Legislature(2025 - 2026)SENATE FINANCE 532
04/09/2025 05:30 PM House LEGISLATIVE BUDGET & AUDIT
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| Audio | Topic |
|---|---|
| Start | |
| Approval of the Agenda | |
| Approval of Minutes | |
| Presentation(s): Alaska Liquefied Natural Gas Project | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
LEGISLATIVE BUDGET AND AUDIT COMMITTEE
April 9, 2025
5:33 p.m.
MEMBERS PRESENT
Senator Elvi Gray-Jackson, Chair
Representative Zack Fields, Vice Chair
Senator Cathy Giessel
Senator Bill Wielechowski
Representative Neal Foster
Representative Andy Josephson
Representative Chuck Kopp
Representative Cathy Tilton
Representative Bryce Edgmon (alternate)
MEMBERS ABSENT
Senator Bert Stedman
Senator Lyman Hoffman
Senator Scott Kawasaki (alternate)
OTHER LEGISLATORS PRESENT
Representative Jamie Allard
Representative Dan Saddler
Representative Sarah Vance
Representative Robyn Niayuq Burke
Representative Nellie Unangiq Jimmie
Representative Donna Mears
Senator Robert Myers
Senator Shelley Hughes
Senator Kelly Merrick
Senator James Kaufman
Senator Jesse Bjorkman
Senator Matt Claman
Senator Jesse Kiehl
Senator Gary Stevens
COMMITTEE CALENDAR
APPROVAL OF THE AGENDA
APPROVAL OF MINUTES
PRESENTATION(S): ALASKA LIQUEFIED NATURAL GAS PROJECT
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
RANDY RUARO, Executive Director
Alaska Industrial Development and Export Authority
Department of Commerce, Community & Economic Development
Anchorage, Alaska
POSITION STATEMENT: Co-offered the Alaska Liquefied Natural Gas
Project presentation.
EMILY NAUMAN, Director
Legislative Legal Services
Legislative Affairs Agency
Juneau, Alaska
POSITION STATEMENT: Co-offered the Alaska Liquefied Natural Gas
Project presentation.
FRANK RICHARDS, President
Alaska Gasline Development Corporation
Anchorage, Alaska
POSITION STATEMENT: Co-offered the Alaska Liquefied Natural Gas
Project presentation.
MATT KISSINGER, Venture Development Manager
Alaska Gasline Development Corporation
Anchorage, Alaska
POSITION STATEMENT: Co-offered the Alaska Liquefied Natural Gas
Project presentation.
JANET WEISS, Vice Chair
Board of Directors
Alaska Gasline Development Corporation
Anchorage, Alaska
POSITION STATEMENT: Offered comments during the Alaska
Liquefied Natural Gas Project presentation.
ACTION NARRATIVE
5:33:55 PM
CHAIR ELVI GRAY-JACKSON called the Legislative Budget and Audit
Committee meeting to order at [5:33] p.m. Representatives
Foster, Josephson, Kopp, Tilton, Edgmon (alternate), and Fields
and Senators Wielechowski, Giessel, and Gray-Jackson were
present at the call to order. Also present were Representatives
Allard, Saddler, Vance, Burke, Jimmie, and Mears and Senators
Myers, Hughes, Merrick, Kaufman, Bjorkman, Claman, Kiehl, and
Stevens.
^APPROVAL OF THE AGENDA
APPROVAL OF THE AGENDA
5:34:52 PM
SENATOR GRAY-JACKSON announced that the first order of business
would be the approval of the agenda.
VICE CHAIR FIELDS moved that the Legislative Budget and Audit
Committee approve the agenda, as presented. There being no
objection, the agenda was approved.
^APPROVAL OF MINUTES
APPROVAL OF MINUTES
5:35:10 PM
SENATOR GRAY-JACKSON announced that the next order of business
would be the approval of minutes.
VICE CHAIR FIELDS moved to approve the minutes for the February
26, 2025, and March 4, 2025, meetings, as presented. There
being no objection, the minutes were approved.
^PRESENTATION(S): Alaska Liquefied Natural Gas Project
PRESENTATION(S): Alaska Liquefied Natural Gas Project
5:35:28 PM
SENATOR GRAY-JACKSON announced that the next order of business
would be the Alaska Liquefied Natural Gas Project presentation.
She gave the following prepared remarks [original punctuation
provided]:
First, the committee will hear from Randy Ruaro,
Executive Director of the Alaska Industrial
Development and Export Authority or AIDEA who the
committee has asked to help us better understand
AIDEA's 50 million dollar "corporate guarantee" to
help support the project.
Second, we will hear a short presentation by Emily
Nauman, Director of Legislative Legal Services. I have
asked Ms. Nauman to share an overview of the statutes
pertaining to AGDC so that the legislature and the
public are aware of the statutory purpose and powers
that the legislature granted to AGDC in past
legislation, primarily Senate Bill 138, which was
passed by the legislature and signed into law by the
governor in 2014.
Finally, Frank Richards, President of AGDC, will share
information on issues such as AGDC's engagement with
Glenfarne, who is now the lead developer and majority
owner of the Alaska LNG project. Mr. Richards will
help us understand Front-End Engineering Design or
FEED as well as the conditions necessary to enter
Final Investment Decision or F.I.D. He will also
talk about project timelines and the roles of the
Legislature, Executive Branch and AGDC as the project
moves forward. And more.
As we begin today's hearing, I want to acknowledge the
important role this committee plays. We are here to do
real due diligence to examine the details, ask some
tough questions, and make sure we fully understand
both the risks and the opportunities. I also want to
thank the team who has worked so hard to bring this
project forward. Your commitment is clear, and we
appreciate your hard work. Our shared goal is to make
sure this project, if built, is built on the strongest
possible foundation.
We have a lot of material to cover this evening and I
hope we can get through it all including questions
within a couple of hours.
5:37:49 PM
RANDY RUARO, Executive Director, Alaska Industrial Development
and Export Authority (AIDEA), Department of Commerce, Community
& Economic Development (DCCED), referred to a PowerPoint
presentation, titled "Investing in Alaskans" [hard copy included
in the committee packet]. He began on slide 2, "Constitutional
Authority and Benefits to Alaska," which highlighted AIDEA's
mission as outlined in Articles 7 and 8 of the Constitution of
the State of Alaska: to promote the development of state
resources, and to care for the health, education, and welfare of
Alaskans. Both obligations are aligned under AS 44.88.010,
which states that AIDEA's purpose is to "increase job
opportunities and ... encourage the economic growth of the state
...", the result of which is revenue to the state through the
AIDEA dividend and jobs and benefits to Alaskans. He continued
to slide 3, "AIDEA Fiscal Year 2024 Financial Highlights," which
listed AIDEA's net income at $65 million the highest in
AIDEA's history which is expected to grow in 2025 and 2026
based on management changes and $200 million in investments in
projects, such as the Alyeschem methanol plant on the North
Slope (NS), the work by HEX in the Cook Inlet, and the Aviator
Hotel in downtown Anchorage.
5:40:10 PM
MR. RUARO continued through slide 4 to slide 5, "Authority of
AIDEA to Issue a 'Corporate Guarantee' to AGDC/8-Star," which
read as follows [original punctuation provided]:
• The type of credit facility AIDEA is offering is a
"Corporate Guarantee". A promise in writing in a
contract with Glenfarne/8-Star.
• The Corporate Guarantee in this case is both
"limited" and "conditional."
• It is "limited" to an amount "up to" a sum certain.
In this case, "up to" $50 million. The financial
liability to pay is limited to the actual cost for
Front End Engineering Design (FEED) work completed
when a Final Investment Decision (FID) decision is
made.
• Glenfarne/8-Star pays for FEED work to be performed
from its funds.
• A significant contingency amount is included in the
$50 million number. The actual amount at risk for
AIDEA will likely be considerably less.
• The corporate guarantee is "conditional" because the
obligation to make payment only comes into effect if
there is a decision by Glenfarne/8-Star not to proceed
with FID.
• If Glenfarne/8-Star chooses to go forward with the
project (positive FID), then AIDEA pays nothing for
the FEED work.
Multiple statutes give AIDEA the legal authority to
enter into a corporate guarantee contract with 8-Star
/ AGDC. AS 44.88.080(5); AS 44.88.080(9); AS
44.88.080(11); AS 44.88.080(13) and AS 44.88.080(17)
5:44:30 PM
REPRESENTATIVE EDGMON sought to clarify the business
relationship between AIDEA, Glenfarne Group, LLC ("Glenfarne"),
and the Alaska Gasline Development Corporation (AGDC).
MR. RUARO stated that AIDEA is not a silent partner and is
analyzing the application for the credit facility.
5:45:38 PM
REPRESENTATIVE EDGMON sought to confirm that AIDEA's fiduciary
duty is to the corporate guarantee.
MR. RUARO explained that AIDEA's statutory duty is to invest
prudently, and to maximize gain and return, and limit risk.
5:46:28 PM
REPRESENTATIVE EDGMON asked what would happen if 8-Star Alaska,
LLC ("8-Star")/Glenfarne were found to be imprudent.
MR. RUARO said the decision to go forward on the merits of the
project is made by the board, who have authorized Mr. Ruaro to
negotiate terms that would accomplish AIDEA's goals. He
clarified that there is no final agreement with 8-Star/Glenfarne
at this time, but the proposed terms would provide AIDEA with
the best return of any project in its history, as not a single
AIDEA dollar will have left its accounts in the Final Investment
Decision (FID) scenario. Furthermore, AIDEA will earn a return
on those funds while they are ringfenced and encumbered, and an
additional return from the project in its later stages.
REPRESENTATIVE EDGMON sought to verify that AIDEA's returns
would be inflation adjusted well into the future.
MR. RUARO agreed that the scenario for AIDEA's best returns
would occur in the future.
5:48:27 PM
REPRESENTATIVE TILTON sought to confirm that with Glenfarne
having 75 percent ownership, AIDEA would maintain no veto
authority on the project.
MR. RUARO said that is correct.
REPRESENTATIVE TILTON asked whether AIDEA is sitting on a
governance board.
MR. RUARO responded that if AIDEA were to have a seat on a board
or committee, it would be to gain transparency into the front-
end engineering design (FEED) procurement process.
5:49:30 PM
SENATOR GIESSEL said she was struggling with Mr. Ruaro's
reference to prudent investing while simultaneously considering
investment in a failed FID.
MR. RUARO said terms are being offered that would allow AIDEA to
recover a significant portion, if not all, of its downside risk
in a "no-go" FID decision, which would grant AIDEA ownership and
control of the FEED work product that would have significant
value for another project proponent.
SENATOR GIESSEL shared her understanding that ownership of the
FEED product would be under AGDC's purview.
MR. RUARO stated that AIDEA is requesting terms that would
provide ownership and control of the FEED product for Phase I of
the pipeline.
5:50:57 PM
SENATOR GIESSEL asked, as terms are being negotiated, whether
AIDEA is requiring the ability to maintain audit oversight as
the project goes forward to monitor for escalating costs and
delays.
MR. RUARO stated that AIDEA would not have audit oversight
authority to control cost items or actions by 8 Star Alaska, LLC
("8 Star")/ Glenfarne Group, LLC ("Glenfarne").
SENATOR GIESSEL asked whether the information that AIDEA would
have access to would be confidential and unavailable to the
public.
MR. RUARO stated that AIDEA would bargain to make the FEED work
product confidential to maintain its value.
5:52:48 PM
MR. RUARO continued to slide 7, "Why Now? What is different?"
Slide 7 read as follows [original punctuation provided]:
Legislature Supports "Working Toward" FEED for Phase
I of a Pipeline Project "It is the further intent of
the legislature that if analysis shows a positive
economic value to the state, all parties would work
toward Front End Engineering and Design for Phase I of
a pipeline project."
Wood Mackenzie Report Shows a Positive Economic
Value for Phase I Alaska LNG can predictably deliver
natural gas in a range between $8.97 - $12.80 per
mmbtu; Alaska LNG will dramatically lower long-term
energy prices; and Alaska LNG Phase I will deliver up
to $16 billion in additional economic benefits as
compared to other options.
AIDEA Board (After Multiple Meetings) Passes
Resolution G24-17 Board authorized AIDEA staff and
the Executive Director to perform due diligence and if
satisfied, to execute a "credit instrument, guaranty,
or other form of debt issuance" to provide a backstop
and allow FEED to advance.
President Trump's Trade Policies Taiwan's state-run
company CPC Corporation signed a Letter of Intent to
buy gas and invest in the project. Japan is expressing
interest along with Phase 1
other countries. "Japan has committed to reduce the
trade deficit with us and its reliance on Russia by
purchasing U.S. liquefied natural gas. I will hold
them to that promise." George
Glass, Nominee for Ambassador to Japan, Senate
confirmation hearing.
5:54:46 PM
VICE CHAIR FIELDS shared his understanding that the letter of
intent [from Taiwan's CPC Corporation] is nonbinding.
MR. RUARO said he believes that is correct.
5:55:14 PM
REPRESENTATIVE JOSEPHSON inquired about the contractual quid-
pro-quo and asked whether, in the event that FID is not reached,
Glenfarne would receive the $50 million backstop and AIDEA would
receive the FEED work product.
MR. RUARO explained that in the downside scenario, AIDEA is
bargaining for ownership of the FEED work product, and in the
upside case, AIDEA has requested a toll per square foot of gas
during the export phase. He reiterated that no final agreement
has been reached.
REPRESENTATIVE JOSEPHSON recalled when the state had to spend
over $200 million to buy out Trans Canada (TC) Energy
Corporation and asked whether this would serve as protection
against a similar situation occurring with Glenfarne.
MR. RUARO confirmed that it's viewed as protection against
downside in the event of a "no-go" FID decision.
5:58:41 PM
MR. RUARO jumped to slide 9, "What's in it for AIDEA?" Slide 9
read as follows [original punctuation provided]:
• A Significant Return per year of operation of the
project
• A possible share of tax savings (tax exempt
financing, etc.)
• Meets mission of AIDEA / Economic development and
jobs
• Brings gas and affordable energy to Railbelt for
residential and commercial use. (Data centers,
manufacturing, chemical production, etc.)
6:00:04 PM
MR. RUARO continued to slides 11-12, "AIDEA Tax Exemptions,"
which read as follows [original punctuation provided]:
AS44.88.140. Exemption From Taxation.
(a)"the real and personal property of the authority
and its assets, income, and receipts are declared to
be the property of a political subdivision of the
state and, together with any project or development
project financed under AS 44.88.155-44.88.159 or
44.88.172-44.88.177, and a leasehold interest created
in a project or development project financed under AS
44.88.155-44.88.159 or 44.88.172-44.88.177, devoted to
an essential public and governmental function and
purpose, and the property, assets, income, receipts,
project, development project, and leasehold interests
shall be exempt from all taxes and special
assessments?"
Federal Laws and tax issues:
• Issuance of tax-exempt financing (Revenue Ruling
63.20)
• Exemption from income taxes (IRC 170(c)(1))
• New Market Tax Credits / Program and Allocation for
ANCSA Corporations and Tribes
6:02:03 PM
MR. RUARO continued to slide 13, "What are New Market Tax
Credits and Programs," which read as follows [original
punctuation provided]:
•To access the tax credits, a certified Community
Development Entity applies for authority to deploy the
tax credits.
•This entity selects projects and structures
transactions that include a tax credit investor.
•The investor provides capital and receives its
economic benefit from tax credits, not capital
repayment. This results in a subsidy for the project.
•There are several new market tax credit programs,
including a program for ANCSA corporations and Tribes.
6:03:06 PM
REPRESENTATIVE TILTON asked whether AIDEA would receive anything
if only Phase I was completed.
MR. RUARO said terms are being negotiated that would allow AIDEA
a return during Phase I; however, he said AIDEA is cognizant
that the returns would be coming from Alaskans versus Liquefied
natural gas (LNG) export customers, so the goal is to balance
the interests of the affected parties and create fair terms for
everyone.
6:03:51 PM
REPRESENTATIVE TILTON cited concerns about national security and
foreign influence and asked whether AIDEA is looking into
working with federal agencies to address these risks.
MR. RUARO said when a project proponent comes to AIDEA as a
foreign corporation or country, there is an attempt to discern
whether there are any Committee on Foreign Investment in the
United States (CFIUS) issues; although in this case, it has not
been found to be an issue.
REPRESENTATIVE TILTON asked how involvement in this project
could help lower the price of gas for Alaskans.
MR. RUARO explained that any federal tax savings would be
largely passed on to Alaskan consumers. In addition, AIDEA is
active in other projects, such as those involving HEX in the
Cook Inlet and IGU out of Fairbanks.
6:06:10 PM
REPRESENTATIVE EDGMON asked whether, during the construction of
Senate Bill 138 [passed during the Twenty-Eighth Alaska State
Legislature], AIDEA's role was contemplated to be what it is
today.
MR. RUARO said AIDEA's statutory authority was drafted in 1967
and enacted via House Bill 526 [passed during the Nineteenth
Alaska State Legislature], which granted the ability to contract
with other state agencies and corporations.
6:07:20 PM
REPRESENTATIVE EDGMON pointed out that the statutes are 60 years
old. He sought to better understand AIDEA's role through the
FID process.
MR. RUARO explained that AIDEA's role is a small component of
the larger project limited to the FEED work product.
REPRESENTATIVE EDGMON sought to verify that the larger
underwriters of the project are determined during FID. He said
he's struggling to arrive at AIDEA's level of confidence, as the
FEED process has not been completed.
MR. RUARO said the FID process would determine whether AIDEA is
liable for the FEED work product or whether AIDEA would pay no
dollars and receive a significant return. On the downside, he
shared his belief that ownership of the FEED work product would
recoup its value. He expressed confidence that AIDEA would
either do "super well" or be able to cover its liability.
REPRESENTATIVE EDGMON sought to verify that AIDEA does not have
a governance role in this project.
MR. RUARO said that is correct.
6:11:25 PM
The committee took a brief at-ease at 6:11 p.m.
6:11:43 PM
SENATOR GIESSEL questioned how $50 million was arrived at.
MR. RUARO said the number was received in the application to
AIDEA and is still in flux. He added that the board adopted a
resolution that would not permit it to go higher, but it could
be lowered.
6:12:40 PM
REPRESENTATIVE KOPP asked whether there are legislative barriers
to be cognizant of.
MR. RUARO said he did not foresee any legislative barriers for
the AIDEA component.
6:13:41 PM
REPRESENTATIVE JOSEPHSON asked about the seeming panic or
urgency that subsequently dissipated in relation to the $50
million in the governor's supplemental budget.
MR. RUARO stated that AIDEA realized it could provide a form of
encumbrance or backstop ringfence of funds that did not require
any dollars leaving its accounts. That, combined with an
extended timeline for completion of FEED, meant that there was
no need for a supplemental request, and it was subsequently
withdrawn.
6:15:28 PM
EMILY NAUMAN, Director, Legislative Legal Services, Legislative
Affairs Agency (LAA), referred to a PowerPoint presentation,
titled "The Statutes of the Alaska Gasline Development
Corporation" [hard copy included in the committee packet]. She
began on slide 2, "Purpose: AS 31.25.005," which read as follows
[original punctuation provided]:
The corporation shall, for the benefit of the state,
to the fullest extent possible,
• "develop and have primary responsibility for
developing natural gas pipelines, an Alaska liquefied
natural gas project, and other transportation
mechanisms to deliver natural gas in-state for the
maximum benefit of the people of the state" AS
31.25.005(1)
• "when developing natural gas pipelines, . . .provide
economic benefits in the state and revenue to the
state" AS 31.25.005(2)
• "maximize the value of the state's royalty natural
gas" AS 31.25.005(3)
• "advance an Alaska liquefied natural gas project by
developing infrastructure and providing related
services, including services related to
transportation, liquefaction, a marine terminal,
marketing, and commercial support" AS 31.25.005(5)
6:18:26 PM
MS. NAUMAN continued to slide 3, "Powers: AS 31.25.080," which
read as follows [original punctuation provided]:
The corporation may
• "enter into agreements with other persons for joint
ownership [or] joint operation of ? an Alaska
liquefied natural gas project; " AS 31.25.080(a)(1)
• "transfer or otherwise dispose of all or part of . .
. an Alaska liquefied natural gas
project, or an interest in an asset of the
corporation" AS 31.25.080(a)(6)
• "make and execute agreements, contracts, and other
instruments necessary or convenient in the exercise of
the powers and functions of the corporation under
this chapter, including a contract with a person,
firm, corporation, governmental agency, or other
entity" AS 31.25.080(a)(11)
• "do all acts and things necessary, convenient, or
desirable to carry out the powers expressly granted or
necessarily implied in this chapter" AS
31.25.080(a)(20)
• "acquire an ownership or participation interest in
an Alaska liquefied natural gas project. . . or an
entity or joint venture that has an ownership interest
in or is engaged in the planning, financing,
acquisition, maintenance, construction, and operation
of an Alaska liquefied natural gas project" AS
31.25.080(a)(23)
6:19:42 PM
MS. NAUMAN continued to slide 4, "Executive Branch Oversight,"
which read as follows [original punctuation provided]:
"The corporation may, after consultation with the
commissioner of revenue and the commissioner of
natural resources, enter into contracts relating to an
Alaska liquefied natural gas project, including
contracts for services related to operation,
marketing, transportation, gas treatment, marine
terminal operation, or liquefaction" AS
31.25.080(a)(24)
"The attorney general shall ? be the legal counsel for
the corporation for legal services related to the
development of contracts and agreements by the
corporation that relate to an Alaska liquefied natural
gas project"
AS 31.25.050(b)(1)
6:20:42 PM
MS. NAUMAN continued to slide 5, "Contract Confidentiality,"
which read as follows [original punctuation provided]:
"The corporation may enter into confidentiality
agreements necessary to acquire or provide information
to carry out its functions" AS 31.25.090(f)
"Information and trade secrets of the corporation are
confidential ? if the corporation determines that
disclosure would cause commercial or competitive harm
or damage to the corporation" AS 31.25.090(h)
6:21:29 PM
MS. NAUMAN turned to slide 6, "Legislative Oversight," which
read as follows [original punctuation provided]:
"The board shall present to the legislature by January
10 each year a complete accounting of all assets of
the corporation" AS 31.25.140(c)(3)
6:22:14 PM
VICE CHAIR FIELDS referred to slide 4 and shared his
understanding that, while other proposals were presented that
may have had better terms for the state, Mr. Richards of AGDC
signed an exclusivity agreement with Glenfarne without
consulting the board or the attorney general (AG). He asked
whether entering into an exclusivity agreement in that manner
endangers either the terms of the contract or AGDC's ability to
convey a 75 percent ownership share.
MS. NAUMAN said she didn't have enough information to answer
that question; however, she said she wouldn't necessarily
categorize that kind of negotiation under this statute;
nonetheless, it seems to contemplate more review of contracts
and agreements of the corporation than negotiations.
VICE CHAIR FIELDS questioned the implications of 8 Star being
incorporated in Delaware versus Alaska in terms of transparency
and oversight.
MS. NAUMAN acknowledged that the state may lose some oversight
because the executive branch monitors the activity of
corporations in the state; however, she said she could not speak
directly to how much information would be lost.
6:24:30 PM
REPRESENTATIVE TILTON asked whether the legislature has the
authority to impose conditions on the LNG project operations
involving foreign entities.
MS. NAUMAN explained that there are separation of powers limits
to what the legislature could amend the statutes to cover.
Firstly, even if the legislature was looking for more
involvement in this process, there are limits to the extent that
the legislature could be required to ratify these types of
contracts. The second limitation is that the contract has been
executed, and both the U.S. and Alaska Constitutions prohibit
the legislature from enacting laws that impair existing
contracts.
6:26:05 PM
REPRESENTATIVE TILTON asked whether the legislature could
require the Legislative Budget and Audit Committee to review
foreign contracts related to state-backed energy projects.
MS. NAUMAN expected that to the extent that there were no other
laws prohibiting that, such as a confidentiality requirement,
then the Legislative Budget and Audit Committee could
investigate through its investigatory powers.
6:26:53 PM
REPRESENTATIVE TILTON asked whether there are legal recourses
for the state if Glenfarne were to default on the state's
deliverable obligations or sells to a foreign entity.
MS. NAUMAN did not know the answer, as she had not seen the
contract between Glenfarne and AGDC.
REPRESENTATIVE TILTON asked whether there are any enforceable
mechanisms in place that require Glenfarne to maintain a minimum
level of Alaska ownership or operational presence.
MS. NAUMAN responded no. There are several existing resident
work requirements in statute, but not in this set of statutes.
6:27:50 PM
REPRESENTATIVE EDGMON expressed surprise that there's not more
legislative oversight, as the constant monitoring of a "mega"
project is an absolute necessity, and the legislature could be
on the hook down the road given its appropriation authority. He
asked whether Legislative Legal Services could be the expert on
this or whether third party counsel should be consulted.
MS. NAUMAN asserted that Legislative Legal Services would be the
best choice for drafting statutes providing oversight to AGDC;
however, complex oil and gas contracts are not something the
office has specific knowledge about for this type of project.
6:30:16 PM
REPRESENTATIVE KOPP asked whether there is wiggle room for
Glenfarne to extract more money, subsidies, or royalties from
the state if the market were to take the wrong turn.
MS. NAUMAN did not know the answer.
6:32:41 PM
FRANK RICHARDS, President, Alaska Gasline Development
Corporation (AGDC), referred to a PowerPoint presentation
[included in the committee packet], beginning with an overview
on slide 2, "Presentation Topics," which read as follows
[original punctuation provided]:
• AGDC's statutorily defined authorities
• Engagement with Glenfarne
• Alaska LNG Project, Front-End Engineering Design
(FEED), and Final Investment Decision (FID)
Glenfarne structure, definitive agreements/timelines
• Roles of Legislature, Executive Branch, and AGDC
• Administration support
MR. RICHARDS continued to slide 3, "AGDC," which read as follows
[original punctuation provided]:
The Alaska Gasline Development Corporation (AGDC)
• Independent, public corporation owned by the State
of Alaska (SOA)
• Created by the Alaska State Legislature
Mission
• Maximize the benefit of Alaska's vast North Slope
natural gas resources through the development of
infrastructure necessary to move the gas to local and
international markets
AGDC divested 75% ownership of a wholly-owned
subsidiary that is advancing the Alaska LNG Project to
Glenfarne Group, LLC
6:35:23 PM
VICE CHAIR FIELDS asked about the value estimate of 75 percent
ownership.
6:35:38 PM
MATT KISSINGER, Venture Development Manager, Alaska Gasline
Development Corporation (AGDC), answered that the 75 percent was
transferred in exchange for taking the project to FID, which is
estimated at $150 million.
MR. RICHARDS clarified that encompasses the entire AK LNG
project.
6:36:09 PM
MR. RICHARDS resumed the presentation to wrap up slide 3. He
then continued to slide 4, "AGDC's Authority," which read as
follows [original punctuation provided]:
Alaska Statute (AS) 31.25 Article 1. Organization,
Administration, and Powers
• AS 31.25.005 Purpose to Develop Natural Gas Pipeline
& Provide Economic Benefits and Revenue to the State
• AS 31.25.065 Personnel Exempt from State Personnel
Act
• AS 31.25.080(a) Powers and Duties
o (1) Determine form of ownership and operating
structure
o (6) Transfer or otherwise dispose of interest in
an Alaska LNG project
o (11) Make and execute agreements and contracts
o (24) Enter into contracts
• AS 31.25.090 Confidentiality
• AS 31.25.101 State Corporation Acting in the Best
Interest of the State
• AS 31.25.120 Authority to Create Subsidiaries
• AS 31.25.140 Exemption from State Procurement Code
• SB 138, Section 76 amends uncodified law to provide
the means for Alaskans to participate in the ownership
of the pipeline
6:37:08 PM
SENATOR WIELECHOWSKI asked whether AGDC had calculated a
potential exposure to itself or other state agencies if
Glenfarne were to decide not to reach the FID.
MR. KISSINGER answered that there is no further exposure to the
state through these contracts based on whether or not the
projects go to FID; however, there is an opportunity at FID to
invest at 25 percent. In response to follow-up questions, he
stated that the obligation of Glenfarne is to take the project
to FID; the next step would be a notice to proceed in
construction. There would be no penalty to Glenfarne for not
achieving FID by a certain time. He clarified that Glenfarne
must make diligent efforts until reaching an FID. He confirmed
that if Glenfarne completes FID but does not begin construction,
then the state would have the ability to recover the assets and
control of the project. He said there is no strict obligation
in regard to require Glenfarne to return control if it completes
FID and does not begin construction, but there are provisions
that would allow the state to advance the provisions itself in
the event that Glenfarne fails to achieve an FID and decides to
abandon its obligation to diligently develop the project. He
confirmed that a payment is not required to reacquire control of
the project. To a follow-up question, he stated that there is a
"claw back mechanism," the details of which are confidential.
SENATOR WIELECHOWSKI asked whether AGDC or the state would be
required to pay Glenfarne market value for work product and
approvals to reacquire control of the project.
MR. KISSINGER offered his understanding that the [question] was
moving into the confidential nature regarding milestones and
abandonment. In response to a follow-up request for
understanding, he explained that that is sensitive information
that would be "negatively impactful to the project in the event
that there would be others looking to try and wrest control of
the project."
6:41:07 PM
MR. KISSINGER, in response to Representative Josephson, stated
that the definitive agreements entered into with Glenfarne were
done without an AIDEA backstop and would allow AGDC to move
forward with or without an AIDEA backstop.
MR. RICHARDS, in response to a follow-up question, explained
that AGDC initiated discussions with the AIDEA Board, and at
that time there were no definitive agreements to move the
project forward. He said $50 million was the top line estimate
to conduct FEED for the pipeline, with the total project being
$150 million. One aspect of the negotiation was consideration
of the "upside" to AIDEA, the beneficial terms for AIDEA for use
of its funds. Regarding a "downside," he said AIDEA wanted to
make certain that if its funds were drawn on and needed to be
able to repay the FEED work efforts, there would be an asset
that would be available for AIDEA to market. He continued:
So, that's where ... AGDC would be working with the
developer to move forward through FEED. If AIDEA, in
the backstop, were negotiated and consummated in the
deal, and ultimately a final investment decision was
not made, then AIDEA's collateral at that time would
be that FEED work backstop. And they would use that
as a potential then to find other parties to come in
and take the project through to FID.
6:44:11 PM
REPRESENTATIVE JOSEPHSON asked whether there are triggering
events that would extend or ratify the contract in which AGDC is
entering or others that would lead to the termination of those
contracts.
MR. KISSINGER answered no.
6:44:41 PM
VICE CHAIR FIELDS recalled that Goldman Sachs had screened
multiple companies and did not say that Glenfarne was the best
project owner. He pointed out that there were multiple
proposals with at least one guaranteeing the state 25 percent
ownership, while under this proposal the state is guaranteed
nothing. He questioned why AGDC would proceed with what seems
objectively to be the worst deal for the State of Alaska.
MR. RICHARDS responded that AGDC was only in discussions and has
never seen written terms; it is in the process of moving forward
with the entire AK LNG project. He said during talks with
Glenfarne, there was "a carve-out of the opportunity to talk to
folks about the Phase I project." In that scenario, he
continued, AGDC was "in discussions with them" to the point when
the final terms with Glenfarne were made and AGDC notified the
other parties that it had entered into agreement with Glenfarne.
At that point, he explained, "there was no prohibition" that
would prevent them from coming in, in the future.
VICE CHAIR FIELDS said he doesn't understand why keeping terms
secret is advantageous or enhances credibility.
MR. RICHARDS pointed to commercially sensitive aspects of
agreements.
VICE CHAIR FIELDS said if terms were disclosed, it would make it
more likely for investors to get involved. Based on the lack of
information disclosed, there is a lack of confidence that any of
the gas is guaranteed to be delivered to Alaska on favorable
economic terms.
MR. KISSINGER recalled that the Alaska Advantage Principles were
reviewed, in which the 500 million standard cubic feet (scf) for
Alaska is guaranteed. Also, within the principles is a
commitment to expand the volume in the event that Alaska moves
from its current 200 million to over 500 million. Further,
there is a final Alaska Advantage Principle that states that gas
must be at the lowest possible price to Alaskans. He concluded
that AGDC has oversight rights of all those principles.
6:49:33 PM
VICE CHAIR FIELDS asked who is in charge of setting that rate of
return for Glenfarne.
MR. KISSINGER indicated that a future slide would address FID
and long-term commitments for Alaska utilities.
VICE CHAIR FIELDS asked whether the agreement does anything in
terms of property tax.
MR. RICHARDS answered that there is no consideration for
property tax.
6:52:39 PM
REPRESENTATIVE TILTON, regarding instate delivery and commitment
to communities, asked whether Glenfarne has any binding
commitment to provide affordable in-state energy access to rural
and coastal communities.
MR. KISSINGER answered no, with respect to coastal and rural
Alaska. To a follow-up question, he indicated the principle
around 500 million is reserved for Alaskans in the Railbelt "and
other off-take along the pipeline route." To a final follow-up
question, he confirmed that Alaska would have first right of
refusal if Glenfarne receives or sells their shares.
6:53:45 PM
SENATOR WIELECHOWSKI asked whether there is a difference between
a definitive agreement and a final contract that obligates
Glenfarne to complete FEED.
MR. KISSINGER answered they are one and the same. He added that
the definitive agreement means the suite of agreements that AGDC
entered into with Glenfarne with respect to the 75 percent
transfer and Glenfarne's commitment to take the project to FID.
In response to a follow-up question, he said the governing law
is Delaware law.
SENATOR WIELECHOWSKI asked whether the state might need to pay
Glenfarne if Glenfarne secures control by conducting FEED but
refuses to build the project.
MR. KISSINGER answered, "No, that's not embedded in the
agreement nor is there a route for that in the agreements." In
response to a follow-up question, he confirmed that there has
been no "fairness opinion" conducted by any other investment
bank.
6:55:56 PM
REPRESENTATIVE JOSEPHSON asked whether, if it's true that
tariffs on gas pipelines are not regulated by the Federal Energy
Regulatory Commission, Alaskans should be concerned about
excessive transportation costs that would reduce the state's tax
and royalty revenues.
MR. RICHARDS answered that this issue is outside his
jurisdiction. Notwithstanding that, he offered his
understanding that in consideration of the gas volumes flowing
for Alaska under Phase I, the Regulatory Commission of Alaska
(RCA) will want to understand the cost of that tariff and, thus,
would be looking out for the interest of Alaska rate payers.
MR. KISSINGER added a reminder that these would all be long-term
contracts and local utilities would be part of the cost
conversation.
6:58:13 PM
REPRESENTATIVE EDGMON asked who is in control during the FID
process.
MR. RICHARDS referred to slide [24] and answered the governance
committee under 8 Star Alaska. In response to a follow-up
question regarding slide 24, as to why AGDC would not have
representation equal to that of a subsidiary company, he said
AGDC and Glenfarne would look for qualified Alaskans to
represent the interest of the state. He described Glenfarne as
"the quarterback" - the leader of the project by virtue of
having assumed the 75 percent ownership of 8 Star Alaska and
Glenfarne will commit to cover all the cost and AGDC will be
carried. He said AGDC would be meeting with Glenfarne to go
over the provisions.
7:01:11 PM
MR. RICHARDS, in response to further questions from
Representative Edgmon, expounded on the current transition
period, speaking about the ability to bring in qualified
entities that have the experience to move things forward, and
describing AGDC's role as the minority governance representing
the state's interest. He said getting to a point of investor
confidence involves FEED efforts toward an updated cost
estimate.
7:05:10 PM
MR. RICHARDS, in response to Senator Wielechowski, said the
three 8 Star board members that are able to vote are the two
Glenfarne members and one AGDC member.
MR. KISSINGER, in terms of whether AGDC would have the right to
approve of an acquisition by a foreign government or private
entity, noted there is a prohibited persons clause in the
agreement, with certain individuals described therein. Further,
he said there is a right of first refusal on any sales of shares
of 8 Star. To another question, he confirmed that if Glenfarne
were to file for bankruptcy, then [AGDC would be able to
automatically recover the assets and authorizations necessary to
develop the project]. He emphasized that Glenfarne would be
bringing competent partners into the project.
7:06:33 PM
SENATOR GIESSEL questioned the confidence being placed in
Glenfarne despite it accepting projects on a smaller scale that
have not reached FID.
MR. RICHARDS responded that AGDC did its due diligence to
determine whether Glenfarne would have the wherewithal to do
this project. He shared some history of Glenfarne including its
project finance background. He said Glenfarne would be bringing
competent partners into the project.
SENATOR GIESSEL emphasized the crucialness of having a third-
party auditor to make sure the project stays on task, with
expenditure controls.
7:10:40 PM
MR. RICHARDS, in response to a request from Representative
Foster regarding slide 24, confirmed that the three board
members make the selection of the fourth independent director
and that the independent director would not be a voting member
on the board.
7:11:39 PM
VICE CHAIR FIELDS questioned how AGDC could have one seat on the
board and maintain veto over decisions.
MR. RICHARDS answered that the board has certain decisions that
are reserved for the board; the managing member, as with
Glenfarne, has certain rights and AGDC, as the minority member,
also has certain rights "exclusive to the rights of the board."
As to whether Glenfarne could change who the neutral person was,
he said he thinks that could happen under unanimous consent. As
to whether there would be penalties if Glenfarne does not
commence service by a certain date, he said that would be after
FID, and those checks and balances would be in the subproject
LLC agreements, which are yet to be negotiated.
7:14:09 PM
REPRESENTATIVE KOPP expressed the desire to hear the remainder
of the presentation rather than continuing the question-and-
answer process that is jumping around within the presentation
material.
7:15:40 PM
The committee took a brief at-ease at 7:15 p.m.
7:16:34 PM
MR. RICHARDS resumed the presentation on slide 5, "Attorney
General's Opinion," which read as follows [original punctuation
provided]:
• AGDC's execution, delivery, and performance of the
transaction was reviewed by the AG's Office and
considered in compliance with all applicable laws
• Compliance included AS 31.25.080(24), which requires
AGDC to consult with the Commissioner of Revenue and
Commissioner or Natural Resources prior to entering
into contracts relating to an Alaska liquefied natural
gas project, including contracts for services relating
to operation, marketing, transportation, gas
treatment, marine terminal operation, or liquefaction
• AGDC consulted directly with the Department of
Revenue and the Department of Natural Resources, with
oversight and advice provided by the AG's Office
• Consultation sessions were provided on February 14,
2025, February 24, 2025, and March 10, 2025, by AGDC,
with participation from the AG's Office
• The AG's Office also provided advised [sic] on and
provided oversight to a virtual data room of
information provided to authorized users from the
Department of Revenue and the Department of Natural
Resources
7:17:55 PM
MR. RICHARDS continued through slide 6 to slide 7, "Process of
Engagement," which read as follows [original punctuation
provided]:
AGDC Sought Private Investment
• 2019 to 2024 AGDC solicited for private sector
partners
• 2022 Re-engaged Goldman Sachs for capital raise
• Strong Support from the Alaska Delegation Senators
Sullivan & Murkowski
• Energy Trade Missions to Asia with Governor Dunleavy
& Senator Sullivan
• U.S. Ambassador Emanuel promoted Alaska LNG as a
strategic energy asset
Public Engagement
• Presentations to the Alaska Legislature, Resources
Development Council, Local Governments, Alaska Native
Corporations, and Community Councils
• Stakeholders and potentially impacted parties
• Board meetings that are public noticed
• Legislative representatives assigned to the Board
• More than 130 public or open-house meetings and
public outreach events
7:20:11 PM
MR. KISSINGER continued to slide 8, "Formal Engagement with
Glenfarne," which read as follows [original punctuation
provided]:
• June 2022 AGDC initial engagement with Glenfarne
• February 2024 Goldman Sachs provided an Investor
Outreach List including Glenfarne
• March 2024 ExxonMobil recommended meeting with
AGDC
• ExxonMobil made introductions to Glenfarne CEO
• In subsequent face-to-face meetings, AGDC
rolled out the phasing concept
• April - June 2024 More advanced discussions and
face-to-face meetings
• June 2024 Letter of Intent (LOI) signed
• Full scope of the Alaska LNG Project
• Initiated a due diligence period
• Allowed AGDC to hold commercial discussions
with other potential lead parties for Phase 1
pipeline, as a contingency
• December 2024 Amendment to the LOI was executed
• Included a Draft Term Sheet setting forth the
key terms for the Definitive Agreements
• Identified an Interim Period of 60 working days
to complete the negotiation and finalization of
the Definitive Agreements
7:25:04 PM
MR. RICHARDS continued through slide 9 to slide 10, "Alaska LNG
Overview," which read as follows [original punctuation
provided]:
North Slope Gas Supply
• 40 Tcf of gas reserves in PBU and PTU
• 122 Tcf of total "Proved Producing Reserves" in
Alaska*
• Potential supply from Great Bear Pantheon
Arctic Carbon Capture (ACC)
• Adjacent to existing PBU gas plants, will
remove and sequester 7 million tons of CO2
annually and condition gas to LNG specifications
Natural Gas Pipeline
• 807-mile pipeline from Prudhoe Bay to Nikiski,
follows existing oil pipeline and highway system,
with gas delivered to Alaska communities and the
LNG plant
Alaska LNG Facility
• 20-MTPA LNG facility located in Nikiski near
the legacy Kenai LNG Plant
7:27:14 PM
MR. RICHARDS turned to slide 11, "Phase 1 of Alaska LNG," which
read as follows [original punctuation provided]:
Alaska LNG is a fully permitted integrated $43.8 bn
LNG export, pipeline, and gas treatment project
Phase 1 is the pre-build of the pipeline from the
North Slope of Alaska to Southcentral Alaska $10.8
bn
Phase 2 is the construction of North Slope gas
treatment and LNG export facilities $33 bn
By phasing Alaska LNG, Alaska can utilize existing
permits to quickly provide gas for Alaskans and
provide infrastructure for future LNG exports and
industrial use
7:28:21 PM
MR. RICHARDS continued to slide 12, "Evolution to Private
Developers," which read as follows [original punctuation
provided]:
2013-2016 Producer-Led
Producers provided initial scoping and engagement
important demonstration of producer support Moderate
Risk
2017-2022 State-Led
State-led initial design, permitting, and
authorizationimportant demonstration of state support
Highest Risk
2023-Onward Developer-Led
Transition to world-class private parties for
construction and operations No State $$ during FEED,
Option to Invest at FID
7:29:44 PM
MR. RICHARDS continued to slide 13, "Understanding FEED," which
read as follows [original punctuation provided]:
"FEED" is the final step before Final Investment
Decision (FID) and construction can start
FEED is a technical term used in the oil and gas
industry for the final stage before an FID &
construction
FEED stands for "Front-End Engineering Design"
FEED produces a final cost estimate and construction
contracts ready to be executed
7:30:41 PM
MR. KISSINGER advanced to slide 14, "Conditions to Enter FID,"
which read as follows [original punctuation provided]:
Final Investment Decision (FID) occurs when all
commercial agreements needed to underpin financing are
in place and all debt and equity capital necessary to
fund the entire project construction is fully
committed.
FID is not simply a "decision" to buildit requires
full construction funding committed and deployed by
third parties.
MR. RICHARDS, in response to concerns about AGDC committing the
state to financial risk in the future, pointed out that in terms
of project financing, the recourse would not flow back through
AGDC to the State of Alaska.
7:33:31 PM
MR. KISSINGER continued through slide 15 to slide 16, "Glenfare
Ownership Structure," which read as follows [original
punctuation provided]:
• Glenfarne will be the majority owner and manager of
8 Star Alaska (including Alaska LNG and Phase 1)
• Glenfarne will lead project development
• AGDC, as minority owner, will represent the State of
Alaska's interests
• For each subproject, including Phase 1, Glenfarne
will have the right to partner with third-party
developers and investors
• These partners will fund and develop the individual
subprojects under the management of Glenfarne
• The first stage of funding is FEED
The next stage gate is FID
• The State of Alaska will have the right, but not the
obligation, to invest up to 25% of construction costs
by FID
7:34:28 PM
MR. RICHARDS continued to slide 17, "Project Timelines," which
showed the Phase I timeline for construction of the pipeline
from the North Slope to Southcentral Alaska. He noted that
options to accelerate this timeline are being pursued and the
legislature may have the opportunity to invest in the Phase I
pipeline as early as the fourth quarter of 2025. He continued
to slide 18, "An Agreement in Line with Strategy," which read as
follows [original punctuation provided]:
Alaska LNG execution Strategy
AGDC's Role: Transition to Private Investors
• AGDC is seeking qualified partners and investors to
advance Alaska LNG to FID
• AGDC created the project company 8 Star Alaska, LLC
(8 Star) to function as the parent company of the
project
• AGDC is transitioning Alaska LNG assets under 8 Star
and is selling 75% equity ownership of the company to
investors in exchange for taking the project to FID
• AGDC will retain a 25% carried interest in 8 Star
8 Star's Role: Manage Alaska LNG through FID
• 8 Star will be managed by private investors with
AGDC being a minority owner
• 8 Star will be the project manager and retain
oversight of all 3 aspects of the project through to
FID
• 8 Star ownership may consist of one "lead party"
with other strategic partners owning minority stakes
• At FID, 8 Star will raise the construction capita l
for each of the three project subcomponents
7:36:50 PM
MR. RICHARDS continued to slide 19, "Objectives Met," which read
as follows [original punctuation provided]:
Key objectives set out at the beginning of investor
outreach were all met in the Definitive Agreements
between AGDC and Glenfarne.
• Glenfarne provides the necessary capital to cover
spending through FID for Alaska LNG
• AGDC will retain a 25% carried interest in 8 Star
Alaska, LLC
• Firm project milestones must be met
• Governance/oversight and rights of AGDC as minority
partner in the project
• Inclusion of the Alaska Advantage Principles
7:38:06 PM
MR. KISSINGER continued to slide 20, "The Alaska Advantage
Principles," which read as follows [original punctuation
provided]:
• The Company will establish and maintain a
substantial operational presence in Alaska
• The Company will accept tie-in requests from Alaska
customersas per design, one such tie-in will serve
Fairbanks
• In-State customers get the priority right for 500
MMscfd (more than double current demand)
• Capacity will be expanded to accommodate increased
demand above the original 500 MMscfd allocation
• The Project may utilize differential rates only
where they both:
1. Help maximize the flow of natural gas through the
project, and
2. Achieve the lowest possible cost of gas for Alaska
utility customers
7:39:14 PM
MR. RICHARDS moved through slide 21 to slide 22, "Role of the
Legislature," which read as follows [original punctuation
provided]:
By FID, the State will have the opportunity to invest
up to 25% equity in the construction of the project.
What does the Legislature need to make informed
decisions?
• Construction and cost overrun risks
• Equity and debt finance options
• Construction spending timing and amounts
Estimated return on equity
What does the State gain as an equity investor?
• 25% of the future profits in each of the sub-
projects invested in
Additional roles of the Legislature?
• Analyzing property taxes impacts to project
economics and costs to Alaskans
7:40:59 PM
MR. RICHARDS continued to slide 23, "Role of the Executive
Branch," which read as follows [original punctuation provided]:
Department of Revenue
• Property Taxes/Payment in Lieu of Taxes
• Investment opportunities for Alaskans, Alaska
companies, and Alaska Native Corporations
Department of Natural Resources
• Revenue-in-kind/Revenue-in-value
• Permit approvals
Departments of Fish & Game, Environmental
Conservation, and Transportation & Public Facilities
• Permit approvals
Department of Labor and Workforce Development
• Workforce training
7:42:25 PM
MR. RICHARDS described the organizational chart on slide 24, "8
Star - AGDC's Role Forward," and continued through slide 25 to
slide 26, "Fiscal Benefits to Alaska," which read as follows
[original punctuation provided]:
State of Alaska revenues come from
• Commercialization of natural gas (royalties and
production tax)
• Commercialization of unlocked Point Thomson
condensate (royalties and production tax)
• Corporate income tax on upstream and midstream
• Property tax on upstream and midstream investments
• Equity investment in Alaska LNG (if elected)
Alaska Affordable Energy for Rural Alaska
• Required by Alaska Statute 37.05.610
• Develops energy in areas of the state without access
to the pipeline
• The Alaska Affordable Energy Fund is to receive an
annual deposit of 20% of state revenue after paying
into the Permanent Fund
7:45:27 PM
MR. RICHARDS continued to slide 27, "Benefits Summary," which
read as follows [original punctuation provided]:
Completing construction of the gas treatment and
liquification plants and exporting natural gas will
result in:
• Significantly cheaper gas for Alaskans, potentially
in the $4 to $5 per MMBtu range
? Could save railbelt households $1,000 in annual
heating and electric costs
? Fairbanks residents will save even more
• Potential to attract more industry in Alaska with
cheap energy costs
• 1,000 full-time permanent jobs and thousands more
indirect jobs created
• Revenues to the State can be hundreds of million per
year from State's investments already made
• Revenues can be significantly more if State elects
to invest in any sub-project
7:47:02 PM
MR. RICHARDS moved to slide 29, "Fairbanks Gasline Project,"
which read as follows [original punctuation provided]:
• AGDC previously designed and permitted Fairbanks
spur under ASAP
• Producers designed Alaska LNG as integrated
wholesale project; permitted accordingly
• Scope changes would cause significant re-permitting
delays and costs
• Preliminary agreement with a qualified Fairbanks
company to fund, construct, and operate the Fairbanks
Gasline Project; simultaneous startup
• AGDC will share completed ASAP permit and design
work to minimize cost and schedule
• Counterparty company has requested confidentiality
7:48:42 PM
MR. RICHARDS continued through slide 30 to slide 31, "Trump
Administration Support," which read as follows [original
punctuation provided]:
Unleashing Alaska's Extraordinary Resource Potential
• Executive Order signed on January 20, 2025
Unleashing Prosperity Through Deregulation
• Executive Order signed on January 31, 2025
Establishing the National Energy Dominance Council
• Executive Order signed on February 14, 2025
Ensuring Accountability for All Agencies
• Executive Order signed on February 18, 2025
Joint Session of Congress March 6, 2025 Speech
• "My administration is also working on a gigantic
natural gas pipeline in Alaska...it's all set to go"
7:49:32 PM
REPRESENTATIVE JOSEPHSON recalled that in 2013, the state had an
opportunity to finance 25 percent of this $44 billion project
for a return of hundreds of millions of dollars. He asked how
the state could afford to invest up to 25 percent equity in the
construction of the project today, and what the state would gain
from this investment for its treasury.
MR. RICHARDS offered to follow up with DOR's revenue
projections, which fell in the range of $600 million per year if
all the taxes from the project were received. Considering the
state's current budgetary challenges, he said he does not have a
"magic bullet" to identify where the nest egg would come from.
7:52:56 PM
SENATOR GIESSEL, referencing slide 11, recalled that Mr.
Richards had stated that in 2023, the estimated cost of the
project was $43.8 billion, which is close to the $44 billion in
2013 that Representative Josephson had referenced. She
expressed surprise that there had been no inflationary increase
and asked whether 43.8 billion is an accurate number.
MR. RICHARDS explained that the level of FEED effort conducted
by ExxonMobil Corporation included a cost of $44 billion. At
the time, ExxonMobil and BP worked in partnership to optimize
the project by reviewing each component and reducing its cost
from $44 billion to $38 billion. Since then, AIDEA has
considered the cost of inflation and believes that $43.8 billion
is a relevant number. He added that getting to the accurate
cost depends on FEED and the consideration of technology
improvements, potential tariff impacts, and the cost of labor,
for example.
7:56:03 PM
JANET WEISS, Vice Chair, Board of Directors, Alaska Gasline
Development Corporation (AGDC), asked Mr. Kissinger to explain
the cost to the state regarding debt equity financing.
MR. KISSINGER reported that if the state were to take a 25
percent position in Phase I, it would require $1.25 billion in
equity. If the state were to take a 25 percent position in
Phase 2, it would require another $2.5 billion, totaling $3.5-
3.7 billion for the state's total equity estimate across both
stages.
7:57:36 PM
SENATOR GIESSEL asked if members were to sign non-disclosure
agreements, whether AIDEA would allow them to look at the
contract.
MR. RICHARDS said he would confer with AIDEA's lawyers, but he
believed that would be acceptable.
7:58:09 PM
SENATOR WIELECHOWSKI recalled that when Senate Bill 138 was
passed, it had a unanimous letter of support urging Alaska hire
and use of Alaska contractors in a project labor agreement. He
asked whether that is included in the current contract.
MR. RICHARDS responded yes; those project labor agreements would
be part of the project. He emphasized that AIDEA's role is to
ensure that Alaskans reap the benefits through work, lower cost,
and revenue.
7:59:00 PM
SENATOR GRAY-JACKSON announced that the conversation would be
continued at a future hearing. She gave closing remarks and
thanked the presenters.
7:59:41 PM
ADJOURNMENT
There being no further business before the committee, the
Legislative Budget and Audit Committee meeting was adjourned at
7:59 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| LBAC Agenda 04.09.25 (REVISED).pdf |
JBUD 4/9/2025 5:30:00 PM |
|
| AIDEA Presentation re Alaska Gasline Project 04.09.25.pdf |
JBUD 4/9/2025 5:30:00 PM |
|
| Legislative Legal Services Presentation re Statutes of AGDC 04.09.25.pdf |
JBUD 4/9/2025 5:30:00 PM |
|
| AGDC Presentation re Alaska Gasline Project 04.09.25.pdf |
JBUD 4/9/2025 5:30:00 PM |
|
| SB138 GAS PIPELINE; AGDC; OIL & GAS PROD. TAX (2014) enrolled.pdf |
JBUD 4/9/2025 5:30:00 PM |
|
| AS 31.25 Alaska Gasline Development Corporation.pdf |
JBUD 4/9/2025 5:30:00 PM |