Legislature(2025 - 2026)SENATE FINANCE 532
02/17/2025 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Alaska Industrial Development and Export Authority | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
SENATE FINANCE COMMITTEE
February 17, 2025
9:02 a.m.
9:02:06 AM
CALL TO ORDER
Co-Chair Hoffman called the Senate Finance Committee
meeting to order at 9:02 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Mike Cronk
Senator James Kaufman
Senator Jesse Kiehl
Senator Kelly Merrick
MEMBERS ABSENT
None
ALSO PRESENT
Randy Ruaro, Executive Director, Alaska Industrial
Development and Export Authority; Jean Kornmuller, Chief
Financial Officer, Alaska Industrial Development and Export
Authority.
SUMMARY
^ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY
9:02:16 AM
RANDY RUARO, EXECUTIVE DIRECTOR, ALASKA INDUSTRIAL
DEVELOPMENT AND EXPORT AUTHORITY, (AIDEA) discussed the
presentation, "Investing in Alaskans" (copy on file). He
pointed to slide 2, "Mission and Purpose of AIDEA":
To promote, develop, and advance economic growth and
diversification in Alaska by providing various means
of financing and investment.
9:02:58 AM
Mr. Ruaro addressed slide 3, "About AIDEA Alaska's
Development Finance Authority
AIDEA, and the precursor to AIDEA, have been investing
in Alaskans since 1961 to strengthen employment
opportunities and economic development.
Be it enacted by the Legislature of the State of
Alaska:
Article I
Organization of Development Corporation
Section 1. Purpose. The purpose of this Act is to
create an instrumentality of the state to develop,
stimulate, and advance the business prosperity and
economic welfare of Alaska and its citizens. This
shall be accomplished by providing critically needed
investment capital for development loans to encourage
and assist the wholesome development of new business
and industry in Alaska and to rehabilitate and expand
existing business and industry. By providing
development loans to all types of business activity,
whether of an industrial, agricultural, or
recreational nature, the economic stability of the
state will be strengthened, the employment
opportunities of its citizens enlarged, and their
standard of living and general welfare enhanced.
Senate Bill 153
Enacted by the Alaska State Legislature
Because investment capital was "critically needed" to
enable jobs and enhance general welfare
Approved April 24, 1961
9:03:51 AM
Mr. Ruaro pointed to slide 4, "Alaska's Development Finance
Authority":
Be it enacted by the Legislature of the State of
Alaska:
Sec. 44.61.140
(a) The real and personal property of the authority
and its assets, income, and receipts are declared to
be property of a political subdivision of the state
and together with any project financed under this
chapter and a leasehold interest created in a project
occupant or other person under this chapter, devoted
to an essential public and governmental function and
purpose,
House Bill 14
(4) The establishment of industrial and manufacturing
plants in Alaska is essential to the development of
the natural resources and the long term economic
growth of the state, and will directly and indirectly
alleviate unemployment in the state,
Approved April 4, 1967
9:04:16 AM
Mr. Ruaro addressed slide 5, "AIDEA's Purpose
AS 44.88.010 states that:
"The legislature finds, determines, and declares that
there exist areas of the state in which seasonal and
nonseasonal unemployment exists this unemployment is a
serious menace to the health, safety, and general
welfare, not only to the people in those areas, but
also to the people of the entire state the state
lacks basic manufacturing, industrial, and business
enterprises. necessary to permit adequate
development of its natural resources and the balanced
growth of its economy. establishment and expansion
of [these entities] are essential to the development
of its natural resources and the long-term economic
growth of the state, and will directly and indirectly
alleviate unemployment in the state
9:04:50 AM
Mr. Ruaro played a short video about AIDEA.
9:06:24 AM
Mr. Ruaro looked at slide 7, "Social and Health Benefits of
Jobs and Community Access":
•"Suicide prevention researchers working in rural
Alaska Native villages offer a number of
recommendations for intervention, including enhanced
occupational and educational opportunities to
alleviate poverty, greater access to mental health
treatment services, ?"
•"Inadequate opportunities for socioeconomic
advancement were seen as major contributors to
suicide, especially among Alaska Native men. ?"
(Alaska Native men 400 percent higher suicide rate
than national average)
•"Many Alaska Native communities are off the road
system and often lack local providers for counseling
or psychiatry services, requiring community members to
travel by airplane to a distant location in order to
see a physician or counselor. ? These barriers prevent
people in crisis from receiving the help they need at
the time they most need it."
Citing: Beliefs about Causal Factors for Suicide in
Rural Alaska Native Communities and Recommendations
for Prevention, Transcult Psychiatry, 2022 February;
59(1): 78-92. Doi: 10.1177/1363461520963869
9:07:07 AM
Mr. Ruaro looked at slide 8, "What Is the Status Of
Unemployment in The United States?
The formal measure of "unemployment" is misleading.
It does not measure persons who have given up looking
for work.
Using "labor participation" as a measure:
The labor participation rate is 62.5 percent in
the United States. Meaning nearly 4 in 10
Americans have given up hope of finding a job.
This rate is just 2.4 percent better than "the
labor participation" during COVID years of 2020
and
2021.
See, U.S. Bureau of Labor Statistics Charts for
Economic Releases
Mr. Ruaro addressed slide 9, "Unemployment and Labor Force
Participation in Alaska":
Labor Participation Rate for Alaska
Labor participation rate in Alaska is a little
better than national average at 65 percent.
Job scarcity is one reason rates are so high in
rural areas.
9:07:56 AM
Mr. Ruaro looked at slide 11, "AIDEA Fiscal Year 2024
Financial Highlights." The slide showed that AIDEAs net
position through fiscal year 2024 reached $1.49 billion an
approximate $52.8 million increase from 2023. In 2024,
AIDEA produced the highest statutory net income in AIDEA
history at $65 million. He noted that half a billion in
dividends had been declared back to the treasury since
1997. He shared that the $20 million dividend for FY2026
was the highest in approximately a decade.
9:08:46 AM
Mr. Ruaro discussed slide 12, "AIDEA Financial FY2024
Highlights The chard broke down AIDEAs assets:
Accounts Receivable: $192 million
Capital Assets & Construction Work in Progress: $178
million
Balance of Loans Financed: $532 million
Investment Funds: $357 million
Project Reserve Funds: $57 million
Project Restricted Funds: $46 million
Cash on Hand: $345 million
Pending Commitments by AIDEA Board of Directors
$200* Net Amount $145
*Committed Projects
• Loan Participation Program
• Alaska Hotel Group - $25 million
• Stoneridge Shop LCC - $1.35 million
• JT Investments Alaska LLC - $3.6 million
Direct Finance
• Alyeschem LL - $70 million
• HEX Cook Inlet - $50 million
• AGDC - $50 million
Other Assets: $12 million
9:11:25 AM
Co-Chair Hoffman asked whether Mr. Ruaro felt he had the
power to expend the funds listed under Direct Finance
without legislative authority.
9:11:39 AM
Mr. Ruaro replied that AIDEA had the authority to expend
those funds in statute. He argued that the authority to
decide what happened with AIDEA funds was vested in the
ADIEA board.
9:12:19 AM
Co-Chair Hoffman felt that opinions differed on the matter
and that clarification was in order as the legislature was
the appropriating authority in the state.
9:13:06 AM
Mr. Ruaro said that the budget requested submitted in the
governors FY26 budget for $50 million in general funds
would fall under the control of the legislature. He said
that the request was to be withdrawn within the week. He
said he was speaking only to funds AIDEA had earned through
interest or return and were then under the purview of
AIDEA.
9:13:39 AM
Senator Kiehl asked about the Investment Funds wedge of
the pie chart. He asked about bonds - how they were
invested and whether they were Alaska company bonds.
9:13:50 AM
Mr. Ruaro replied that some of the investments were in
international entities and that that wedge represented
hundreds of different investments.
9:14:15 AM
Senator Kiehl asked whether a steady 6-year cycle of $16
million a year could be expected from the Investment Funds.
9:14:26 AM
Mr. Ruaro responded that it was not set by year to the same
amount and there could be a year when a large amount
matured, which he believed was the case with the current
year.
9:14:46 AM
Senator Kiehl understood that the Investment Funds equaled
21 percent of total assets and wondered whether the fuds
were invested outside of the state because AIDEA had not
found an Alaskan project to invest in.
9:14:58 AM
Mr. Ruaro responded that AIDEA expected to move significant
amounts from Investment Funds to Cash on Hand once funds
matured.
9:15:44 AM
Senator Kiehl understood that the goal would be to keep
$350 million cash on Hand and AIDEA committed out $200
million for other projects.
9:15:51 AM
Mr. Ruaro replied that the intention was to course keep a
healthy balance of cash on hand of at least $100 million
for the bonding reserve. He said that the current influx of
projects would require additional cash. He furthered that
instead of reinvesting Investment Funds, those funds would
be moved to Cash on Hand so that AIDEA could continue to
make investments in other projects.
9:16:40 AM
Senator Kiehl was satisfied that AIDEA wanted to keep $100
million liquid and available for appropriation.
9:16:50 AM
Co-Chair Stedman understood that banks were awash in cash
and looking for suitable borrowers to lend to. He queried
AIDEAs process for loan assistance.
9:17:17 AM
Mr. Ruaro replied described the loan commitment process
which included two rounds of underwriting by a local bank
and one by AIDEA before a board review of the request.
9:18:22 AM
Co-Chair Stedman understood that all cases went through a
local bank before consideration by AIDEA.
9:18:35 AM
Mr. Ruaro said that in all instances the bank would
approach AIDEA; it was a bank application to AIDEA for
assistance.
9:19:00 AM
Co-Chair Hoffman understood the board was interested in
making new investments and wondered about the timeframe.
9:19:10 AM
Mr. Ruaro replied that investment funds would be moved as
they matured. He said that there was no timeline for
individual projects.
9:19:58 AM
JEAN KORNMULLER, CHIEF FINANCIAL OFFICER, ALASKA INDUSTRIAL
DEVELOPMENT AND EXPORT AUTHORITY, pointed to slide 13,
"FY2026 AIDEA BUDGET OPERATIONS COMPONENT. She noted that
because of SB 307, AEA was becoming an autonomous entity,
and personnel had already been transferred. The second
column showed the remaining dollars to be transferred out
to complete the separation. The third column showed $2
million had been transferred from Contractual Services to
Personnel Services because more contractual work would be
done in-house by AIDEA staff. She said that remaining funds
included COLA increases.
9:21:26 AM
Co-Chair Hoffman asked about the $10 million for
Contractual Services for AEA in the second column.
9:21:42 AM
Ms. Kornmuller replied that those funds were comprised of
Support Services for the Rural Energy Program and other
services and support. She lacked additional details.
9:22:08 AM
Co-Chair Hoffman requested that further detail be sent to
the committee.
9:22:17 AM
Ms. Ruaro proudly summarized the slide saying that 43 AIDEA
employees produced a $20 million dividend, $10 million in
AIDEA receipts for operating with $65 million in statutory
net income.
9:22:51 AM
Ms. Kornmuller looked at slide 14, "FY2026 AIDEA Budget
Facilities Maintenance Component. She noted that AEA had
an increase of $304 thousand to reimburse AIDEA for
facilities rent and maintenance. She added that two changes
were to AIDEA: the transfer in from the operating component
of $50.7 thousand and a request for $110 thousand increase
for contractual services. She said that historically AIDEA
had used its own fund for facilities management through
resolutions approved by the board but would now consider
the use of operating budget funds approved by the
legislature.
9:24:00 AM
Mr. Ruaro highlighted slide 15, "FY2026 AIDEA Budget
Capital Appropriations":
FY25 Fast Track Supplemental Budget
Alaska Liquefied Natural Gas Project
Phase 1 Contingency Backstop
$50 million
Soon to be withdrawn
FY26 Capital Budget
West Susitna Access Project
$2.5 million
Funds will support completion of Federal and State
permitting
9:24:26 AM
Co-Chair Stedman spoke of concerns surrounding the LNG
project and the lack of public discussion in AIDEAs
process.
9:25:09 AM
Mr. Ruaro replied that staff would meet with a project
proponent multiple times before going before taking the
proposal to the board for a hearing. He said that staff
work on the LNG line began several months ago and that the
topic had been on the agenda for several board meetings. He
said that there had been opportunities for board members to
meet with project proponents. A resolution had been passed
on December 4, 2024, which allowed for further review and
negotiation on the backstop. He said that there would be no
draw on AIDEA funds as the work was being performed, and
AIDEA would only pay up to the amount of actual completed
work.
9:27:29 AM
Co-Chair Stedman suggested that Phase 1, the building of
the pipeline, presented the highest financial risk. He felt
that AIDEA had skirted the issue of cost overruns when
confronted by the committee. He said that the available
numbers were outdated and that the expectation of the cost
of the pipeline was nebulous. He noted the $600 million the
state had invested, as well as $500 million from
TransCanada in the pipeline, compared with zero from
Glenfarne. He added that there was concern about
commitments made between AGDC and Glenfarne that preceded
the new administration in Washington D.C. He believed that
the project was a priority of the federal administration
and hoped that Alaska would fully benefit without taking on
too much risk and exposure. He stated that before this
current administration there had been no investors
interested and Glenfarne had entered the picture after
being pursued for investment. He reiterated that the
biggest concern was who was going to invest in the project
and how to maintain limited exposure to the state.
9:30:52 AM
Mr. Ruaro agreed. He suggested comparing the project to LNG
Canada and looking at those numbers. He said that the Trump
Administration liked the project. He listed the major
differences in the projects including gas availability and
international interest. He thought that the current climate
was the best to-date for the viability of the project.
9:32:48 AM
Co-Chair Stedman believed that there was a presentation
coming regarding overruns on a similar project in Cananda.
He asked about AIDEAs authority limit as an investor.
9:33:09 AM
Mr. Ruaro replied that it would depend on the type of
credit facility used. AIDEA has a legislative limit of $400
million per year in bonds. He added that any direct
financing projects above $25 million must be approved by
the legislature. He felt that there were significant checks
for AIDEA ability to bond. He shared that other credit
facilities like a corporate guarantee would grant broad
authority with no express limit based on the facility. The
limit would come from AIDEAs assets, which would become
the limit on what could be invested. He said that there
were areas where the authority could backstop without
limits.
9:34:38 AM
Co-Chair Stedman expounded on his discomfort with Great
Bear as they presently had no gas and could not produce a
balance sheet. He reiterated his concern about the cost of
financing for a $10 billion pipeline, with less than 10
percent gas going through it, falling back on the
consumers, and putting the state at risk.
9:36:15 AM
Co-Chair Hoffman interjected that the Trump Administration
had just announced a 25 percent increase on tariffs for
imported steel.
9:36:57 AM
Senator Kiehl thought that the project was subject to Buy
America, Build America, which meant that the steel tariffs
would not apply. He wondered about how AIDEA would get paid
for the $50 million risk.
9:37:36 AM
Mr. Ruaro said that the compensation structure was based on
volumes through the pipeline first, and if the project did
not go forward there were plans being made to recoup costs.
9:38:05 AM
Senator Kiehl understood that the backstop was through the
final investment decision on the in-state pipe only, but
AIDEAs potential to get paid was the full export with
liquification and gas treatment plant.
9:38:21 AM
Mr. Ruaro replied that the timeframe for when AIDEA could
recover cost for the tolling rate was still in
negotiations.
9:38:31 AM
Senator Kiehl asked when the legislature could expect the
details of the agreement.
9:38:47 AM
Mr. Ruaro replied that he was under Non-Disclosure
Agreements (NDA) with the parties and would need to consult
with counsel on how much he could share with the
legislature once the contract was complete.
9:39:12 AM
Senator Kiehl submitted that the level of risk to the state
already made some Alaskans skeptical of the project; a
secret deal might make them downright freaked out. He
stressed the importance of negotiating in the ability to
tell Alaskans what risk they were taking and what
potential for recovery there was for $50 million of the
state's dollars.
9:39:48 AM
Co-Chair Hoffman asked whether information about the risk
the state was taking on would be shared with Alaskans prior
to investment or after.
9:39:57 AM
Mr. Ruaro replied that the risk that would be taken would
be that AIDEA backstops feed work, no money leaves the
AIDEA treasury the engineering firm would pay its own
expenses up until the time that feed was complete, and FID
was taken. He said if FID was taken, and the project moved
ahead there was zero risk that AIDEA would spend any funds
because the project would move ahead with the developer
taking on the cost.
Co-Chair Hoffman clarified that FID meant financial
investment decision.
Mr. Ruaro replied in the affirmative.
9:40:38 AM
Mr. Ruaro looked at slide 16, "AIDEA's Financial Toolbox:
AIDEA is a catalyst for economic development with a
track record for success, utilizing a variety of
financial tools such as:
Loan Participation
The Loan Participation program provides long-term
fixed and variable rate financing to Alaska's
commercial businesses.
Project Finance
AIDEA can finance projects (whole or partial) through
its ability to develop & own assets within the State.
Conduit Revenue Bonds
AIDEA is one of the State's Principal issuers of
taxable & tax Exempt Conduit Revenue Bonds.
Energy & Resource Development
The Alaska Sustainable Energy Transmission Supply
Fund, Arctic Infrastructure Development Fund, & Cook
Inlet Reserve-Based Lending Program are programs
within AIDEA to meet Alaska's energy resource needs.
Asset Ownership
In addition to traditional financing, AIDEA can
directly own assets that generate revenue or enable
economic development.
AIDEA Bonds
AIDEA has the authority to issue taxexempt and
taxable bonds.
Strong Investment Relationships & Financial Expertise
AIDEA provides financial expertise and information to
assist with projects, job creation, and infrastructure
development.
9:42:38 AM
Co-Chair Hoffman queried whether AIDEA had pursued any
bonds or had any active bond issuances.
Mr. Ruaro replied in the negative.
9:42:44 AM
Mr. Ruaro pointed to slide 17, "AIDEA Assets Projects Bonds
and Loans The slide illustrated the projects AIDEA had
funded in bonds ($522,059,965) and loans ($488,107,152).
The map showed the areas of the state where AIDEA had
provided bonds and loans for projects, as well as the
location of AIDEA assets and projects. He noted that there
was suspected significant resources available in the Arctic
National Wildlife Refuge (ANWR).
9:44:29 AM
Co-Chair Hoffman asked about the Ambler Road Project and
whether rights-of-way had been secured for the project.
9:44:32 AM
Mr. Ruaro responded that the federal administration had
indicated that federal rights-of-way would be awarded and
AIDEA was hopeful the same would happen on the state level.
He said that AIDEA would be working largely with Doyon.
9:45:03 AM
Co-Chair Hoffman believed that the project would not move
forward without the support of Doyon.
9:45:14 AM
Mr. Ruaro agreed. He said that the federal government had
not granted the federal right-of-way, which had stopped the
project and stalled conversation with Doyon. He asserted
that the Alaska National Interest Lands Conservation Act
(ANILCA) guaranteed the rights-of-way. He felt that once
the federal and state governments issued the rights-of-way
then the project could go forward.
9:45:59 AM
Co-Chair Hoffman asked about the cost of the Ambler Access
project.
9:46:03 AM
Mr. Ruaro replied that the estimated cost was between $500
million and $1 billion.
9:46:22 AM
Senator Kiehl queried the proven reserves expected to be
harvested from ANWR.
9:46:25 AM
Mr. Ruaro, he said that proven reserves to the extent of
bornite and the Arctic mine was 30 years of mine-life. He
did not have the exact combined amounts but said that an
assessment was available.
9:47:05 AM
Senator Kiehl stated that he has never seen a mine with 30
years of proven reserves and expressed eagerness to see the
assessment.
9:47:10 AM
Co-Chair Stedman asked how many loan payments were 30 to 90
days late, and how many of them had been restructured. He
desired an assessment of the overall health of the loan
portfolio.
9:48:03 AM
Mr. Ruaro asserted that the loan participation program had
zero defaults. He said that there had been some loans that
had to be restructured for various reasons, specifically
citing a loan to Blue Crest, which had been restructured
and then settled.
Co-Chair Hoffman asked about the terms of the Blue Crest
settlement.
Mr. Ruaro replied that the outstanding loan amount had been
approximately $14 million and AIDEA had been able to
negotiate $6.8 million payment and had maintained the
collateral of a manned camp onsite.
9:49:18 AM
Co-Chair Hoffman assumed that the additional $8 million had
been written off by AIDEA.
Mr. Ruaro agreed.
9:49:25 AM
Co-Chair Stedman requested further detail on the Blue Crest
loans.
9:49:32 AM
Mr. Ruaro replied that the overall loan amount had been
paid down to where $14 million was owed. He said AIDEA had
allowed for 14 instances of forbearance and eventually
reached an agreement to take a lump sum payment of
approximately $6.87 million and retain an interest in a
man-camp onsite.
Co-Chair Stedman asked about the $14 million figure.
Mr. Ruaro said that the original loan had been paid down to
$14 million.
9:50:19 AM
Co-Chair Stedman asked whether participants had used
credits as assistance in receiving loans from AIDEA.
9:50:57 AM
Mr. Ruaro responded that he was unaware of any such
transaction.
9:51:03 AM
Co-Chair Stedman expressed curiosity with where the money
from credits had ended up.
9:51:16 AM
Mr. Ruaro offered that AIDEA had recovered $17 million in
credits on the Mustang Field. Those funds had been used to
pay off the loan that had been made through the state
treasury.
9:51:37 AM
Senator Cronk wondered about loans or bonding for the Port
MacKinzie Rail Extension or the Norther Rail Extension.
9:51:42 AM
Mr. Ruaro responded that a project was not currently
pending. He said that the borough or the railroad could
approach AIDEA for financing along with sister
corporations.
9:52:12 AM
Co-Chair Hoffman understood that payments were very high
and asked whether any other substantial loans had been
written off.
9:52:22 AM
Mr. Ruaro replied that the other troubled project was the
Mustang Project, which was written down significantly and
the breakdowns had been documented in the financial
statements and were no longer affecting dividend payments
or net income.
9:52:45 AM
Co-Chair Hoffman how much had been written off.
9:52:47 AM
Mr. Ruaro replied that after the recovery of the roughly
$17 million in tax credits, nearly $70 million had been
written off.
9:53:14 AM
Co-Chair Stedman expressed concern about current loan
payments. He requested that AIDEA get back to the committee
with detailed spending portfolio information. He stressed
that the economics of the fishing implosion in Coastal
Alaska was concerning and while funding projects on the
North Slope was important there were other areas in the
state that were struggling.
9:54:22 AM
Mr. Ruaro agreed to provide the information.
9:54:42 AM
Co-Chair Hoffman requested a follow up in writing to be
submitted to the committee. He said that banks usually
required collateral for loans and assumed that AIDEA had
not required collateral for the loan on the Mustang
Project. He asked whether the board had learned from the
$70 million loan loss to require adequate collateral in the
future.
9:55:18 AM
Mr. Ruaro replied that there had been collateral on the
project, but the problem was that the leases were the large
part of the collateral, and the leases were insufficient
value to cover the amounts being put into the project.
There had not been enough oil and gas to be worth the
investment. He said that the Mustang Project had cost AIDEA
money in the end. He expounded on the lessons learned from
the process.
9:57:25 AM
Mr. Ruaro discussed slide 19, "Innovative Utilization of
Natural Resources":
Financing Approved for Alyeschem North Slope Project
Project goal: Utilize Alaska's natural gas for
economic and environmental benefits.
Facility to produce methanol and ultra-low sulfur
diesel from North Slope gas.
Economic impact:
o 80 construction jobs and 15 permanent jobs.
o Estimated $5M in annual tax and royalty revenue
for the state.
o Increased demand for North Slope natural gas
supports local producers.
o Environmental benefits: Cleaner burning fuels
align with global emission reduction efforts.
o Public private partnership drives economic
growth and sustainability.
o Project to break ground soon, marking a step
toward energy innovation in Alaska.
Mr. Ruaro looked at slide 20, "Railbelt Energy Solutions
Hex Cook Inlet LLC Leads the Way":
HEX CI's Financial Milestone and Strategic Investment
Repaid its $7.5 million AIDEA loan eight months
early in 2023.
Enabled HEX LLC's acquisition of the Kitchen Lights
Unit (KLU)
Secured energy delivery and created nearly 40 local
jobs.
Meeting Alaska's Energy Needs
AIDEA approved a $50 million revolving credit line
in late 2024.
Plans include sidetracking underperforming wells,
drilling new wells, and expanding production.
Expected to create up to 100 temporary construction
jobs and five permanent positions.
9:59:02 AM
Senator Kiehl spoke to a recent presentation from AGDC on
the potential gasline. He relayed that AGDCs financials
depended on them being the only provider of natural gas to
South Central Alaska. He wondered how HEX LLC would keep
paying off the AIDEA loans under the revolving line of
credit.
9:59:32 AM
Mr. Ruaro replied that he felt that the volume produced by
HEX was fairly small compared to the overall totals and the
timing of the pipeline was out several years which would
allow HEX to successfully sell and produce gas. As long an
Enstar was buying the gas ADIEA could continue to finance
HEXs operations.
9:59:54 AM
Senator Kiehl thought that if AGDC was going to provide all
the gas, Enstar would have to discontinue buying gas from
HEX.
10:00:14 AM
Mr. Ruaro replied that he felt that there was an
opportunity for gas to be used for more than domestic users
in South Central. He said that AIDEA was looking into data
centers and industrial uses. He thought that there was a
number of uses for gas that went beyond the consumers and
believed there was room for both AGDC and HEX.
10:00:47 AM
Senator Kiehl recalled that a recent report from AGDC had
counted on growth on consumption in the Cook Inlet Basin.
10:00:56 AM
Co-Chair Stedman wondered about the connection between
AGDCs proposal with other proposed projects. He felt that
the various projects did not connect.
10:01:29 AM
Mr. Ruaro replied that the market for gas was not limited
to just the domestic rate payers and consumers, AI
manufacturing could be layered in and could require the
volumes described in the AGDC domestic supply scenario as
well as the small volumes that HEX could provide.
10:02:12 AM
Co-Chair Stedman was not concerned with the mainline. He
was concerned that the project never made it past Phase 1
and a gasline was built with no export. He understood that
AI servers required low-cost energy and did not create
jobs. He believed that the data on the project was outdated
and inaccurate.
10:03:17 AM
Mr. Ruaro could not speak to the cost estimates. He thought
they were updated through Wood Mackenzie. He said that the
numbers would be updated through the feed work, which would
be backstopped by AIDEA, and that the numbers would be as
accurate as possible.
Mr. Ruaro pointed to slide 21, "Interior Energy Project
Fairbanks, AK":
Trailer Deployment: All 15 large capacity LNG
trailers have been received and are now in operation.
LNG Plant Construction: Harvest Midstream North
Slope LNG Plant is advancing as planned and is
expected to ensure a reliable gas supply for Interior
Alaska.
Future Commitment: IGU remains dedicated to
providing affordable, clean energy while strengthening
long term operational capabilities.
Financial Performance: Strong financial health with
credit rating improvement through sound fiscal
management and operational efficiency.
Operational Progress: Steady growth in operations,
financial stability, and project execution.
Mr. Ruaro displayed slide 23, "Authority of AIDEA to Issue
a 'Corporate Guarantee' To Alaska Gasline Development
Corporation (AGDC) GDC / 8 STAR":
• The type of credit facility AIDEA is offering is
a "Corporate Guarantee". A promise in writing in
a contract with 8 Star / AGDC.
• The Corporate Guarantee in this particular case
that is being discussed is both "limited" and not
limited
• It is "limited" to an amount "up to" a sum
certain. In this case, "up to" $50 million but
really "up to" the amount and cost for Front End
Engineering Design (FEED) work actually performed
when a Final Investment Decision (FID) decision
is made. Reason to believe significantly less,
due to contingency.
• It is "conditional" because the obligation to
make a payment only comes into effect if there is
a decision by Glenfarne not to proceed with a go
forward on the FID.
• If Glenfarne chooses to go forward with the
project and a 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)
10:06:10 AM
Co-Chair Hoffman understood the stats exposure was $10
million and wondered about the exposure for Glenfarne.
10:06:13 AM
Mr. Ruaro shared that if Glenfarne chose not to go forward
with FID after $10 million in feed work was completed AIDEA
would be responsible for the $10 million payment and
Glenfarne would be responsible of all costs they had
incurred and all other phases of the project.
Co-Chair Hoffman asked for a number.
Mr. Ruaro replied $100 million for feed work and other
items related to the project.
10:07:11 AM
Co-Chair Stedman spoke to Phase 1: just the pipe. He
understood that that there would be a maximum cap on loss
to the state of $50 million and Glenfarne would incur some
opportunity costs before reimbursement. He asserted that
the state would be taking 100 percent of the risk on the
FID for Phase 1.
Mr. Ruaro agreed.
Co-Chair Stedman reminded the committee that the state put
$500 million on the table for TransCanada, TransCanada used
the entire $500 million. He thought that is the current
plan was of similar structure the state would be out $50
million. He recommended that the AIDEA board demanded a
50/50 match to ensure that partners did not spend any more
money than necessary. He stressed the importance of all
involved parties having skin in the game.
10:09:14 AM
Mr. Ruaro was aware of what Co-Chair Stedman was speaking
to and he said that terms were being crafted to mitigate
loss to the state.
10:09:41 AM
Co-Chair Stedman reiterated the importance of, at minimum,
a 50/50 match. He reiterated that Phase 1 was where most of
the cost organization for the project.
10:10:18 AM
Co-Chair Hoffman remarked that the entire committee shared
Co-Chair Stedmans concerns. He noted that he had been in
discussions on a gasline for at least four administrations
and yet there was currently no gasline.
10:11:20 AM
Co-Chair Stedman looked at slide 21 and wondered about
offtake points in Fairbanks and the cost to plumb the town.
He hoped AGDC was considering how the Interior Energy
Project would be financed.
10:12:23 AM
Mr. Ruaro replied that that a resolution had already been
passed by the board, but he would relay Co-Chair Stedmans
suggestion of a 50/50 match requirement. He said that he
talked to AGDC about how to get gas into the community of
Fairbanks.
10:12:56 AM
Co-Chair Hoffman said that take off points were critical
for the Yukon and Kuskokwim. He stressed that there were
areas of the state that paid energy rates 5 percent to 10
percent higher than the rest of the state.
10:13:24 AM
Senator Kaufman remarked that wondered whether the state
had the data connection to power data centers for
Artificial Intelligence (AI).
10:13:51 AM
Mr. Ruaro believed that there was data connection in
certain parts of the state.
10:14:15 AM
Senator Kaufman thought that the lines should be in a
location where there could be convergence.
Mr. Ruaro agreed. He said that AIDEA was working to
identify sites.
10:14:42 AM
Senator Kaufman said that if the state were to be
successful in delivering gas, there would be a lot of
displacement. He asked whether there was an economic change
management plan to deal with the affects of that
displacement.
10:15:33 AM
Mr. Ruaro replied in the negative.
10:16:36 AM
Senator Kaufman remarked that the geopolitical landscape
had changed with the election of the current president. He
asked whether the structure of the plan would change if a
larger international player came onboard, such as the
entire country of Japan.
10:17:53 AM
Mr. Ruaro was not aware of limits that would prevent a
sovereign entity, such as Japan, from participating and
working with the state and Glenfarne.
10:18:43 AM
Senator Kaufman asked whether a restructuring of the
project with a bigger international player would be
possible at this point.
10:19:08 AM
Mr. Ruaro replied that the question should be directed to
AGDC.
10:19:18 AM
Senator Cronk spoke to high energy costs in the Fairbanks
area and the Interior. He stressed the importance that the
project benefit Alaskans in rural areas.
10:20:15 AM
Mr. Ruaro agreed, and stated that he was willing to work
with entities .
10:20:28 AM
Co-Chair Stedman requested a written response from AGDC
expressing their flexibility on the project. He noted that
this was the biggest project Glenfarne had ever taken on;
this project was multiple times larger than the aggregate
of the entire corporation.
10:21:17 AM
Mr. Ruaro replied that the project partners would be
important.
10:21:27 AM
Mr. Ruaro pointed to slide 24, "Authority of AIDEA to
Commit AIDEA Assets
.notdef Art. III, sec. 22, of the Alaska Constitution gives
the Legislature the authority to create separate
entities from the State of Alaska and grant these
entities the authority to act and make decisions using
their own resources.
.notdef The ability of the Legislature to create AIDEA and
give it an existence separate and apart from the State
of Alaska and to manage and use its own assets, which
are not considered assets of the State of Alaska, was
decided in favor of the Legislature and AIDEA in 1962.
DeArmond v. Alaska State Development Corporation, 376
P.2d 717
.notdef AIDEA statutes were rewritten in 1967 to expressly
set out its authority and powers, including the
authority to contract, spend, and use its own assets.
.notdef AS 44.88.190(a) removes AIDEA's funds from the
Executive Budget Act, except for the operating budget
AS 44.88.205.
10:22:07 AM
Senator Kiehl expressed fascination with the advance
appropriation question and voiced concern about the
legislatures ability to appropriate AIDEA funds. He cited
a 1985 Attorney General opinion that held that as long as
it did not impair a contract of disturb bond covenants,
AIDEA funds were subject to appropriation by the
legislature.
10:22:51 AM
Mr. Ruaro replied that HB 526, passed in 1996, set dividend
statute and said that the dividend was the way the
legislature should receive funds back from AIDEA and then
the legislature could appropriate the dividend at its own
discretion. He said that he could provide a summary to the
committee.
10:24:27 AM
Senator Kiehl asserted that the power of appropriation
granted to the legislature by the Alaska constitution was
still in full effect.
10:24:39 AM
Co-Chair Hoffman agreed.
10:24:46 AM
Mr. Ruaro looked at slide 25, "Why Now? What is
Different?":
.notdef 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."
.notdef 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.
.notdef 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.
.notdef President Trump We are now in a completely
"transactional" trade world. "If X, then Y". For
Japan, the "X" is a defense security agreement with
the United States that does not change, protection
from China, and avoiding U.S. trade tariffs. If Japan
wants "X" then it must give "Y". What is "Y"? Y is new
Japanese investment in the United States which Prime
Minister Ishiba said would be $1 trillion dollars.
Also, increased LNG purchases from the U.S., and a
joint venture linked to Alaskan oil and gas.
(Note: Since the meeting, six (6) more countries in
Asia have come forward to offer to buy more LNG from
the U.S. to fend of tariffs)
10:26:16 AM
Mr. Ruaro addressed slide 26, "Why Now? What is
Different?":
• Crisis with Gas Supply for Railbelt According to
Enstar at the recent RCA meeting (Jan. 15, 2025)
and in other meetings, Alaska will experience a
gas shortage. Enstar has studied all project
options, and has decided to go forward with
Glenfarne with an onshore import terminal. There
is no way for imported gas or Cook Inlet gas
likely to be sold at a rate near the price for
imported gas ($13.72) to get to the low $2.32 per
mmbtu price that Alaska LNG could provide via a
pipeline. (Page 8, AGDC Presentation, January 28,
2025)
• Cheap and Clean Gas from Great Bear Publicly
filed information from Great Bear shows certified
contingent oil resources at 1.6 billion barrels
(management thinks they can get to 3.5 billion)
6.6 TCF of gas from Kodiak, Ahpun , and Ahpun
Western Topsets. And separately a possible 3.3
TCF of gas from the Magrez 1 Well and drilling.
All gas available at up to 500 million cfd at a
maximum price of $1 per million btu. 20 years.
Gas Sales Purchase Agreement with AGDC.
• Gas Suppliers Proceed without Fiscal Certainty
Current suppliers of gas such as Great Bear are
not making a constitutional amendment or contract
for "fiscal certainty" on gas taxes a
precondition for providing gas.
• Prudhoe Oil Loss Declining Yearly Loss of oil
production from Prudhoe as a result of gas
offtake for a gas project is significantly
reduced each year by the passage of time. It has
been eight years since the AOGCC decision by
Cathy Forrester that enough oil production had
occurred, and enough gas reinjected and available
for a gas project that gas offtake could occur.
10:28:15 AM
Senator Merrick asked whether the current federal
administration had committed any funds to the project.
10:28:25 AM
Mr. Ruaro believed that the federal administration was
focusing on the federal loan guarantee and making sure it
is in a form that is effective and useful.
10:28:58 AM
Co-Chair Stedman thought that some of the major gas holders
in the state had committed to selling ga to the line. He
did not think that Great Bear has any gas to sell and did
not believe that financial markets would be eager to work
with them over Point Thompson.
10:29:34 AM
Mr. Ruaro thought that both could be possible source. He
said that it remained to be seen how Greak Boar would raise
funds for its fields.
10:30:02 AM
Co-Chair Stedman suggested the federal administration could
put itself in an equity position and back out once the
project was up and running. Much like the bailout of the
car industry.
10:30:26 AM
Mr. Ruaro thought that there was work towards some sort of
investment fund on the national level.
10:30:57 AM
Mr. Ruaro looked at slide 28, "AIDEA Small Business Loans
DCCED Managed Programs." The slide offered program
highlights from the Rural Development Initiative Fund
(RDIF), and the Small Business Economic Development
(SBED)program and highlighted the following details:
• $1.86 million funded in FY 2024
• 37 jobs created in FY 2024
• $46.3 million approved since inception
• 2,392 jobs created since inception
10:31:51 AM
Mr. Ruaro pointed to slide 29, "Loan Participation Program
Highlights and Regional Diversity." The slide detailed the
loan participations current month end balance, loan
participations previous month end balance, and month over
month percentage change, by region. The slide highlighted
the following information:
• $21.1 million with AIDEAs participation of $18.3
million
• 60 construction jobs and 79 permanent jobs supported
• 813 loans funded since 1992 with AIDEAs participation
of $1.2 billion
• 11,579 construction jobs since 1992 with 9,998
permanent jobs supported
10:32:17 AM
Mr. Ruaro highlighted slide 30, "Alaska Wildbirch Hotel
Downtown Anchorage":
Project Highlights:
• 70 percent AIDEA Participation
• 147 Construction Jobs
• 245 New Jobs
• $25 million AIDEA Funding Commitment
• Loan Closing in Early 2025
Slated to open in the spring of 2025 in the heart of
Anchorage's downtown Mushing District. The Wildbirch
Hotel will usher in a new era for the city's
hospitality scene as its first Hyatt JdV boutique
property and the most significant lodging addition in
two decades. The Wildbirch Hotel is part of a broader
effort to revitalize downtown Anchorage.
"When you work with AIDEA, it's not just another bank
loan. Our efforts to redevelop downtown matched
AIDEA's goal of economic revitalization, job creation
and making downtown Anchorage a better place for
tourists and locals alike. We are grateful AIDEA was
willing to work with us to make the Wildbirch Hotel a
reality and improve downtown Anchorage for generations
to come"
- Former U S Senator Mark Begich
10:32:50 AM
Mr. Ruaro looked at slide 31, "Sun Mountain Development
Wasilla, Alaska
Project Highlights:
• 90 percent AIDEA Participation
• 554 Construction Jobs
• 284 Permanent Jobs
• Over $15 million in AIDEA Funding
Sun Mountain is site condominium project and a
significant development in the retail sector The
Shoppes at Sun Mountain are located on the Parks
Highway The development opened in August 2019 and has
since attracted small businesses, larger Alaska
companies, and national franchises
10:33:05 AM
Mr. Ruaro addressed slide 32, "Golden Heart Waste
Management Fairbanks, Alaska":
Project Highlights:
• 90 percent AIDEA Participation
• 10 New Jobs
• 12 Jobs Retained
• $3.6 Million Loan Funding Commitment
• Closing in early 2025
With services that extend beyond Fairbanks, Golden
Heart Waste Management has been covering areas such as
Delta Junction, Tok, Ft Greely, and Coldfoot since
2019
This investment not only strengthens the local economy
but also underscores the importance of supporting
environmentally conscious businesses in Alaska
10:33:26 AM
Mr. Ruaro pointed to slide 34, "Delong Mountain
Transportation System Red Dog Mine (Northwest Arctic
Borough)":
• AIDEA owned asset.
• In 1985, Alaska Legislature, Governor, and AIDEA
agree some public support is needed to make Red
Dog go forward. After many hearings, SB 279 and
SB 280 are passed by the Legislature and signed
into law.
• In 1986, AIDEA funds mine, road, and port with
$160 million.
• AIDEA keeps mine operating in 1990's by funding
$85 million for expansion.
• Project provides significant economic benefits.
• Project continues to yield significant dividends
for
• NANA (royalty of $255 million in 2021 and shares
60 percent of the royalty with other Regional
Corporations).
• Future opportunities also exist (Aktigiruq
prospect could be one of the largest undeveloped
zinc deposits in the world).
10:34:24 AM
Mr. Ruaro displayed slide 35, "Arctic National Wildlife
Refuge Section 1002 Area Leases
"Kaktovik is the only community in the 1002 Coastal
Plain . . . We are not an exhibit in a museum. Nor is
the land that we have survived and thrived on for
centuries to be locked away for the peace of mind of
those from faraway places. This school of thought
amounts to nothing more than green colonialism land
grabbing in the name of the environment."
- From the testimony by Fenton Rexford of Kaktovik
before the House Resource Committee, March 6, 2019,
1:57 p.m.
SECTION 1002 AREA LEASES
In 2017 Congress passed the "Tax Cuts and Jobs Act,"
which directed the Department of the Interior (to
establish and manage a competitive oil and gas leasing
program in the Arctic National Wildlife Refuge (The
Coastal Plain, often referred to as the 1002 Area,
comprises 1 56 million acres within the 64-million-
acre ANWR AIDEA's leases cover 37 acres. Development
of the 1002 Coastal Plain holds significant potential
for economic growth According to the Final
Supplemental Environmental Impact Statement (leasing
and development could generate billions of dollars in
revenue for local, state, and federal governments
while creating thousands of jobs.
10:34:45 AM
Mr. Ruaro pointed to slide 36, "Arctic National Wildlife
Refuge Section 1002 Area Leases The slide offered an
estimated state annual tax and royalty revenue of
$2,002,000,000. The slide showed the estimated jobs
(average number of part-time and full-time jobs):
10:35:36 AM
Mr. Ruaro discussed slide 37, "Ambler Access Project Access
to Opportunities Denied by Biden Administration":
Potential Benefits
Mine Construction
? 2,777 direct jobs with $286 million in wages
annually
? 2,034 additional indirect and induced jobs with $108
million in wages annually
Mining Operations
? 495 direct jobs with $72 million in wages annually
? 3,436 additional indirect and induced jobs with $228
million in wages annually
Road Construction and Operations
? An annual average of 360 direct jobs over the road
construction period
? Up to 81 direct annual jobs for road operations and
maintenance over the life of the road
Government Revenue Generation
•$393 million in mining license tax revenues
•$524 million in corporate income taxes
•$214 million in production royalties
•$13 million in claim rents
10:36:13 AM
Mr. Ruaro played short video from slide 38.
10:37:45 AM
Co-Chair Hoffman remarked that there had been presentations
regarding provisions for local hire, and wondered how local
hire was being considered in the project.
10:38:13 AM
Mr. Ruaro replied that he could speak to local hire on the
Ambler Road Project, which was an AIDEA project.
10:38:27 AM
Co-Chair Hoffman specified that he wanted to know about
local hire on the gasline project.
10:38:33 AM
Mr. Ruaro deferred to Frank Richards, President, Alaska
Gasline Development Corporation.
10:38:46 AM
Co-Chair Hoffman thought it was curious that the matter
would not have bene discussed by the governors office.
10:38:50 AM
Mr. Ruaro responded that they had talked about it, but he
did not have all the details.
Senator Hoffman contended that if the matter was in the
slide presentation, then the presenter should be able to
provide the information.
Mr. Ruaro said he could speak to local hire as it was
related to the Ambler Road Project.
10:39:44 AM
Senator Merrick wondered who would own the road and whether
the public would have access.
10:39:53 AM
Mr. Ruaro replied that the public would not have access to
the road it would be and industrial road with access by
members of local communities for fuel, groceries, and
medivacs.
10:40:11 AM
Senator Merrick asked who would own the road.
10:40:14 AM
Mr. Ruaro relayed that the road would be owned either by
AIDEA or regional corporations. He said that the idea of a
syndicate that included AIDEA, tribes, and other
landowners, was being explored.
Co-Chair Hoffman asked for final comments.
10:41:20 AM
Mr. Ruaro stated that the benefits to Alaskan communities
from the investment was important to AIDEA. He believed
that the corporation could do more for the state.
10:41:58 AM
Co-Chair Hoffman felt that communities that lacked a stable
economic base should be especially considered.
10:42:12 AM
Mr. Ruaro agreed.
10:42:16 AM
Co-Chair Stedman thanked Mr. Ruaro for addressing the
personnel issues at AIDEA and remarked that he had
inherited some thorny issues. He appreciated the work
that had been done by Mr. Ruaro at AIDEA and added that he
still had concerns regarding the pipeline project.
10:43:10 AM
Senator Kiehl echoed Co-Chair Stedmans remarks and added
that the corporations loan participation program had
helped Alaskan small businesses. He expressed concern for
projects that had not been completed or had been abandoned
by AIDEA.
Co-Chair Hoffman discussed the following day's agenda.
ADJOURNMENT
10:45:14 AM
The meeting was adjourned at 10:45 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 02-17-2025 Senate Finance Committee Presentation FINAL.pdf |
SFIN 2/17/2025 9:00:00 AM |