Legislature(2025 - 2026)SENATE FINANCE 532
04/23/2025 05:30 PM House LEGISLATIVE BUDGET & AUDIT
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| Audio | Topic |
|---|---|
| Start | |
| Approval of Agenda | |
| Legislative Finance Division Confidentiality Policy | |
| Presentation(s): Alaska Liquefied Natural Gas (lng) 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 23, 2025
5:31 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
Senator Scott Kawasaki (alternate)
Representative Bryce Edgmon (alternate)
MEMBERS ABSENT
Senator Bert Stedman
Senator Lyman Hoffman
OTHER LEGISLATORS PRESENT
Representative Sara Hannan
Representative Bill Elam
Senator Gary Stevens
Senator Robert Myers
COMMITTEE CALENDAR
APPROVAL OF AGENDA
LEGISLATIVE FINANCE DIVISION CONFIDENTIALITY POLICY
PRESENTATION(S): ALASKA LIQUEFIED NATURAL GAS (LNG) PROJECT
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
ALEXEI PAINTER, Director
Legislative Finance Division
Legislative Agencies and Offices
Juneau, Alaska
POSITION STATEMENT: Gave an overview of the proposed
confidentiality policy for the Legislative Finance Division.
WARREN CHRISTIAN, Chairman
Board of Directors
Alaska Gasline Development Corporation
North Pole, Alaska
POSITION STATEMENT: Co-offered the Alaska Liquefied Natural Gas
(LNG) Project presentation.
JANET WEISS, Vice Chair
Board of Directors
Alaska Gasline Development Corporation
Anchorage, Alaska
POSITION STATEMENT: Co-offered the Alaska Liquefied Natural Gas
(LNG) Project presentation.
MIKE CHENAULT, Director
Board of Directors
Alaska Gasline Development Corporation
Nikiski, Alaska
POSITION STATEMENT: Co-offered the Alaska Liquefied Natural Gas
(LNG) Project presentation.
FRANK RICHARDS, President
Alaska Gasline Development Corporation
Anchorage, Alaska
POSITION STATEMENT: Co-offered the Alaska Liquefied Natural Gas
(LNG) Project presentation.
MATT KISSINGER, Venture Development Manager
Alaska Gasline Development Corporation
Anchorage, Alaska
POSITION STATEMENT: Co-offered the Alaska Liquefied Natural Gas
(LNG) Project presentation.
ACTION NARRATIVE
5:31:31 PM
CHAIR ELVI GRAY-JACKSON called the Legislative Budget and Audit
Committee meeting to order at 5:31 p.m. Representatives Foster,
Josephson, Kopp, Tilton, Edgmon (alternate), and Fields and
Senators Wielechowski, Giessel, Kawasaki (alternate), and Gray-
Jackson were present at the call to order. Also present were
Representatives Hannan and Elam, and Senators Stevens and Myers.
^APPROVAL OF AGENDA
APPROVAL OF AGENDA
5:32:36 PM
CHAIR 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. There being no objection, the
agenda was approved.
^LEGISLATIVE FINANCE DIVISION CONFIDENTIALITY POLICY
LEGISLATIVE FINANCE DIVISION CONFIDENTIALITY POLICY
5:32:53 PM
CHAIR GRAY-JACKSON announced that the next order of business
would be an update by Legislative Finance Division (LFD) on the
confidentiality policy.
VICE CHAIR FIELDS moved that the Legislative Budget and Audit
Committee approve the confidentiality policy for the Legislative
Finance Division.
CHAIR GRAY-JACKSON objected for the purpose of discussion.
5:33:40 PM
ALEXEI PAINTER, Director, Legislative Finance Division (LFD),
Legislative Agencies and Offices, stated that the policy before
the committee would codify the existing confidentiality policy
with the following language: "Members of the legislature and
legislative staff may utilize the fiscal analysis and budget
review services of the Legislative Finance Division. Requests by
members of the legislature and legislative staff are
confidential." Making this an official Legislative Budget and
Audit Committee policy would ensure that practices continue
under different leadership in the future. It would also give
LFD analysts a binding committee policy to cite when denying
requests for information on the basis of confidentiality.
5:35:12 PM
CHAIR GRAY-JACKSON removed her objection. There being no
further objection, the confidentiality policy for LFD was
adopted.
^PRESENTATION(S): ALASKA LIQUEFIED NATURAL GAS (LNG) PROJECT
PRESENTATION(S): ALASKA LIQUEFIED NATURAL GAS (LNG) PROJECT
5:35:25 PM
CHAIR GRAY-JACKSON announced that the next order of business
would be the continuation of the Alaska Liquefied Natural Gas
(LNG) Project presentation.
5:36:36 PM
WARREN CHRISTIAN, Chairman, Board of Directors, Alaska Gasline
Development Corporation (AGDC), introduced himself and detailed
his professional background in the oil and gas industry.
5:38:25 PM
JANET WEISS, Vice Chair, Board of Directors, Alaska Gasline
Development Corporation (AGDC), introduced herself and detailed
her professional background in the oil and gas industry.
5:40:15 PM
MIKE CHENAULT, Director, Board of Directors, Alaska Gasline
Development Corporation (AGDC), introduced himself and detailed
his professional background in the oil and gas industry, as well
as his 18-year career as a member of the Alaska State House of
Representatives.
5:42:02 PM
MR. CHRISTIAN began a PowerPoint presentation [hard copy
included in the committee packet] on slide 2, "AGDC Mission,"
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
5:42:34 PM
MR. CHENAULT continued to slide 3, "AGDC History," which read as
follows [original punctuation provided]:
HB 4 and SB 138
What the Legislature empowered AGDC to do
•AS 31.25.080(a) Powers and Duties
?(1) Determine form of ownership and operating
structure
?(6) Transfer or otherwise dispose of interest in an
Alaska LNG project
?(11) Make and execute agreements and contracts
?(24) Enter into contracts
•AS 31.25.090(f) Confidentiality
Why AGDC was given this broad authority
•Why AGDC is independent?
•Why AGDC is a corporation?
5:45:30 PM
MR. CHRISTIAN turned to slide 4, "Board Oversight," which read
as follows [original punctuation provided]:
The role of AGDC's Board
•AS 31.25.020 AGDC governed by a Board of Directors
•AS 31.25.040 The Board shall manage the assets and
business of the corporation
Why commercial agreements are confidential
•Preserve proprietary competitive advantages
•Trust building
•Protect intellectual property
5:47:10 PM
MS. WEISS addressed confidentiality in the private sector. She
explained that confidentiality is needed for commercial
agreements to maintain a competitive advantage, build trust, and
protect intellectual property.
5:48:02 PM
MR. CHRISTIAN turned to slide 5, "Role of AGDC Going Forward,"
which read as follows [original punctuation provided]:
•Represent the State's interest in Alaska LNG
•Provide oversight and governance
•Ensure that Glenfarne meets targets and Alaskans get
gas at the lowest possible price
•Develop means for Alaskans to invest in Alaska LNG,
as required by statute
•Advise the Legislature on future investment
opportunities
•Liaise between Legislature and Glenfarne
egotiate with investors and developers for three
subprojects
•Utilize and preserve extensive project expertise,
knowledge, and national and international
relationships
5:49:23 PM
SENATOR WIELECHOWSKI recalled that Mr. Chenualt had stated that
if the legislature were to get involved in the Alaska LNG
project, it would go away. He asked whether it's the board's
position that the legislature should not have oversight over the
project.
MR. CHENAULT answered no. He shared his belief that if the
statutory terms were to be changed, it would create indecision.
SENATOR WIELECHOWSKI asked whether it's appropriate for the
committee to hold these hearings and evaluate the contract.
MR. CHENAULT stated that the purpose of hearing from AGDC is to
relay what it's doing and how it's spending state appropriated
funds to bring this project to fruition.
5:51:09 PM
REPRESENTATIVE KOPP said many questions have come up about the
state's ownership share of 25 percent. He requested more
context on the history of the project's ownership share and how
its evolved from producer-led, to state-led, to developer-led.
MS. WEISS recalled that when Senate Bill 138 [passed during the
Twenty-Eighth Alaska State Legislature] was put forward in 2014,
the producer's share was 75 percent and the state had 25
percent. At the time, producers had a desire to see the
permitting work continue despite deeming the project
uncompetitive, so they gifted 75 percent ownership to the state.
She indicated that the 75/25 split has lived on in the project
because of the way it was described and birthed.
5:53:16 PM
REPRESENTATIVE KOPP asked whether anything could dilute the 25
percent share in terms of AGDC's ability to execute its mission.
MS. WEISS said there are decision points that the state can
make. She reminded the committee that the 25 percent is
reserved for the state, its citizens, and companies within
Alaska, which could be viewed as either dilution or a benefit to
Alaskans.
5:54:35 PM
MS. WEISS resumed the presentation on slide 6, "Alaska LNG &
Glenfarne," which read as follows [original punctuation
provided]:
AGDC divested 75% of a wholly-owned subsidiary
responsible for advancing Alaska LNG to Glenfarne
Why Alaska LNG is ready:
•Fully permitted
•Commercial structure
•Federal loan guarantees
•Cook Inlet crisis => project phasing
•Demonstrated economic viability
Glenfarne=> emerging energy leader
•Unprecedented Administration support
MS. WEISS explained how the Cook Inlet gas shortage helped the
project emerge and helped the phasing concept take shape. She
spoke to the emergence of Phase I, which, with the encouragement
of ExxonMobil Corporation ("Exxon"), identified Glenfarne Group,
LLC ("Glenfarne") as the LNG Developer. She said Glenfarne is
good at finding capital money, good at looking for the "win-
win," has a good reputation with similar entities, and has a
management team with a good track record.
5:59:34 PM
SENATOR WIELECHOWSKI asked whether AGDC had transferred control
of the project before commercial parameters were agreed to.
MS. WEISS explained that definitive agreements had been signed
and agreed to ahead of the transfer of control.
SENATOR WIELECHOWSKI asked about the outstanding commercial
parameters.
MS. WEISS said the outstanding commercial parameters were agreed
to for this stage; however, there are more parameters to be
defined in front-end engineering design (FEED).
SENATOR WIELECHOWSKI asked which commercial parameters had not
been agreed to beyond FEED.
MS. WEISS said she was referring to details that Glenfarne would
work out on behalf of 8 Star Alaska, LLC ("8 Star"), and gas
supply agreements, for example, which would come later.
6:00:56 PM
SENATOR WIELECHOWSKI asked if Glenfarne were to propose an
unreasonable cost to service for Alaskans, whether AGDC could
regain control of the project.
MR. CHRISTIAN said AGDC has clawback provisions if its required
milestones are not met.
SENATOR WIELECHOWSKI asked whether AGDC would be required to pay
Glenfarne to reacquire control.
MR. CHRISTIAN deferred the question to AGDC staff.
6:02:30 PM
FRANK RICHARDS, President, Alaska Gasline Development
Corporation (AGDC), introduced himself and detailed his
professional background and experience in the oil and gas
industry.
6:06:13 PM
MATT KISSINGER, Venture Development Manager, Alaska Gasline
Development Corporation (AGDC), introduced himself and detailed
his professional background and experience in the oil and gas
industry.
6:08:49 PM
MR. RICHARDS resumed the presentation on slide 7, "What's Been
Secured/Future Opportunities," which read as follows [original
punctuation provided]:
What's been secured
•Gas for Alaskans as top priority
•All costs covered until FID option
•25% of 8 Star in perpetuity
•25% of developer economics
Future opportunities
•Up to 25% equity investment in each sub-project
•Opportunities for Alaskans to invest
MR. KISSINGER described developer economics in further detail.
He explained that AGDC has a 25 percent carried interest in 8
Star, which is the "Topco" that would get AGDC through FEED to a
final investment decision (FID). He added that because the
project was staged, it would come in phases. The 25 percent
carveout in perpetuity would come with developer economics,
which is often uncontracted volume to the tune of several
hundred million dollars per year. He added that many contracts
across the Lower 48 stipulate 80-90 percent of the total volume
leaving around 10 percent left; however, most LNG facilities
operate over their nameplate capacity, which should only be
exacerbated in cold temperatures, as turbines are more efficient
in cold weather. He said there could be a profound revenue
source from the developer economics alone. Carveouts for the
future include subproject participation, such as the gas
treatment plant, also referred to as Arctic carbon capture, the
pipeline, and the LNG plant. Each of those projects would have
FIDs and an opportunity for AGDC and the state to invest 25
percent, which is the next key decision point for the
legislature.
6:13:32 PM
VICE CHAIR FIELDS referred to slide 8 and shared his
understanding that currently, AGDC has reserved 25 percent share
in [8 Star], but the state has no ownership over any of the
subprojects. He asked whether that is correct.
MR. KISSINER responded that is correct, as those assets don't
exist yet. As the assets are built, the state would have the
opportunity to invest up to 25 percent.
VICE CHAIR FIELDS shared his understanding that if Glenfarne
failed to meet its milestones, the state would have to pay
Glenfarne for a nonexistent project under the clawback terms in
the agreement signed between AGDC and Glenfarne.
MR. KISSINGER said no, total project control would be clawed
back. He clarified that the clawback would be a paid clawback
because penalizing developers for missing a milestone would
disincentivize them from putting their best work into it.
VICE CHAIR FIELDS said he's trying to get a sense of how much
the state would be in a position to pay. He shared a scenario
in which Glenfarne failed to develop the pipeline and asked how
much money AGDC or the state would have to spend to regain
control.
MR. KISSINGER said it depends and likened the contractual
agreement to a marriage. He said there's an annulment period at
which point, if [Glenfarne] was not acting in good faith and not
advancing the project, the project could be reverted back to
AGDC at zero cost. After that, if Glenfarne failed to enter
FEED, the difference in fair market value would be clawed back.
He noted that it's hard to quantify, because without entering
the first FEED milestone, there wouldn't be that much added
value. He estimated that it would cost around $10 million or
less [to regain control] if it's the first milestone, which
wouldn't necessarily be paid by the state if the developer were
swapped, for example.
6:17:38 PM
VICE CHAIR FIELDS surmised that under the signed contract, "bad
faith" would need to be proved, which would be hard in practice.
MR. KISSINGER declined to answer due to the confidentiality
agreement.
6:17:57 PM
SENATOR WIELECHOWSKI asked whether the work product had been
provided to Glenfarne
MR. KISSINGER answered yes.
SENATOR WIELECHOWSKI asked if the state does not make the 25
percent equity investment in project, what would be gained for
the $1 billion in work product and for turning over the other
assets that were acquired.
MR. KISSINGER explained that 75 percent was transferred to AGDC
with a lot of work product for free, so at that point, there was
zero value attributed.
6:19:23 PM
SENATOR WIELECHOWSKI pointed out that somewhere between $650
million and $1 billion was spent [on work product], which had
been turned over to Glenfarne. He restated the question, asking
what the state would receive if it did not invest anything
further in the project.
MR. KISSINGER answered 25 percent of developer economics through
perpetuity, which could be uncontracted volumes, for example, to
the tune of hundreds of millions of dollars per year.
6:20:23 PM
MR. RICHARDS emphasized that the project was designed for 20
million tons of LNG production. So, efficiencies in the realm
of 25-30 percent above the nameplate production would amount to
5-6 million tons per year of additional production that would be
available for 8 Star to sell on the oil market through spot
sales. He said it would return hundreds of millions of dollars
to the developers to disburse through the ownership structure.
SENATOR WIELECHOWSKI sought to clarify the definition of
"developer economics."
MR. KISSINGER said developer economics would be further defined
through negotiations when the subproject LLC agreements are
completed. Traditionally, it manifests as a percentage of
uncontracted volumes. He explained that project financing would
be based on the agreements coming into it rather than on one's
own "purse," so sales agreements on the downstream and gas
purchase agreements on the upstream with credit worthy partners
to build up a level of credit quality within the entity. This
way, the funds can be borrowed and all that's needed is the
smaller amount in equity, which is reflected on slide 8.
6:24:33 PM
MR. RICHARDS described the bar chart on slide 8, explaining that
the project debt would be financed at 70 percent leaving 30
percent equity to be raised in Phase I, which totals
approximately $3.2 billion. He calculated that 25 percent of
$3.2 billion would be available for the state to invest in
totaling approximately $800 million.
6:25:47 PM
REPRESENTATIVE KOPP asked what would happen if Glenfarne were to
come up short during FEED.
MR. KISSINGER said he couldn't divulge competitively sensitive
aspects of the contract; nonetheless, he said other [developers]
could step into that role. He added that AGDC is betting on
Glenfarne succeeding, not failing, so the last thing AGDC would
want to do is to undermine Glenfarne by actively seeking out
other investors.
REPRESENTATIVE KOPP asked whether anything further could be
shared in terms of interest in the project to assure members
that the project is moving forward.
MR. KISSINGER suggested that any interested investors should be
in conversation with 8 Star to invest alongside and join as a
partner.
6:27:56 PM
REPRESENTATIVE KOPP asked whether AGDC could speak to potential
investments from other countries.
MR. KISSINGER answered delegations from Thailand and South Korea
would be coming next week.
REPRESENTATIVE KOPP said he was confused on the operating and
capital side of AGDC and asked how the funds would be utilized
on both sides of the budget.
MR. RICHARDS stated that the governor's FY 26 budget includes an
operating request of $2.5 million for employee salaries,
building rent, office commodities, and information technology
(IT). The majority of AGDC contracts are covered under the
capital budget to follow the legislature's intent of not
creating a large bureaucracy. The capital request in the
governor's FY 26 budget is $4.5 million, which would allow AGDC
to retain knowledge and oversee Glenfarne's work going into
FEED, as well as working with consultants to understand the
opportunities and risks of investing in the project and bringing
Alaskans into the mix.
6:31:40 PM
REPRESENTATIVE KOPP asked how AGDC would be impacted if capital
funds "went away."
MR. RICHARDS said without the money, that expertise would not be
available and AGDC would be representing the state's minority
interest with very few technical or administrative assets, which
would be a challenge.
6:32:44 PM
SENATOR GIESSEL recalled that in 2012, the main interest was
getting gas to Alaskans. She asked for the timeline on Phase I
and what the delivery of gas would look like at that point.
MR. RICHARDS shared the following timeline: starting FEED in
2025, completing FEED by the end of 2025, looking at financing
options in 2026, starting construction in 2027, and first gas
available in 2030 to 2031. He said they've also discussed
potential acceleration, in recognition that there's a dire need
for gas in Southcentral and Fairbanks. However, he said
[acceleration] would take support from the federal government.
He estimated that pricing would be in the range of $13 to $14
per million British thermal unit (Btu), whereas Cook Inlet
prices are around $9 per million Btu.
SENATOR GIESSEL asked what would happen if in 10 years,
investors in Phase I were to pull out because the world energy
picture had changed. She asked how that would impact the price
of gas through the tariff accrued for the $10.8 billion
pipeline.
MR. RICHARDS explained that FID is the critical decision point
for investors at which point they have to make sure that
contracts are lined up, economic hurdles are met, permits are
assigned, and customers are lined up for the offtake. He
acknowledged that a concern had been raised that Glenfarne came
into the project solely because of the $50 million AIDEA
backstop. However, he shared that Glenfarne decided to suspend
discussions on the AIDEA backstop, so the project would move
forward under Glenfarne's leadership without reliance on the $50
million to cover FEED.
MR. KISSINGER stated that FID cannot be entered into without the
long-term contract and pricing already in place. He concluded
that the cost overrun risk ultimately sits with project
sponsors.
6:40:02 PM
SENATOR GIESSEL said it still doesn't answer the question of
what would happen if the project "cavitates" halfway through and
who would be left holding the bag.
MR. KISSINGER responded the project sponsors would be left
holding the bag; however, if someone had spent $5 billion and
went bankrupt, another entity would pick it up and finish the
project. Regardless, the off-take agreement and pricing
mechanisms would still be in place for the full life of the
contract. He emphasized that when FID is entered, definitive
pricing would be set for 30 years.
6:41:10 PM
VICE CHAIR FIELDS reported that the Trans-Alaska Pipeline System
(TAPS) cost $8 billion 50 years ago, so the estimated pipeline
cost of $10.8 billion for the Alaska LNG project is 20 percent
more in nominal terms. He commented on the rate of inflation
and asked whether it's plausible that the project's cost would
only increase by 20 percent when the value of the dollar has
gone from 1 to 5.
MR. RICHARDS deferred the question to Mr. Christian.
6:42:57 PM
MR. CHRISTIAN stated that the estimates were created by Exxon,
an entity that is very detailed in how it executes projects with
ironclad design. He added that the estimates were also looked
at by other pipeline companies and evaluated by Fluor in 2023.
VICE CHAIR FIELDS asked whether gas could flow through the
pipeline to make the project economic without the gas treatment
plan.
MR. RICHARDS responded it would depend on the composition of the
gas. If there were a source of gas with low or no CO2, it could
be put into the pipeline and delivered to an LNG plant for
liquefaction.
6:44:58 PM
SENATOR WIELECHOWSKI asked whether Glenfarne would take on any
risk in developing the Phase I pipeline or whether state
utilities and consumers would bear the risk of cost overruns.
MR. RICHARDS stated that Glenfarne is leading the effort in
utilizing private funds to take the project through FID, so
Glenfarne would be at risk.
MR. KISSINGER added that other investors would come in at FID,
but the project sponsors would take on the cost overrun risk.
SENATOR WIELECHOWSKI sought to confirm that cost overruns would
not be passed on in the form of increased tariffs to Alaskan
consumers and state utilities.
MR. KISSINGER reiterated that contracts would be set at FID, so
the buyer would have to agree to that.
6:46:45 PM
MR. RICHARDS resumed the presentation on slide 9, "Understanding
the State's Risk," which read as follows [original punctuation
provided]:
There is NO risk to the state until the State decides
to invest further. Glenfarne assumes 100% of
development cost and risk
State assumes risk only if a decision is made to
invest
First equity investment decision for Phase 1 Pipeline
could come as early as 4th quarter of 2025
The State will have access to confidential project
documents available to all investors
6:47:20 PM
MR. RICHARDS continued to slide 9, "Investing in Alaska LNG,"
which read as follows [original punctuation provided]:
All potential investors will have access to
confidential FEED documents and background materials
necessary to fulfill their due diligence when making
huge financial investments
Other Alaskan entities could take advantage of
reserved 25%, such as Alaska Native Corporations
Legislature's decision:
Should we invest?
How much?
How will investment be funded?
How to perform due diligence?
6:49:08 PM
REPRESENTATIVE EDGMON sought to confirm that there are no major
underwriters in 2025.
MR. RICHARDS stated that Glenfarne is taking on the
responsibility of funding the next level of effort and bringing
in partners to take the project through FEED to FID. At this
point, however, AGDC is not ready to make FID until the
information is updated.
REPRESENTATIVE EDGMON asked whether 8 Star should be at the
table to better understand where the project is at. He opined
that it seems more hopeful and aspirational that the project
would be completed by 2031.
MR. RICHARDS assured the committee that the proposed timeline
had been worked through with 8 Star and Glenfarne. He added
that both entities are working to advance this project by
bringing in additional partners and hiring engineering
contractors. Ultimately, he conceded that the project schedule
may change, but for now, the proposed timeline is believed to be
achievable.
REPRESENTATIVE EDGMON said he feels like he's not talking to the
real authority on the pipeline, and instead, talking to someone
who is representing someone else who is looking for major equity
investors that are yet to be identified. Without sounding
cynical, he questioned why there is such optimism that the
Alaska LNG project would produce gas in 6 years. He reiterated
that he's trying to walk away with something more tangible, so
he could tell his constituents that the project is happening.
6:53:03 PM
SENATOR WIELECHOWSKI recalled that AGDC had stated that Alaskans
would receive priority gas at the lowest possible cost and asked
how that would be calculated if volumes for the LNG plant
provide a reasonable rate of return for the pipeline.
MR. KISSINGER said many variables would factor in, such as
equity return for investors, for example. Another major factor
is differential pricing, which he defined as selling to
industrial customers at a far lower cost than utility customers.
He added that differential pricing would be used from Phase I to
Phase II to bring down the local price from $13 to $9 in the
first train; the second train would reduce the local cost from
$9 to $6. He added that minority rights were carved out in the
contracts to allow AGDC to govern the factors that go into
calculating differential pricing.
6:55:21 PM
SENATOR WIELECHOWSKI recalled that AGDC had previously indicated
that capacity would be available for large data centers and new
demand with volumes in excess of 500 million cubic feet (MMcf)
per day allotted for Alaska demand. He asked whether Glenfarne
would have sole authority to determine which Alaskan projects
receive capacity.
MR. KISSINGER said provided that the projects were in line with
the Alaska Advantage Principles, Glenfarne would be leading
negotiations. Further, AGDC would ensure that the contracts are
in line with the principles in that they would deliver the
lowest possible price to Alaska utility companies.
SENATOR WIELECHOWSKI asked what would happen if it exceeds 500
MMcf, which has been allotted for Alaska demand.
MR. KISSINGER said it would depend on whether all three trains
decide to go forward. If fewer decide to go forward, there
would be extra capacity. In the event that all three trains go
forward, the pipeline system would be expandable.
6:56:58 PM
SENATOR WIELECHOWSKI asked whether Glenfarne would receive a fee
for marketing the gas to Alaskans, LNG customers, or to others.
MR. KISSINGER answered yes, they would receive a fee as the
manager of the project.
6:58:22 PM
ADJOURNMENT
There being no further business before the committee, the
Legislative Budget and Audit Committee meeting was adjourned at
6:58 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| LBAC Agenda 04.23.25 .pdf |
JBUD 4/23/2025 5:30:00 PM |
|
| LFD Memo and Proposed Confidentiality Policy.pdf |
JBUD 4/23/2025 5:30:00 PM |
|
| AGDC Presentation to LBAC 04.23.25.pdf |
JBUD 4/23/2025 5:30:00 PM |
|
| Alaska LNG FAQs from AGDC 2025 04 17.pdf |
JBUD 4/23/2025 5:30:00 PM |
|
| Alaska LNG Fact Sheet from AGDC 2025 04 17.pdf |
JBUD 4/23/2025 5:30:00 PM |