Legislature(2025 - 2026)SENATE FINANCE 532
02/10/2025 09:00 AM Senate FINANCE
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| Audio | Topic |
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| Start | |
| Alaska Gasline Development Corporation: Agdc | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE FINANCE COMMITTEE
February 10, 2025
9:02 a.m.
9:02:52 AM
CALL TO ORDER
Co-Chair Hoffman called the Senate Finance Committee
meeting to order at 9:02 a.m.
MEMBERS PRESENT
Senator Bert Stedman, Co-Chair
Senator Lyman Hoffman, Co-Chair
Senator Mike Cronk
Senator James Kaufman
Senator Jesse Kiehl
Senator Kelly Merrick
MEMBERS ABSENT
Senator Donny Olson, Co-Chair
ALSO PRESENT
Frank Richards, President, Alaska Gasline Development
Corporation; Matt Kissinger, Head of Commercial and Venture
Development, Alaska Gasline Development Corporation;
Senator Cathy Giessel.
SUMMARY
^ALASKA GASLINE DEVELOPMENT CORPORATION: AGDC
9:03:51 AM
FRANK RICHARDS, PRESIDENT, ALASKA GASLINE DEVELOPMENT
CORPORATION, (AGDC), introduced himself.
9:04:22 AM
Mr. Richards discussed the presentation, "Senate Finance
Committee Meeting, February 10, 2025" (copy on file). He
pointed to slide 2, "AGDC":
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
Current Owner and Developer of the Alaska LNG Project
• Transitioning project to private ownership under
qualified developers
9:05:48 AM
Mr. Richards addressed slide 3, "Alaska LNG Overview":
North Slope Gas Supply
• 40 Tcf of gas reserves in PBU and PTU
• 122 Tcf of total "Proved Producing Reserves" in
Alaska*
• Early 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
Mr. Richards explained that the pipeline was meant to
capitalize the natural gas resources existing on the North
Slope and had been designed to line had been designed to
deliver gas from both the Point Thompson Unit (PBU) and the
Prudhoe Bay Unit (PBU). He shared that the Arctic Carbon
Capture plant was in Prudhoe Bay. He relayed that 7 million
tons of CO2 would be removed from the gas stream and pushed
back down into the geologic formations for sequestration
and potentially the 45Q Tax Credits. The LNG gas would then
enter the 807-mile pipeline to be distributed to
communities, ultimately ending in Nikiski where it would be
liquefied. The liquefied product would be easily
distributed internationally. In 2024, the project was
estimated to cost $44 billion; however, inflation and the
impacts of potential new tariffs could alter costs.
Co-Chair Hoffman asked about the ne tariffs.
9:08:30 AM
Mr. Richards relayed that the president was considering a
25 percent tariff on steel imports. He said that
consideration of the tariffs would be ongoing while the
impacts were revealed to the American people and the world.
9:09:14 AM
Co-Chair Hoffman asked whether Mr. Richards would be
addressing the infrastructure costs that would be necessary
to make the pipeline operable.
9:09:30 AM
Mr. Richards replied in the affirmative. He said that the
presentation highlighted the overall goal set out in SB 138
to advance forward an LNG project to commercialize the
assets for Alaskans and provide gas to Alaskans and to sell
on an international level for the benefit of Alaskans.
Mr. Richards highlighted slide 4, "Phase 1 of Alaska LNG":
Alaska LNG is a fully permitted integrated $43.8 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.
9:11:57 AM
Senator Kiehl wondered who would bear the cost of gas
treatment and the removal of hydrogen sulfite and CO2 from
the LNG.
Mr. Richards replied that Great Bear Pantheon had done some
flow tests, which had showed very little hydrogen sulfite
and CO2. He said that this could make it possible that the
gas could flow directly into the pipeline for consumption.
He said that, should the Great Bear Pantheon gas not come
to fruition, the corporation was looking into the Point
Thompson Unit, which would require an additional 62 miles
of pipeline but the Point Thompson Unit as had lower CO2
levels than the gas at Prudhoe Bay. He suggested that using
the Point Thompson gas would alleviate the need for
treatment of the gas for hydrogen sulfite and CO2.
9:14:02 AM
Co-Chair Stedman wondered how much of the project's
capacity would be pre-sold and utilized. He queried how
Phase 1 financing would be secured.
9:14:23 AM
Mr. Richards responded that the capacity on the pipeline,
designed for the full flow was 3 billion standard cubic
feet per day. He said that the in-state needs ranged from
180 million to 200 million standard cubic feet per day,
which was a small fraction of the overall capacity of the
project. He stated that the reason that the full 42-inch
pipe had been considered was because that was what the
permitting already indicated, and authorization from the
FERC had been given for that diameter of pipe. He explained
that changing the diameter of pipe would require the
reopening of the environmental process and would add
additional time and cost. He relayed that the design was to
provide gas to Alaskan utilities and industry. He related
that the next phase would include front end engineering and
design, which would help define the overall cost for off
takers. He asked Mr. Kissinger to speak to Co-Chair
Stedmans question.
9:16:15 AM
MATT KISSINGER, HEAD OF COMMERCIAL AND VENTURE DEVELOPMENT,
ALASKA GASLINE DEVELOPMENT CORPORATION, explained the
financing of the project. He said that the project would be
financed through a traditional project finance structure
approximately 70 percent debt and 30 percent equity. Debt
would be underpinned by federal loan guarantees and the
remaining would be funded by equity investors who would be
backed by long-term take commitments of the ultimate buyers
of the gas.
9:17:22 AM
Co-Chair Stedman asked whether the guarantee by the federal
government was against a fault or late debt service
payments. He queried the actual guarantee to the bond
holder.
9:17:42 AM
Mr. Kissinger replied that the federal government would be
guaranteeing against the fault of the buyers.
9:17:46 AM
Co-Chair Stedman asked how much volume would need to be
moved to break even on the 70 percent debt service.
9:18:08 AM
Mr. Kissinger replied that the cost to deliver the in-state
volumes of gas were in the $12-$13mmbtu range, which
included the full service of the debt and the return on
equity for investors.
9:18:37 AM
Co-Chair Stedman understood that if Phase 2 was never
reached the state would be fine.
9:18:43 AM
Mr. Kissinger replied that it depended on the definition of
fine; it would be less than importing LNG.
9:18:56 AM
Co-Chair Stedman clarified that the project had viability
without implementing Phase 2.
9:19:28 AM
Mr. Kissinger agreed and explained that the project was
sustainable with only the completion of Phase 1.
9:19:37 AM
Co-Chair Stedman asked about the fiscal infrastructure and
how it would be addressed.
9:20:03 AM
Mr. Richards replied that the infrastructure was the
physical infrastructure necessary to construct the project.
He cited the Dalton Highway, bridges, the Parks Highway,
the Alaska Railroad, and the ports in the state that would
receive the incoming pipe shipments. He said that Seward
could be the potential entry point for pipe to be delivered
and then transported by railroad to delivery points in
Fairbanks where it would be trucked along the Dalton
Highway. He spoke of bridge uptakes able to handle heavy
module loads associated with the project. He said over the
last 10 years the bridges had been retrofitted to handle
ethe weight of the modules and the pipe load. He believed
that the infrastructure was in good condition to support he
infrastructure of the project.
9:21:33 AM
Co-Chair Hoffman understood that Mr. Richards was
testifying that no additional infrastructure across the
state would be needed to bring in the materials for the
projects. He surmised that there would be no additional
expenditures for upgraded infrastructure related the
building of the project.
9:21:55 AM
Mr. Richards replied that the corporation had been in
consultation with the railroad and the DOT&PF about what
would be needed for the project. He understood that port
development had been ongoing for needs within Seward that
would benefit the project.
9:22:31 AM
Senator Kiehl asked about tariffs and steel. He asked
whether the project would be bound to buy American under
the federal loan guarantees.
9:22:43 AM
Mr. Kissinger replied that the regulations for the loan
guarantees were under development. He said that the
guarantees were in statute but had been amended to be
applied to the LNG export project. The corporation would be
working with the current federal administration on defining
the requirements under the regulation. The buy American
factor may not apply.
9:23:33 AM
Senator Kiehl asked whether buying American steel would
raise the steel cost more than 25 percent.
9:23:36 AM
Mr. Richards replied that a number could not be given at
this time. He understood that if money had been granted to
construct, then the buy American cluse went into effect.
He said that he was not aware the buy American clause was
part of the loan guarantees for the federal Department of
Energy.
9:24:37 AM
Co-Chair Hoffman questioned whether the state had the
necessary labor force in place to construct the pipeline.
9:24:57 AM
Mr. Richards replied that labor unions in the state had
stated that there was a workforce available for the
project. He said that the goal was to maximize the Alaskan
workforce, but the outside workers would be necessary.
9:25:52 AM
Co-Chair Stedman reminisced on the number of years he had
sat through presentations on the proposed gasline and noted
that in all those years he had never heard that the Alaskan
workforce could build the gasline. He said that previous
testimony had stated that the workforce would come from all
over America and Canada. He stated that historically,
conversations on steel production had indicated that
importing of steel supplies would need to be addressed,
which had yet to be addressed. He recalled conversations
surrounding the rebuild of infrastructure that would be
used for the project; he expressed discomfort that concerns
about the project that had been discussed in the past had
never been reconciled. He added that further discussion of
the cost of the debt service would be in order moving
forward. He believed that consumers and the state would
need financial protections.
9:30:44 AM
Mr. Richards agreed with Senator Steadmans concerns. He
said that the corporation was updating the cost estimates
to be able to deliver the information to the private sector
so they could make the decision to sign on to the project.
He discussed the evolving conversation surrounding the
price and supplier of steel.
9:33:52 AM
Mr. Richards looked at slide 5, "2024 Legislative Intent
Language":
"It is the intent of the legislature that the Alaska
Gasline Development Corporation continue to work
towards meeting the critical energy needs of Alaskans
by advancing a pipeline project proposal which would
deliver North Slope natural gas to Alaska's utilities,
businesses, and homeowners. Further, it is the intent
of the legislature that the Alaska Gasline Development
Corporation complete an independent third-party review
of a project proposal that would commercialize North
Slope gas and present that analysis to the legislature
by December 20, 2024. 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 1 of a
pipeline project."
At the direction of the Alaska Legislature, Wood
Mackenzie was contracted to complete an independent
third-party economic assessment of the Alaska LNG
Phase 1 Pipeline.
The analysis shows a positive economic value to the
state.
9:34:43 AM
Mr. Richards pointed to slide 7, "Wood Mackenzie Study":
• At the direction of the Alaska Legislature, AGDC
contracted with Wood Mackenzie to perform an
independent third-party economic assessment of the
Phase 1 gas pipeline
• Wood Mackenzie's key findings are:
• The Phase 1 pipeline can match or beat the cost of
imported LNG
• The Phase 1 pipeline will create significant new
jobs and economic activity in
Alaska
• Phase 1 increases the likelihood of full project
success
9:35:33 AM
Mr. Richards displayed slide 8, "Wood Mackenzie Analysis":
The Wood Mackenzie Analysis shows that the Phase 1
pipeline can deliver gas at or below the cost of
imported LNG with just domestic demand. As new Anchor
Customers develop, Alaskans will benefit from lower
cost energy.
Mr. Richards noted that the bar on the left of the slide
represented the range of costs of LNG imports and did not
include the onshore reception costs; the additional onshore
reception costs would be added to the over import cost. The
other four bars reflected a stair step reduction
suggesting that piped gas would provide access to potential
upside demand, which would result in the lower cost of
delivered gas.
9:38:14 AM
Co-Chair Hoffman surmised that at some stage the Alaska LNG
price of $2.23, with imports at $13.72, Alaskans would be
willing to pay $5 to $6, rather than the import at $13.72.
9:39:27 AM
Mr. Kissinger replied that each bar was a blend of base
demand with added layers of industrial demand. He said that
the way to bring the local price down was to layer on
industrial demand.
9:40:24 AM
Co-Chair Stedman asked whether forward contracts for take-
off from potential customers would lower the price for
Anchorage residents. Or would Anchorage residents assume
all the risk.
9:40:54 AM
Mr. Kissinger replied that a common system differential
rate would be used. He shared that there would be a
differential rate for industrial payers; gas would be
supplied at the start up threshold rate, which would have a
direct effect on what rate payers were paying. Additional
industrial demand would dilute the cost for rate payers.
9:41:48 AM
Co-Chair Stedman asked what kind of risk exposure Alaskan
residents would face if industrial users did not come to
the table to shoulder some of the cost.
9:43:09 AM
Mr. Richards replied that the developer should be taking on
the cost of cost overrun risk.
9:44:13 AM
Co-Chair Stedman replied that he was not referring to cost
overrun risk. He thought that the corporation was relying
on additional load factors to come into play after
construction had already begun. He asked whether data
centers and ammonia plants were expected to take no-pay
contracts before construction began. He wondered about
building a 42-inch line while only using 10 percent of it.
He questioned the economics of the plan.
9:45:16 AM
Mr. Kissinger referred to slide 8. He pointed to the
baseload bar on the graph and noted that the cost was lower
than importing LNG and represented existing demand with a
considerable decline over time based on efficiencies and
the potential for population decline. He relayed that based
on the current cost estimate, with contingencies, $12.80
was the high watermark. He stated that the cost estimate
did not include additional industrial demand and thought
that there was easy industrial demand growth unaccounted
for the in the baseload number. He stressed that based on
current modeling the baseload demand of local and
residential commercial customers would keep the cost at
$12.80.
9:47:05 AM
Co-Chair Stedman asked for further explanation of the
utilities on the Railbelt as the energy map there differed
greatly from Southeast. He asked how Cook Inlet would be
incorporated into the corporations plan.
9:47:53 AM
Mr. Kissinger replied that in the early years, the
corporation had mapped the existing contracts out of Cook
Inlet while feathering gas from the pipeline as contracts
expired and had spread the rates through the outer years.
He shared that this was called a sculpting tariff.
9:48:33 AM
Senator Kiehl asked whether Cook Inlet would be out of gas
at the end of the contracts or would the gas be shut off to
allow for all gas to come from the North Slope.
9:48:53 AM
Mr. Kissinger responded that the assumption was that the
demand beyond the contracted volume out of Cook Inlet would
be met through the pipeline.
9:49:09 AM
Senator Kiehl understood that the contract would end with
gas in Cook Inlet, but the contract would not be renewed
because the gas levels would be too low. He recalled a Wood
Mackenzie analysis from November that had reflected a 90
percent cut in property tax, a tax subsidy provided by the
state. He asked about the Great Bear prospect and the $1
treatment cost gas. He wondered when Alaskans would know
what their heating costs would be because of the project.
9:50:40 AM
Mr. Richards replied that the property tax issues would
require a further conversation between the administration
and boroughs. He reiterated that the gasline was meant for
Alaskans and Alaskan gas for Alaskans. He said going from a
2mil property tax rate to a 20mil tax rate, $2.20 would be
added to the cost of the gas. Alternative case of going
from the Great Bear Pantheon to Point Thompson gas added
$.78.
Co-Chair Hoffman asked which schedule Mr. Richards was
referring to.
Mr. Richards replied that he was addressing the Wood
Mackenzie report, page 19.
9:52:36 AM
Senator Kiehl hoped to have a deeper conversation with Mr.
Richards about who subsidized whom within the state. He
assumed that who paid for what and how much would be
concretely determined by start of the project.
9:53:16 AM
Mr. Richards responded in the affirmative. He noted that
further in the presentation was a slide that detailed all
the components necessary to make a final investment
decision.
9:53:31 AM
Senator Kaufman asked about the total LNG import cost
range. He wondered whether the cost of the facility under
discussion on the Kenai was reflected in the presentation.
9:54:08 AM
Mr. Richards said that discussions were still underway, and
the costs were unknown.
9:54:37 AM
Senator Kaufman queried a peer reviewed approach to
scrutinizing all aspects of the project that would
supplement the financial analysis.
9:56:04 AM
Mr. Richards replied that peer review analysis had been
done for the entire project with Exxon Mobile and BP after
they had left the project, an independent third-party had
also reviewed the analysis. He said that no review had been
done for the current Phase 1, but that experts in the
various involved disciplines would be reviewing the plans.
9:57:14 AM
Mr. Richards pointed to slide 9, "Phase 1 Jobs."
The Impact in jobs created from Alaska LNG Phase 1 is
4x larger than the LNG imports alternative mainly due
to larger in-state construction scope.
9:57:51 AM
Mr. Richards addressed slide 10, "Economic Impact."
Economic impact for Alaska LNG Phase 1 is 7x 10x
larger than the LNG imports alternative with the
additional benefit of potential lower gas cost via
industry expansion and upside demand.
Mr. Richards noted that the slide showed $10.3 billion in
positive economic impact to the state from the construction
and operation of the project.
9:58:33 AM
Co-Chair Stedman understood that the pipeline would be a
bullet line.
9:58:38 AM
Mr. Richards replied that it would be a pipeline that would
deliver gas to Alaskans like the initially proposed line
when the legislature created the corporation.
Co-Chair Hoffman thought that the problem Alaskans faced
was that the 42-inch line seemed out of reach. He wondered
whether the idea of a bullet line would be reevaluated.
9:59:40 AM
Mr. Richards responded that the corporation had
investigated what it would take to build a differently
sized pipeline, not only the cost impacts but also the
long-term missed opportunities. He lamented that changing
the size would require reopening the environmental process.
He asserted that it would be easier to use the existing
plan with the existing permits. He said that investors were
interested in the full 42-inch pipeline and export
facility.
10:01:42 AM
Co-Chair Hoffman hoped the potential investors would
testify before the committee.
10:02:12 AM
Co-Chair Stedman thought that the committee should examine
the other similar Canadian projects, particularly in
Alberta, that had faced cost overruns and difficulties,
which he thought were normal. He added that an exploration
of the gas trading marketplace would be beneficial as well.
He said that large companies exiting a project did not go
unnoticed, nor when they came back to the table. He
expounded on the size of the project and contended that
large scale financing from outside of the state would be
necessary.
10:04:50 AM
Mr. Richards highlighted slide 11, "Economic Impact.":
• Gas via pipeline has additional economic benefits over
the long term:
o Lifetime savings from the baseload supplied via
Pipeline compared to LNG add up to US$5.7
billion
o Savings going back into the economy would also
generate indirect and induced impact.
o The pipeline provides potential upside for gas
demand and industrial activity.
o Overall potential impact to the state of Alaska
is estimated at US$16.5 billion or 2.8X in-
state capex.
10:05:19 AM
Mr. Kissinger looked at slide 13, "Evolution of Private
Developers":
Producer-Led (2013 -2016)
Producers provided initial scoping and
engagementimportant demonstration of producer
support.
State-Led (2017-2022):
State-led initial design, permitting, and
authorizationimportant demonstration of state
support.
Developer-Led (2023-Onward):
Transition to world-class private parties for
construction and operations
Mr. Kissinger explained that the problem with the
producer-led plan was that it was the wrong source of
capital. He relayed producers commissioned a report in 2016
on Project competitiveness, which had found that a
reconfiguration of capital for the projects was needed. The
state-led plan had been found uncredible. He said that
the state would not have the ability to take it to
fruition. He concluded that the developer-led approach
had proved most attractive. He asserted that the developers
were better at managing costs.
10:08:18 AM
Co-Chair Stedman reflected on past testimony. He mentioned
that it was accurate that big producers did not hold
gaslines because of the regulated rate of return. He said
that there was also concern of risk mitigation. He shared
that Exxon had exited the project because in Alaska every
governor has a plan which meant that the state could not
get on course with one path to fruition of a gasline. He
spoke to the geographic hurdles to the project. He stressed
that multiple meetings had been held to discuss a plan for
a gasline and that it was important to keep in mind the
colossal nature of the project.
Co-Chair Hoffman added that the gasline had been the topic
of conversation for many months of meetings and throughout
the service of several governors.
10:11:45 AM
Mr. Richards replied that producers had said to the
corporation that they wished to sell gas at the well head.
He asserted that, in no way, was the corporation trying to
force producers into the project.
10:12:47 AM
Co-Chair Hoffman felt that the problem was that the people
that owned the leases had an obligation to the state to
produce.
10:13:06 AM
Mr. Richards agreed.
Co-Chair Hoffman added that did not mean that producers
were going to wait to produce until the gasline was built
so they could sell it at the wellhead.
10:13:28 AM
Mr. Richards said that the AOGCC gave the mandate to
leaseholders to produce as much oil as possible. He said
that for many decades that gas was a benefit form producing
oil. He stated that Hilcorp had produced a lot of oil,
which had been great for the state.
10:14:48 AM
Co-Chair Hoffman said that the problem was that Alaskans
wanted cheaper energy. He said that if producers were not
willing to produce natural gas, then maybe other producers
should be found.
10:15:30 AM
Senator Merrick wondered how much had been invested in the
project since inception.
10:15:36 AM
Mr. Richards replied over $1 billion between the state and
producers.
Co-Chair Hoffman asked how much had been paid by the state.
10:15:50 AM
Mr. Richards agreed to provide that information.
10:16:01 AM
Co-Chair Hoffman relayed that the cost to the state, to
date, was $634.9 million.
10:16:05 AM
Co-Chair Stedman thought that the $1 billion mentioned had
not included the $500 million the state had paid to Trans
Cananda. He contended that $1.1 billion in investment by
the state showed great interest in moving a gasline
forward. He added that the state would like a return on its
investment.
10:16:45 AM
Co-Chair Hoffman noted that the states contribution was
considerably higher when considering inflation.
10:16:57 AM
Mr. Kissinger pointed to slide 14, "Equity Offer for
Investors":
AGDC is raising development capital to take Alaska LNG
to Final Investment Decision (FID)
• Alaska LNG is an attractive investment:
? Best economics of any North America project
? Has all major permits
? Beneficial equity terms
? Local support
AGDC equity offer highlights
• Majority ownership and control of Alaska LNG in
exchange for:
? Funding development costs to FID
? Commitment to move Alaska LNG forward on fast
timeline
? Preferential in-state gas supply
? Opportunity for Alaska to invest
10:18:16 AM
Senator Kiehl understood that the state had spent $1.1
billion to own whatever was currently available to own of
the project, which would eventually be split 75/25 with a
developer. He surmised that the state would have the
opportunity to invest beyond 25 percent equity in the
project.
10:18:52 AM
Mr. Kissinger replied that the state would have the
opportunity, but not the obligation, to invest up to 25
percent after the FID investment.
10:19:18 AM
Senator Kiehl asked what the state would own after
investment in the holding company.
10:19:44 AM
Mr. Kissinger responded that there would be developer
economic streams that would flow through to the holding
company. He said that taking the up-front risk, if the
project did not move forward, would result in loss of the
investment. He relayed that other forms of revenue might be
pushed into the holding company.
10:20:38 AM
Co-Chair Stedman spoke of conversations between the current
federal administration and Japan. He believed that Japan
and Korea as anchor tenets would be beneficial to the
project.
10:21:46 AM
Mr. Richards looked at slide 16, "Glenfarne Mission and
Vision
Company Tear Sheet:
-2.2 GW Power Portfolio
12.8 MTPA FERC-Approved LNG Export Capacity
-800 team members
Glanfarne is a global energy transition specialist
that is guided by its core mission and vision.
Mission: To realize the potential of the worlds
energy transition.
Vision: Responsibly grow our renewables, grid
stability, and flexible fuels business to provide
economically viable solutions to our communities and
customers to realize the potential of the worlds
energy transition.
Glenfarne believes that its core competence is its
ability to develop local platforms in end markets (by
leveraging assets knowledge and relationships), built
around a core understanding that the markets energy
transition journey will be driven by the interaction
of domestic gas and global LNG.
10:23:08 AM
Mr. Richards pointed to slide 17, "Glenfarne at a Glance."
The slide offered details about the -2.2 GW Power Portfolio
broken down by renewables, grid stability, and gas
infrastructure, as well as a map showing the locations of
Glenfarne markets and offices.
10:23:55 AM
Senator Kiehl queried the process that led AGDC to connect
with Glenfarne.
10:24:30 AM
Mr. Kissinger relayed that there was a process, not an RFP,
but discussions with companies which had led AGDC to
Glenfarne. He said that Exxon had officially introduced
AGDC to Glenfarne in March 2024 and the relationship had
blossomed.
10:26:00 AM
Senator Kiehl asked whether an external organization had
been used to screen and validate price estimates from all
interested parties.
10:26:10 AM
Mr. Kissinger said that the corporation had worked with
Goldman Sachs over the last two years.
Senator Kiehl surmised that Goldman Sachs had recommended
choosing Glenfarne.
Mr. Kissinger replied that Goldman Sachs had been focused
on the financial investors rather than the strategic
investors. He said that conversations with strategic
investors were already underway when Goldman Sachs entered
the conversation.
10:26:47 AM
Senator Kiehl asked about the difference between a
financial investor and a strategic investor.
Mr. Kissinger shared that a financial investor brought
money to the table, but strategic investors brought money
and development background experience.
10:27:44 AM
Co-Chair Stedman asked about the interface between
Glenfarne and Enbridge Gas. He noted that Glenfarne had no
developments in the Arctic and wondered whether the company
could successfully develop in that region.
10:28:14 AM
Mr. Richards said that Glenfarne played a quarterbacking
role. He stated that a team would be built that would
utilize the expertise of large pipeline companies, in
addition to Glenfarne as the lead developer.
10:29:00 AM
Mr. Kissinger addressed slide 18, "Glenfarne Term Sheet":
This Term Sheet memorializes certain obligations and
key timeframes for the Alaska LNG Project, with key
milestones for phased project development and the
overall goal to have the project constructed and
operational by 2030, and through which Glenfarne will:
1. Commit to capitalize the project in sufficient
amounts to fund and resource the successful
development of the project to FID of each
subproject
2. In return for project leadership and
investment in project development, obtain a 75
percent equity position across the 8 Star
structure, while carrying AGDC's 25 percent
equity to FID
3. Achieve agreed milestones to:
i. Enter Front-End Engineering Design (FEED)
on the Phase 1 pipeline ($50 m)
ii. Market sufficient volumes and prepare
for FEED on the gas treatment and LNG plants
iii. Enter FEED on Phase 2 LNG exports ($100
m)
10:30:27 AM
Co-Chair Stedman asked where the $150 million would come
from. He asked how the $50 million backstop in the
governors budget interplayed.
Mr. Richards said that the question would be addressed in
future slides.
10:30:47 AM
Senator Merrick asked what risk Glenfarne was taking on if
the state was backstopping the $50 million.
10:30:57 AM
Mr. Richards shared that the agreement with AIDEA had yet
to be executed, which was the process the corporation was
undergoing for the $50 million for Phase 1. He added that
the concept Mr. Kissinger described had been for the LNG
project in total, which was $150 million and included $50
million for the pipeline feed. The additional $150 million
was for the front engineering and design for gas treatment
and the liquefaction facility. He said that the corporation
would continue to work with AIDEA on the project finance
agreement. He said if AIDEA provided the funding for Phase
1 the $50 million backstop would be unnecessary.
10:32:52 AM
Senator Merrick wondered how much risk Glenfarne would be
taking.
10:32:59 AM
Mr. Richards replied that Glenfarne was willing to take on
the entire $150 million risk. If the Phase 1 concept was
successful, then Glenfarne would work to execute not only
Phase 1 of the pipeline but also the compression stations
to feed into the liquefaction facility.
10:33:29 AM
Senator Merrick asked whether Glenfarne had any risk in
Phase 1.
10:33:36 AM
Mr. Richards replied that definitive agreements had not
been made with wither AIDEA or Glenfarne.
10:33:46 AM
Senator Merrick asked whether Glenfarne had any risk in
Phase 1, yes or no.
Co-Chair Hoffman replied that the answer was no.
10:33:54 AM
Co-Chair Stedman advised that the corporation should be
sure that the other party had direct match skin in the
game. He noted that the state had contributed $634 million
to the project already and wondered whether any of those
funds would be rolled into the projects or would the state
see no return on that investment.
10:34:54 AM
Mr. Richards related that AGDC would hold 25 percent in the
holding company, 8 Star Alaska, and the returns that came
from the payments from the sub-projects to the holding
company would provide a cash stream. He added eventually 25
percent would come to AGDC for the state.
10:36:07 AM
Co-Chair Stedman asked when the time would come for the
legislature to engage in discussions surrounding dropping
of property taxes and royalty issues. He pointed out that a
vast majority of sitting legislators had no idea of the
history of the project and that the education curve was
significant. He sought clarity about the legislature's role
in the project.
10:37:02 AM
Mr. Richards said that the legislature played an important
role. He said that the corporation had worked to retain the
ability for the state to make and investment decision but
to not be obligated. He understood the legislatures stance
of not incurring major costs without the legislature making
the decision. He relayed discussions about moving the
project forward had accelerated over the last few months.
He welcomed the conversation and expressed willingness to
work with the legislature to bring everyone up to speed on
the project.
10:39:33 AM
Co-Chair Stedman thought that would be helpful. He
suggested a summary document that informed current and
future legislators of the history and issues related to the
project. He stressed that the legislature wanted to get gas
to market but no at great expense to the state. He said
that royalties in kind versus royalties in cash had been
contentions in the legislature, as well as the issue of
property tax. He said that even if the legislature played
no role in some of the discussions the legislature could
benefit from being informed of those conversations.
10:40:39 AM
Mr. Richards thought a summary was a good idea.
10:40:47 AM
Co-Chair Hoffman asked how soon Mr. Richards could provide
the summary to the committee.
Mr. Richards that the summary could be provided by the end
of the week.
10:41:01 AM
Mr. Richards discussed slide 20, "Alaska LNG Corporate
Structure
AGDC will use the project company 8 Star to hold
Alaska LNG assets, raise capital, and provide
collateral to AIDEA
• AGDC is a state-owned corporation and cannot sell or
transfer ownership shares of itself
• AGDC created "8 Star Alaska, LLC" (8 Star) as the
vehicle for bringing in third-party investment and
control of Alaska LNG
• All Alaska LNG assets (permits, rights-of-way,
agreements) are held by 8 Star
• Project components are structured to allow separate
economics at the project level while holding the
integrated permits at the 8 Star level
10:42:32 AM
Mr. Kissinger addressed slide 21, "Glenfarne Ownership
Structure
• 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 percent of construction
costs
10:43:58 AM
Co-Chair Stedman asked how royalty gas interplayed wit the
25 percent construction cost potential investment.
10:44:26 AM
Mr. Richards replied that the royalty in kind/royalty in
value determination would be provided after discussions
with the Department of Natural Resources. He said that
determination would apply to whether the state could get up
to 25 percent ownership of the gas, but that would be gas
that would flow down the pipeline and did not equate to
funding for the capital to be 25 percent owner of the
pipeline.
10:45:01 AM
Mr. Richards highlighted slide 22, "Understanding FEED
"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 and
construction.
FEED stands for "Front-End Engineering Design.
FEED produces a final cost estimate and construction
contracts ready to be executed.
10:45:31 AM
Mr. Richards addressed slide 23, "FEED Backstop Timeline":
1. December 4: AIDEA Board Resolution authorizing
AIDEA Executive Director to negotiate and execute
binding agreements
• Resolution ONLY applies to Phase 1 FEED (up to
$50 m).
• There is NO state backstop requested or
proposed for Phase 2 FEED (up to $100 m)
2. After AIDEA Resolution:
• Finalize and sign Phase 1 FEED backstop
agreements: AIDEA, AGDC and Developer
3. Upon execution of FEED Agreements:
• Pipeline FEED subcontractor commences work to
update FEED Scope of Work and Budget at their own
expense
4. Within 120 days of execution of FEED Agreements:
• Parties commence Phase 1 FEED
10:46:42 AM
Mr. Richards pointed to slide 24, "Actions to Build Phase 1
Pipeline
• Execute FEED Backstop Agreements and $50 million FEED
backstop from
• AIDEA (in progress)
• FEED generates final cost estimate and construction
contracts.
• Enter into agreements with Alaska utilities for long-
term gas supply.
• Raise debt and equity financing.
• Final Investment Decision Start construction.
10:47:26 AM
Mr. Richards addressed slide 25, "Conditions to Enter FID":
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 build it requires
full construction funding committed and developed by
third parties.
10:48:42 AM
Co-Chair Stedman asked about gas in-kind or in-cash. He
noted that Exxon, ConocoPhillips, and British Petroleum had
all recently been attached to the project as which time the
royalty gas was mixed in with their gas, which prompted the
discussion as to who would sell the gas. He asked whether
AGDC had had conversations with producers about royalty
interests.
10:49:30 AM
Mr. Kissinger replied in the affirmative and added that
because of the configuration of the project they were
always looking at North Slope gas sales. He relayed that
the question of royalty in-kind or in-value was still a
question. He said that producers preferred in-kind over in-
cash. He thought that if it was a North Slope arm's length
transaction they royalty could be in-value, which would
help the state to avoid cost and the unnecessary burden of
standing up a sales team.
10:50:28 AM
Co-Chair Stedman believed that the legislature needed more
information. He stated that no one knew who would own the
pipeline and at this point it could be owned by an out-of-
state entity.
10:50:52 AM
Mr. Richards pointed to slide 26, "North Slope Gas Supply":
Preferred Gas Supply: Great Bear Pantheon
Accelerates project and lowers Alaska energy costs.
These fields are still in development, so back up
supply agreements from Prudhoe Bay and Point Thomson
are required.
<$1.00 per MMBtu Low-Cost Access
• Cheaper to supply gas to pipeline than reinject
• Price to be reduced based on cost-savings
No CO2 removal
• Adjacent to pipeline, no new infrastructure needed
"Back Up" Gas Supply: Producing North Slope Fields
These fields are currently producing gas but will have
a higher price and require additional infrastructure.
Prudhoe Bay
• Largest gas field in North America
• Needs gas treatment to remove CO2
Point Thomson
• Selling gas unlocks liquids production
• Requires new 63-mile pipeline
Satellite Fields
• Endicott and North Star
• Needs gas treatment to remove CO2
10:51:39 AM
Mr. Richards addressed slide 28, "Transition to Lead
Party":
Key Milestones:
• Pre-Definitive Agreements:
? AGDC is leading and funding Alaska LNG Project
development
• Pre-FID:
? Lead Party assumes 75 percent equity in 8 Star
upon signing Definitive Agreements and is
responsible for funding all project development
costs to FID
• Pre-FID:
? The State's equity in 8 Star is carried at 25
percent to FID and AGDC is responsible for
project transition functions
• Post-FID:
? The State has the option, but not the
obligation, to invest in up to 25 percent of
capital to construct the Alaska LNG subprojects
with AGDC representing the State's interest
10:53:12 AM
Mr. Richards looked at slide 29, "Transition to Lead
Party The slide detailed the roles of AGDC and the Lead
Party in the areas of pre-definitive agreements, pre-FID
(FY26-FY27), and post-FID (FY28 forward), broken down by
who would be responsible, accountable, consulted, and
informed.
10:53:52 AM
Mr. Richards addressed slide 31, "National Priority, Local
Benefits":
Alaska LNG benefits from strong federal, state, and
local support:
• Robust Federal Support:
? Two presidents, unified delegation
? Executive Order "Unleashing Alaska's
Extraordinary Resource Potential"
• Uncommon State Support:
? Three governors
? Business leaders
? Alaska Native support
? Leading labor voices
10:54:42 AM
Mr. Richards discussed slide 32, "Rapidly Intensifying
Market Interest":
• Last week officials from Japan, South Korea, and
Taiwan signaled intensifying interest in Alaska LNG
through direct investment, long-term purchase
agreements, or both
• Accelerating commercial interest adds to project
momentum
10:55:11 AM
AT EASE
10:56:40 AM
RECONVENED
10:56:46 AM
Co-Chair Hoffman informed the room that the bells had rung
for floor session and the AGDC presentation would be
continued later in the week. He lamented that the only
major source of revenue to fund the 25 percent state in the
project was the permanent fund, which could not be accessed
without a constitutional amendment voted on by the public.
He shared that a constitutional amendment would require a
two-thirds vote of the legislature.
10:57:58 AM
Mr. Richards looked forward to continuing the conversation.
Senator Hoffman discussed housekeeping.
ADJOURNMENT
10:58:30 AM
The meeting was adjourned at 10:58 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| AGDC Senate Finance Presentation - February 10 2025.pdf |
SFIN 2/10/2025 9:00:00 AM |
|
| 021025 DCCED AGDC SFIN 02.10.25 - Follow-up.pdf |
SFIN 2/10/2025 9:00:00 AM |