You're saying that the
discussion about going to an AVT, you believe, is critical.
Correct me if I'm wrong on that. You're also saying we could set
a rate, or maybe set a framework for a rate. What advice would
you give us on that? So, there are two questions there.
4:09:38 PM
MR. FULFORD
I would agree with the first restatement. A formulation of the
property tax mechanism toward an AVT would be an essential step
in creating an economic framework for the project with
appropriate fiscal controls.
On the second point, my assumption is that in suggesting a 6-
cent-per-Mcf AVT, which I understand has arisen from the project
developers, correct me if I'm wrong, there's probably a
reasonable expectation on their part that, give or take, that's
about the number that the project could sustain.
I don't think they would wish to see material changes in tax
rates as the project progresses. One approach would be to set
the tax at 6 cents and provide a framework for reexamining it if
required.
I think some thought would need to go into what that framework
would look like because it wouldn't be in anybody's interest for
it to be essentially a completely open question.
I mentioned LNG price reopeners. They typically contain certain
criteria that have to occur for the reopener to be followed.
Sometimes there's a time constraint. Maybe some of the lessons
from that type of framework could be applied to this to provide
the state with some flexibility as you go forward and as the
economics of the project become more disclosed.
4:11:57 PM
MR. FULFORD moved to slide 10:
Property Tax Incentives (Louisiana)
Some of these numbers will look familiar. These are property tax
subsidies that I've discussed before. For the benefit of today's
discussion, I thought it would be useful to turn them into
dollars per Mcf, given that we're talking about a dollar per Mcf
charge.
As you look across the table, the number in the right-hand
column is not a tax that's imposed. It's a tax reduction that's
being offered to the project.
For example, Sabine Pass at the top there, 30 million tons per
annum, the property tax holiday that was offered is worth about
33 cents per Mcf, and so forth as you go down.
The other thing to recognize here is that the nominal property
tax rate in Louisiana is 100 mills, so it's already half of what
it would be in Alaska.
It should also be added that the taxable value of the LNG plant
is worked out in a different way.
At the bottom, I put an example calculation. It's not an
accurate reflection of Alaska property tax. It's simply an
approximation based on a $50 billion initial capital number,
depreciated over 20 years and taxed at 20 mills Obviously, there
are nuances around municipal taxes versus state taxes, but as a
helpful guide, the numbers are there for illustrative purposes.
You can see that the contribution of the property tax subsidies
offered to these projects is material, and it compares, at least
in some way, to the discussion here in Alaska.
4:14:21 PM
MR. FULFORD moved to slide 11:
Property Tax Incentives (Texas)
Slide 11 represents the same analysis for Texas. The mill rates
are a little different in Texas. They are made up of county,
city, and port authority.
In 2022, the potential for LNG projects to benefit from a
reduction in property taxes for school districts was removed.
You can see in the last two projects, including Glenfarne's
Texas LNG project, that the size of the property tax subsidy was
somewhat smaller.
Again, taxable value is typically about 75 percent of the cost
of the terminal.
These examples provide a guide as to how property tax has been
addressed in other projects and the extent to which projects
have been offered concessions.
4:15:33 PM
SENATOR DUNBAR
I'm trying to interpret this information and put it in a way
that I can understand, and maybe the public can digest as well.
The numbers on the far right, approximate value of the tax
holiday per Mcf, that's just property taxes, as you indicated.
There are also other taxes in these jurisdictions that maybe we
don't have, correct?
MR. FULFORD
Yes.
SENATOR DUNBAR
Beyond that, if you compare the two, other projects that are
going forward with 3 cents, 10 cents, and 3 cents again, while
ours is 78 cents, that seems very much out of step with the
other projects. Is that a fair interpretation?
4:16:21 PM
MR. FULFORD
It is. Brief comment. There are two reasons. One is the
relatively high mill rate, and the other is the nature of the
tax, which is very much focused on the front end, so that the
highest tax occurs at the start of operations.
Those are the two reasons why the numbers are different.
4:16:51 PM
SENATOR DUNBAR
I understand the issue of having the tax on the front end. We
discussed that yesterday. There might be other ways to shift the
cost to the pipeline, not just the pipeline but the project,
into out-years when they are generating revenue while
simultaneously protecting the state's interests. Both in the
short run and hopefully over the long run, we can recover some
of that value.
My question is, if those two numbers were reversed and it was 53
cents for the first 10 years and 78 cents for the out-years,
would that appreciably change things for the project?
4:17:39 PM
MR. FULFORD
I think it's worth considering how project investors would
typically look at the economics for an LNG project like this.
First of all, they would apply a fairly significant discount
rate to revenues and indeed costs as time progresses.
A burden on the project, taxes charged to the project that occur
10 years from now, would be very significantly discounted
compared to taxes on the project in year one.
That's one of the main reasons why, in Texas and Louisiana,
we're talking about a 10-year tax holiday, because by the time
the taxes do become payable, the value in money of the day terms
is significantly less than the project.
Equally, debt has been paid down, cash flows have increased, so
the ability of the project to support these taxes later in life
is much higher than in the early days.
4:19:01 PM
SENATOR DUNBAR
That all makes sense.
Of course, what we're being asked to do is more than just a tax
holiday. It's a tax holiday and then a permanent tax cut.
Nothing, of course, can be permanent with our legislature; we
can't bind future legislatures. But essentially that's what
we're being asked to do.
Mr. Fulford, shouldn't we also apply something like that
discount rate for the out-years? You saw the graphs yesterday,
or maybe it was two days ago. We're doing this every day now, so
it's starting to flow together a little bit.
We're being asked to actually run our revenue into the negative
when it comes to connected oil taxes in the short term on the
promise of increased revenues in the out term. Shouldn't we use
similar logic to what these projects are using and value
immediate dollars more than highly discounted future dollars?
4:20:00 PM
MR. FULFORD
There's a third feature that's worth discussing too, and that is
revenue stability. It's not just the amount; it's how stable
that revenue is for the state and for municipalities.
That has value to the state and to municipalities. There are, if
you like, two or three factors at stake. One is the time value
of money and how that is used to value the broader tax. The
other is how you value a steady income that can be more
dependable for schools, health, and so forth.
I didn't put it on the slides today, but in Maryland, the PILT
that was agreed to for the Cove Point LNG project was mainly
agreed to because the alternative was creating extremely
volatile property tax income for the local communities. So, I
would add that.
The other feature, which is potentially quite a material element
of the AVT, is that it continues in perpetuity. From a time-
value-of-money perspective, $60 million a year in today's
dollars, received 20, 30, or 40 years from now, has very low
value once discounted.
But for the state and the communities involved, a revenue like
that, which could continue for many decades, has some
significance compared to a property tax that may be based on a
pretty well written-down asset.
4:22:17 PM
SENATOR DUNBAR
I think it would hold its value if it were adjusted for
inflation, but I don't think we're being asked to do a
percentage value. I think we're asking for a flat cent value
that's going to get progressively less valuable as the years
progress.
4:22:34 PM
SENATOR KAWASAKI
This seems to be sweeping larger than property taxes. It talks
about replacing all state and municipal property, ad valorem and
sales and use taxes on qualified property, municipal taxes on
gross or net income, license fees, excise taxes, and other
charges. Is that typical for most jurisdictions?
4:23:05 PM
MR. FULFORD
I must admit I've not come across that in any other
jurisdictions. In a place like Tanzania or Mozambique, for
example, where you're really talking about a transformational
impact of the LNG project, the dialogue does get down to quite
detailed features of how communities, municipalities, and local
governments can be assisted. So, it can get very detailed.
VAT, value-added tax, is typically a feature in many countries,
though not quite the same, it typically gets roped into the
discussion.
4:24:04 PM
SENATOR WIELECHOWSKI
The information in this slide and the previous slide is
interesting, but I don't know how to put this in context. I
don't know that this helps me a whole lot. It shows me that some
communities give a tax holiday of 2 cents, and some give a tax
holiday on the previous slide of 58 cents.
I see what the value of that is, but fundamentally we have a
constitutional obligation to get the maximum value for the
resource. What that means to me is sort of what Jay Hammond used
to say: extract every penny you can. That's our job.
I don't know that this is helpful to me in getting to that
answer. What would be helpful to me is maybe some information
from you or the department saying, well, the internal rate of
return for the company needs to be 10 percent. Pick a number. If
you tax at 6 cents, they have an 11 percent rate of return. If
you tax at 7 cents, they have a 10.9 percent rate of return.
That just seems to be more where this discussion should be. Am I
wrong in that?
4:25:22 PM
MR. FULFORD
The process you described is very consistent with the type of
dialogue that we've seen in many other jurisdictions. This is
where getting down to the nitty-gritty of the economics and the
economic model, with all these factors, is ultimately what will
drive the equation that governs the split between the private
investor and the host government.
4:25:57 PM
SENATOR WIELECHOWSKI
Can you get us modeling like that as we move forward in these
next few weeks of debate and discussion?
At least to me, that seems to be what has driven our decisions
on oil taxes in recent years, well, in the last 20 years, where
we've had analysis on what the implications of various tax rates
would be on particular oil fields.
In this case, we have one discrete project. It seems to me you
could simply create an analysis that would show what the cost of
the project is estimated to be, what the total taxes the
producer has to pay are, what the cost of the product is, what
the sale price of the product is, and what the gas treatment
costs are.
You could create a formula. It seems like it wouldn't be that
hard to do. It would be hard for me, but probably not hard for
you. Then you could plug in the numbers and figure out the
standard rate of return. That would be a helpful process.
4:27:00 PM
MR. FULFORD
Yes, I agree, Senator Wielechowski, through the chair.
The greatest uncertainty is the capital cost and where that's
likely to come out.
The mechanics of LNG economics are relatively straightforward.
It involves a fairly complex Excel model, but the mechanics
themselves are relatively straightforward. It's the assumptions
that will drive the outcome because, in a very high-capital-cost
outcome, clearly the potential for government revenue is less,
and vice versa.
So, the modeling per se can be done. It's the assumptions that
are key.
While we're on the topic, depending on how the committee wants
to progress this type of work, I mentioned that I think the DOR
model is potentially moving toward what I would classify as an
OBEM, an open-book economic model, given the guidance that we
have from AGDC.
That might be the place to start, and I'd be happy to work with
DOR on what that looks like and compare it against other models
that we have.
Anyway, I'll leave that for you to consider.
4:28:40 PM
SENATOR CLAMAN
One of the challenges that I continue to have with all the
discussion is the unknown of whether this project will actually
go forward or not. In the best possible world, we come up with
the perfect tax rate, the project goes forward next summer, and
construction starts.
Suppose we come up with some sort of legislative solution that
has many uncertainties, including whether the project even goes
forward. Is there some reasonable time period to essentially
sunset that proposal? So, if it has not developed and things are
not going forward, or even if it has developed, we put ourselves
in a position to further examine whether the project is really
working or not working.
How do we avoid getting into a situation where we lock ourselves
into a 20-year picture and then, 10 years in, people are saying
we did not really look at all those things? If we were to try to
put in a sunset, what is a reasonable sunset approach given the
uncertainty of whether the project even goes forward?
4:29:56 PM
MR. FULFORD
Obviously, I have no insight into any of the project
documentation or contracts, but I would assume that some or many
of those also have some kind of clause that relates to
timeframes.
In an ideal world, a sunset clause around legislative actions
would potentially correspond to some of the key timeframes in
those contracts, and that might be a dialogue to have with AGDC.
4:30:45 PM
MR. FULFORD moved to slide 12:
Worker Impact and Taxation
This comes to the ad valorem, bed tax, and so forth. This came
up at yesterday's hearing, and you had some testimony from, I
think, Legal, in terms of the interpretation of the bill as it
stands.
This slide simply highlights the likely level of expenditure
that could be directed toward some of those other taxes, which
may or may not be included in the bill.
As you can see here, in terms of the workforce, I think
Glenfarne has suggested the peak workforce would be about 12,000
people, which most likely would be about two-thirds of the way
through the project.
At a $200 per worker subsistence and accommodation cost, you can
see that generates almost $1 billion of expenditure around the
middle part of the project.
This is simply an illustration that the topic of how activities
related to the project are taxed is a fairly material number.
4:32:20 PM
MR. FULFORD moved to slide 13:
LNG Jurisdictions with a Constitutional Duty
We talked about jurisdictions with a similar constitutional
requirement to monetize resources for the benefit of the
citizens. This is a list of some of those jurisdictions. In the
context of SB [280,] it is interesting to compare Mozambique and
Tanzania in the context of Alaska and British Columbia (BC), two
adjoining jurisdictions with similar gas economics and so forth.
What's interesting is that in 2017 Tanzania introduced a bill
that provided such a high degree of control over the project,
using the constitutional obligation as the rationale, that it
became very difficult for international energy companies to
operate without concern that the government might change key
project features. In effect, what happened is that capital
flowed toward Mozambique, which equally had a demanding
framework for the project, for taxes and so forth. In the
context of Alaska and BC, a really good textbook example of how
capital can flow between two countries depending on perceptions
of risk and control.
The other example on this slide, which I will return to in a few
minutes, is Papua New Guinea. It introduced a very comprehensive
program to support communities impacted by the project.
On the next slide are examples of different jurisdictions and
how they have imposed taxes. As you think about the 6-cent-per-
Mcf AVT, the next slide sets out some of those comparisons.
4:35:05 PM
SENATOR MYERS
I can't help but notice that with all these countries that have
public-interest or ownership language, you're, well, to be
blunt, comparing us to third-world countries, more or less.
I have to wonder whether, in your analysis, some of these
requirements for the country to basically get the maximum
revenue have acted in such a way as to help keep those countries
poor to some extent.
4:35:47 PM
MR. FULFORD
I fully accept your initial comment that the comparison between
Alaska, with its developed economy and standard of living, is
very different from some of these countries. Nevertheless, from
an LNG perspective, I think there are some very interesting
parallels that can be learned.
Of these countries, Nigeria has well-known challenges in terms
of governance and transparency. Mozambique is an interesting
one. They've been exporting LNG now for probably two and a half
years, and already you can see the differences in terms of
stability, foreign exchange, and so forth. That's maybe an
example of where things have turned out well. But there's a
phrase, I think it's called the "winner's curse," where
countries that encounter significant wealth and income sometimes
find that the outcome is not what was planned.
4:37:11 PM
SENATOR MYERS
With these countries that you listed, when their LNG projects
were going forward, were they also offering tax incentives at
the time those projects were being created?
4:37:30 PM
MR. FULFORD
In some of these countries, it required almost a complete
reinvention of tax and tax mechanisms. The formulation of the
tax mechanisms and tax rates was almost like a commercial
negotiation.
It was a unique set of laws that was specific to the LNG
project, and that's another thing that is useful to remember.
These projects are so big and so complex that sometimes they
need their own enabling legislation that sets them apart from
any other oil or gas activity.
4:38:29 PM
SENATOR WIELECHOWSKI
When we talk about stability, a lot of people like to criticize
the state we live in by saying we're unstable. I would point out
that a number of these jurisdictions are not what some people
would say are the most stable in the world.
Papua New Guinea. The United States government urges Americans
to reconsider travel there.
Nigeria. Known for having its pipelines blown up and its workers
assassinated.
Algeria. The border areas are fraught with terrorism.
Peru. Recently it has been subject to nationwide strikes.
Mozambique. It has Islamic State-linked insurgencies.
I know people like to beat up on Alaska and say we're not the
most stable place, but looking at some of these other
jurisdictions around the world, I would say we're a pretty good
place to do business.
That's not including Venezuela, where taxes were raised to 90
percent and assets were expropriated; Russia, where Vladimir
Putin raised taxes to 90 percent and expropriated assets;
Bolivia, where the president expropriated assets; and Libya,
where Muammar Gaddafi presided over a civil war, expropriated
assets, and raised taxes to 90 percent.
I would say Alaska is not a terrible place to do business for
those who like to beat up on our state.
4:39:49 PM
MR. FULFORD
It's actually a highly relevant comment because, given the
events of the last couple of months, stability and reliability
have moved so far up the LNG agenda that, as you look at Alaska
from a stability and dependability point of view, it's very much
at the top of the list.
As I mentioned before, it's a short hop across the Pacific
Ocean, there are no navigation threats, and so your comments are
actually very relevant at the moment.
4:40:42 PM
MR. FULFORD moved to slide 14:
Municipal/Community Support - Global Examples
What I've done here is look at specific features that have been
directed toward benefits for local communities. I've tried to
put them in cents-per-Mcf terms so you can compare them with the
6 cents here.
For example, you've got benefits to the local municipality in
Norway of 7 cents. That's probably the closest approximation.
LNG Canada, for the benefit of one of the local First Nations,
is 1 cent. There's another 1 cent with the wider British
Columbia coastal fund, and another Canadian example, also
directed toward First Nations, that was 4 cents.
With the time remaining, I might suggest that we move briefly to
slide 15, which does a little more of a deep dive into Papua New
Guinea.
4:41:51 PM
MR. FULFORD moved to slide 15:
Papua New Guinea - Features to Assist Impacted Communities
It's an interesting example because a lot of time and effort was
put into addressing concerns about how the original LNG project
would impact some of the local communities, many of which were
relatively isolated and not accustomed to industrial activity.
The way they did it was in two halves. One was financial, with
what was essentially a royalty on the gas based on its value at
the wellhead. That was split between direct benefits to what
they class as clans or what might be considered a tribe,
community investments and infrastructure, and a future
generations fund.
There was also a development levy, which is less well defined,
but is supplied for local infrastructure development.
With that came an opportunity to invest in equity on the
project. In that case, there was an overall state interest of
19.4 percent, of which 4.27 percent, under what was called the
"kroton equity option," was an amalgamation of the local
communities impacted.
They had equity in the project. It was not a carried interest,
as it sometimes is. They had to fund the original equity, but
they were offered assistance to do so by the state government.
Coming back to some of the remarks made earlier. I think this is
a good example of how, even with the best thought and planning,
putting in place a fair and equitable mechanism to recognize the
disruption to local communities is a difficult thing to do.
Since it was put in place, there has been quite a lot of
dialogue and indeed litigation around it. But this was the
mechanism they chose.
4:44:40 PM
CHAIR GIESSEL opened public testimony [on SB 280 and SB 275.]
4:45:11 PM
BRIAN KASSOF, Lead Regulatory Analyst, Alaska Public Interest
Research Group (AKPIRG), Fairbanks, Alaska, testified in support
of SB 275 with the following remarks:
My name is Brian Kassoff. I'm calling in from Fairbanks on
behalf of the Alaska Public Interest Research Group, a statewide
nonpartisan 501(c)(3) nonprofit with more than 50 years of
history advocating for the public interest in Alaska.
AKPIRG strongly supports the transparency and fiscal
accountability provisions of SB 275 and appreciates the
committee's efforts to address these important questions.
Glenfarne has refused to share critical information about
project governance and economics with legislators. This would be
concerning under any circumstance, but is particularly alarming
given the following:
Glenfarne has no proven track record, having never brought an
LNG export project to final investment decision.
Glenfarne's assertions that the project might not go ahead
without substantial tax breaks raise questions about its
competitiveness.
Glenfarne proposes to begin construction on phase one, an in-
state natural gas pipeline, before it completes the final
engineering studies for phase two, the gas treatment plant and
LNG export facility, without any guarantee of the viability of
phase two. There is a very real possibility that Alaskans could
be left responsible for the full cost of a pipeline.
Glenfarne has promised that gas from the phase one pipeline
would be competitive with imported LNG. I think cost estimates
for imported LNG are between $12 and $16, but Glenfarne will not
share the information necessary to verify that claim. Their
calculations assume a volume of gas that is more than twice
current in-state use. A 2023 estimate by the Berkeley Research
Group, which was hired by Enstar and other utilities to consider
new gas supplies, estimated a much higher price for gas from a
privately owned in-state pipeline, at about $28 per thousand
cubic feet.
All of these reasons, and others, make transparency essential.
We support other aspects of the bill as well. I included those
in my written comments, and I will close there.
4:47:54 PM
MIKE CHENAULT, Board Member, Alaska Gasline Development
Corporation (AGDC), Nikiski, Alaska, testified in support of SB
275 with the following remarks:
Thank you, Madam Chair and committee members. I have a lot more
to say than what I'm allowed in two minutes, but I'll try to get
through it.
When creating AGDC, the legislature wanted to take decision-
making out of the political arena of the legislature and provide
it to a board whose main focus is to assess commercial, fiscal,
and legal risk impacts.
The sponsor stated that the project has changed since Senate
Bill 138, [ch. 14, SLA 14]. The ExxonMobil project was
originally envisioned as an equity participation project where
all the partners would be responsible for bringing their
percentage of equity to final investment decision (FID) to move
the project forward.
At $40 billion, that would have meant the state would have had
to fund $10 billion and accept the risk of schedule and project
cost overruns.
We heard from Wood Mackenzie that the Exxon project was
uneconomical due to the high rate of return the producers would
require to invest their equity.
Wood Mackenzie recommended that the project move to a project-
finance model akin to LNG export projects then under
construction on the U.S. Gulf Coast.
The project-finance model, where the project is financed with a
combination of debt and equity, and the debt is underpinned by
off-take agreements.
The project sponsors are willing to accept a lower rate of
return, perhaps 10 to 12 percent, compared to international oil
companies, who want 18 to 22 percent. With lower equity and debt
costs, the project is more economical.
In 2024, Glenfarne stepped in as a potential lead developer and
began due diligence in earnest, coming to Alaska and meeting
with various companies, government officials, utilities, and
several legislators.
4:50:31 PM
SEAN MCDERMOTT, Energy Policy Analyst, Fairbanks Climate Action
Coalition, Homer, Alaska, testified in support of SB 275 with
the following remarks:
Thank you for the opportunity to comment today and for the
committee's diligence on this issue.
I'm calling to express our support for the measures outlined in
Senate Bill 275. Without detailed cost estimates from AGDC and
Glenfarne, there is no way for legislators in Alaskans to know
the true cost and impact this project will have on our
communities.
In response to questions from this committee on March 18, Mr.
Fulford acknowledged that, without the type of financial
guardrails proposed in this legislation, existing Alaska law
does not adequately protect Alaska's interests in this project.
This project is also operating on a lot of problematic
assumptions.
The claim for the phased approach to the project was to provide
affordable gas to Alaska, but Mr. Kissinger with AGDC has told
House Resources that the phase one pipeline would not provide
lower-cost gas to Alaskans.
The Wood Mackenzie Alaska LNG report, that is often cited,
assumes that 90 percent of Fairbanks will be connected to
natural gas within just a few years, but there is no plan for a
spur line to Fairbanks.
As Fairbanks North Star Borough Mayor Hopkins pointed out, even
with current property tax rates, Fairbanks does not receive
revenue or cash from this project.
AGDC continues to say the project will cost $44 billion to $46
billion. This committee heard Monday that project consultant
Mark Begich recently suggested the cost could be $57 billion.
Independent analyses suggest that number is likely to be upward
of $70 billion.
Without transparency concerning overall cost estimates, the true
impacts of the governor's and Glenfarne's property tax
legislation are also a mystery.
How can they possibly ask Alaskans to subsidize the project
through property tax cuts worth billions before the true cost of
those cuts is known?
Another critical financial piece of this conversation that I
feel has not been addressed is the need for a clearly defined
and funded plan for dismantling, removal, and restoration, like
TAPS, which could otherwise cost Alaskans billions in public
funds.
Thank you for your time and consideration. I'm happy to answer
any questions.
4:52:59 PM
MADDIE HALLORAN, representing self, Anchorage, Alaska, testified
in support of SB 275 with the following remarks:
I'm a born-and-raised Alaskan.
I want to start by thanking both you for bringing this really
important issue to light with this bill, and also Senator
Dunbar, who is a great representative of my neighborhood. Thanks
to both of you.
I'm supportive of SB 275 because I'm really concerned about this
project for a lot of reasons, but the potential impact of moving
forward on such a costly project when it appears, from all of
the great questions you all were just asking during that
presentation, legislators close to the project do not currently
have a whole picture of what it will cost the state.
As Sean just said, Glenfarne has not provided an updated
construction estimate in years, and I'm worried that the current
gas crisis in the Railbelt and the current state fiscal crisis
are being leveraged to push this project forward when it won't
actually come online in time to help solve those issues.
A friend told me yesterday that her heating bill in Fairbanks
for an apartment complex is normally $1,200 for the first three
months of the year, and this year it was $4,000 because of high
prices and an unusually deep cold in Fairbanks this year.
I've heard from lots of neighbors across Alaska. We're all
facing really big utility bills that are only going to grow with
the current world oil crisis and local gas crisis, and we've all
watched there be an insufficient budget to meet state needs year
after year.
We're basically losing twice by hinging our future on these
extraction projects, and this project in particular feels like
we're doubling down on a strategy that is not really serving us
anymore as a state.
I'd love to see the legislature consider an analysis showing how
much money we could save Alaskans by mobilizing just a fraction
of the cost of this proposal into renewable energy projects and
training Alaskans to maintain new energy infrastructure.
I believe public dollars should be used to serve the public and
not subsidize projects that will on make out-of-state
millionaires richer.
4:55:31 PM
DOUG WOODBY, representing self, Juneau, Alaska, testified in
support of [SB 275] with the following remarks:
Mostly, I want to thank you, Senator Giessel, your staff, and
others on the committee who have done the hard work to bring
this bill forward to increase transparency for the LNG project.
The developer of the project, 8 Star Alaska, suffers from a
transparency gap, especially regarding project timelines and
project costs.
Just yesterday morning in this room, you heard that the FEED
studies for the gas treatment plant and liquefaction plant may
not get started until sometime midyear this year. They're not
expected to be completed for a year, which means the FID, the
final investment decision, won't happen until sometime next year
at the earliest.
But we keep seeing glowing press releases from Glenfarne, such
as the one that came out on April 2 saying that Alaska LNG
offtake volumes will be "determined when customer allocations
are finalized in the coming weeks."
Our governor and others keep saying we're closer than ever to
having a gasline.
It could make a person wonder whether we're being taken for a
ride.
There's a consulting industry built around this pipeline
planning process that must be profiting pretty well, and we have
Alaskan workers and families looking forward to the promise of
good jobs, an economic boom, and supposedly cheaper energy
costs.
But does it pencil out? It's hard to know.
Yes, we need greater transparency, and I'm really thankful that
you brought this bill forward.
That's all I have.
4:57:41 PM
BEN BOETTGER, Energy Policy Analyst, Cook Inletkeeper, Soldotna,
Alaska, testified in support of SB 275 with the following
remarks as paraphrased:
I thank the committee for bringing forward this much-needed
bill. The project is changing fast. It is far from clear that
every possible scenario would necessarily bring benefit to
Alaskans in the form of lower energy costs or revenue. I think
it is not even clear that the majority of scenarios, or the most
likely scenarios, would bring benefits to Alaskans.
As our representatives with a constitutional mandate to realize
the maximum value of Alaska's resources, you have an obligation
to be proactive in watching these developments and getting all
the information needed for sound decision-making.
SB 275 is a strong step and a far smarter approach than the
blind trust and wishful thinking that have so far guided
Alaska's approach to this gasline project.
All week, you have been looking at a spread of potential
outcomes for the project involving variable capital costs and
uncertain gas prices.
Another variable in the background is the LNG prices Asian
utilities' will decide to accept.
I hope that seeing these possible scenarios makes it clear to
you what Alaska LNG actually is.
It is gambling on geopolitical scenarios involving price LNG in
Asia. It is gambling on the capacity of partners we do not know
much about. We have yet to actually bring an LNG project final
investment decision.
The legislature has made bad bets in the past. If you are going
to continue rolling dice for Alaska's energy future, you should
at least understand the [indiscernible] area and who you are
playing with.
I hope you will pass this bill.
Thank you.
4:59:27 PM
CHAIR GIESSEL closed public testimony [on SB 280 and SB 275].
4:59:47 PM
[SB 280 and SB 275 were held in committee.]
5:00:04 PM
There being no further business to come before the committee,
Chair Giessel adjourned the Senate Resources Standing Committee
meeting at 5:00 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB280 GaffneyCline Presentation to SRES 4.14.26.pdf |
SRES 4/14/2026 9:00:00 AM SRES 4/15/2026 3:30:00 PM SRES 4/16/2026 9:00:00 AM |
SB 280 |
| SB 275 Public Letters 4.15.26.pdf |
SRES 4/15/2026 3:30:00 PM |
SB 275 |