Legislature(2025 - 2026)BUTROVICH 205
02/10/2025 03:30 PM Senate RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Alaska Gasline Development Corporation Report, Continued | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
February 10, 2025
3:30 p.m.
DRAFT
MEMBERS PRESENT
Senator Cathy Giessel, Chair
Senator Bill Wielechowski, Vice Chair
Senator Matt Claman
Senator Forrest Dunbar
Senator Scott Kawasaki
Senator Shelley Hughes
Senator Robert Myers
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATION(S): ALASKA GASLINE DEVELOPMENT CORPORATION REPORT
CONTINUED
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
FRANK RICHARDS, President
Alaska Gasline Development Corporation
Anchorage, Alaska
POSITION STATEMENT: Continued the presentation, Alaska Gasline
Development Corporation Report
MATT KISSINGER, Venture Development Manager
Alaska Gasline Development Corporation
Anchorage, Alaska
POSITION STATEMENT: Assisted with the presentation, Alaska
Gasline Development Corporation Report and answered questions.
ACTION NARRATIVE
3:30:29 PM
CHAIR GIESSEL called the Senate Resources Standing Committee
meeting to order at 3:30 p.m. Present at the call to order were
Senators Myers, Dunbar, Kawasaki, Hughes, Wielechowski, Claman
and Chair Giessel.
^PRESENTATION(S): ALASKA GASLINE DEVELOPMENT CORPORATION REPORT,
CONTINUED
PRESENTATION(S): ALASKA GASLINE DEVELOPMENT CORPORATION REPORT,
CONTINUED
3:30:59 PM
th
CHAIR GIESSEL announced the continuation of the January 27
presentation from Alaska Gasline Development Corporation (AGDC)
by Frank Richards. She referred to a gas pipeline project
timeline chart that her staff had created in 2014 or 2015. The
chart outlined steps such as AGDC board appointments, right-of-
way determination, property tax assessment, and royalty
determination:
[Original punctuation provided.]
Timeline to GASLINE
Alaska Senate
Majority
AGDC Board
appointments announced
March
Pipeline right of way
access legislation
introduced
March
Governor introduces
property tac
legislation
April 1
DNR Commissioner
makes royalty
determination
April 1 - 15
Term sheets developed:
establish basis for
enabling agreements
April 30
Parties reach
enabling agreements
July
Board approves
enabling agreements
agreements become public
August
CHAIR GIESSEL said there was a lot to do to put a gas pipeline
in place. She mentioned a course attended by legislators [in
2014/2015] on industrial megaprojects, a book on taxing such
projects, and specifically a chapter on taxing gas pipelines and
natural gas. She referenced historical research on past gas
pipeline projects in Alaska and emphasized the complexity of the
projects and that the endeavor was not new to Alaska. She
emphasized that Alaska still does not have a gas pipeline.
3:33:25 PM
CHAIR GIESSEL explained that, earlier in the day, the [Senate]
Finance Committee requested from AGDC a chart like the 2014/2015
version.
3:33:38 PM
SENATOR DUNBAR asked for clarification regarding the timeline
and asked whether it was current.
CHAIR GIESSEL explained that the chart was developed by her
office in 2014 or 2015.
3:34:11 PM
FRANK RICHARDS, President, Alaska Gasline Development
Corporation (AGDC), Anchorage, Alaska introduced himself and
suggested advancing to slide number 6 of the presentation,
continuing from January 27th, 2025:
[Original punctuation provided.]
Alaska
Developer-Led Project Gasline
Development Corp.
3:35:12 PM
MATT KISSINGER, Venture Development Manager, Alaska Gasline
Development Corporation, Anchorage, Alaska, moved to and
narrated slide 7. He characterized the efforts to develop and
finance Alaska LNG in three separate phases: Producer-Led.
State-Led and the current Developer-Led. He summarized the
challenges encountered during the producer-led and the State-led
phases, including:
• market changes due to fracking
• incompatible investment goals
• expensive capital
• high project on project risk
• extensive facility needs:
• carbon capture facility
• large pipeline
• large LNG facility
[Original punctuation provided.]
Evolution to Private Developers
2013 - 2016
Producer-Led
Producers provided initial scoping and engagement
important demonstration of producer support
2017 - 2022
State-Led
State-led initial design, permitting, and
authorizationimportant demonstration of state support
2023 - Onward
Developer-Led
Transition to world-class private parties for
construction and operations
MR. KISSINGER proposed that the current developer-led phase had
a greater outlook for success. He said a nimbler developer like
Glenfarne, would act as a sort of quarterback, bringing major
North American pipeline companies and other development
companies to add depth and more appropriately allocate risk. He
said the cost of supply would be driven down by reducing the
cost of debt.
3:38:35 PM
CHAIR GIESSEL noted that [the AGDC proposal is to build] a 42-
inch pipeline.
MR. KISSINGER concurred.
CHAIR GIESSEL noted that AGDC and the Wood-Mac report were
previously based on a pipeline to deliver [LNG] in Alaska, not
an export facility.
3:38:58 PM
MR. KISSINGER said he was referring more to a 2016 Wood-
MacKenzie study which suggested re-aligning the cost of capital
and included the cost to export.
3:39:11 PM
CHAIR GIESSEL summarized AGDC's proposal. She said, from 2023
onward, the developer-led model, transitioning to [investment
by/collaboration with] world class companies and described by
the Wood-MacKenzie study as an economic approach, was
constructing a 42 inch [pipe] line. She asked for clarification.
3:39:44 PM
MR. RICHARDS concurred and said the AGDC was proposing a 42-inch
pipeline, as designed for the entire Alaska LNG project. He
distinguished between the full LNG project and Phase One of the
project which was a 42-inch line to deliver energy to Alaskans.
3:40:19 PM
CHAIR GIESSEL asked how it could be a rational idea to use a
large 42-inch pipeline to deliver the small amount [of LNG]
needed by Alaskans.
3:40:36 PM
MR. RICHARDS concurred that a 42-inch pipeline was overkill for
the needs and gas volume of Alaska. However, he explained that
Phase One was the first phase of a multi-phase project
envisioned by the Federal Energy Regulatory Commission (FERC).
He recalled that the Alaska standalone pipeline project, which
AGDC began developing in 2013 was concluded in 2015 when the
legislature directed AGDC to go forward with the Alaska LNG
project. He said reviving the standalone pipeline would incur
additional costs and delays. The goal was to find an
economically viable solution that matched the price of imported
LNG.
3:42:56 PM
SENATOR DUNBAR expressed concern about the potential risks for
investors in the construction of a 42-inch pipeline,
particularly if the project only advanced through phase one and
subsequent export facilities were not built. He asked about the
viability of recovering invested capital if the project stalled
at this early phase.
3:43:43 PM
MR. RICHARDS said the goal of AGDCs Phase One model was to
determine whether the construction and the operations of a 42-
inch main line would be economic. He said the model included the
[LNG] demand forecast for Alaska, the debt financing cost, as
well as the midstream private equity return that [developers]
would be looking for. He explained that this was the model AGDC
presented to the legislature in 2024. The legislature called for
validation of the model by an independent third party which led
to the Wood-MacKenzie study. He said AGDC also engaged with
private sector entities developing their own models to validate
AGDCs findings and Wood-MacKenzie's study to determine whether
the Phase One project was viable for them and their investment
criteria. He emphasized that supplying gas for Alaskans remained
the primary target.
3:45:00 PM
MR. KISSINGER stated that the Phase One development can stand on
its own and return the debt service required as well as the
equity returns necessary for those equity investors, and it
could deliver gas to Alaskans for less than imported LNG. T
He said that was what AGDC was looking for.
3:45:32 PM
SENATOR HUGHES asked whether there were any physical restraints.
She noted that there had been problems with pipeline delivery
when there was not enough material flowing through and that
Phase One would only be moving enough gas for Alaskans. She
asked whether a certain volume was required to ensure
operations.
3:46:01 PM
MR. RICHARDS said hydraulic analysis considered the minimum flow
necessary to meet the needs of Alaskans and whether that would
be viable in terms of pressure on the pipe. He said the results
were favorable and that it was like the Alaska standalone
project, which was comprised of a compressor station in Prudhoe
Bay, and required no additional compressor stations to deliver
LNG to southcentral Alaska and Fairbanks.
3:46:54 PM
SENATOR HUGHES said she was glad to hear Phase One would work
out financially. She noted the constitutional requirement to
develop the states resources for the maximum benefit to
Alaskans. She also noted recent interest by Japan and Taiwan in
Alaska's natural gas and asked whether those interests had
changed any of the [Alaska LNG project] considerations. She
asked whether it would increase the chances of moving to Phase
Two.
3:47:39 PM
MR. RICHARDS said visits in fall 2024 with to introduce the
phased project beginning with building the pipeline were well-
received. From the perspective of potential investors and off-
take consumers (Japan, Korea and Taiwan) the largest risk was in
completing the pipeline and that would be in place with the
completion of Phase One. He emphasized that the Alaska LNG
project in total would supply gas for Alaskans and gas for
export, generating revenue for the [state's] treasury.
3:48:49 PM
SENATOR CLAMAN asked what diameter pipeline was planned for the
Alaska [standalone] project.
3:48:59 PM
MR. RICHARDS said the Alaska Standalone project proposed a 36-
inch pipeline. He noted that the Alaska Gasline Inducement Act
(AGIA) was in effect when the Alaska standalone project was
developed and limited the flow to 500 MMscf per day,
approximately twice the amount Alaska used. He said the project
was designed for that maximum flow.
3:49:29 PM
SENATOR CLAMAN asked whether [Alaska LNG Phase One] 42-inch
pipeline could be paid for by supplying gas to Alaskans alone.
3:49:48 PM
MR. RICHARDS said that the construction and operation of Phase
One would be paid for.
3:49:56 PM
SENATOR CLAMAN asked for clarification that the costs associated
with the development of a liquefaction plant would be part of
Phase Two and not of Phase One.
3:50:08 PM
MR. RICHARDS affirmed that the ultimate goal was for Phase One
to provide gas for Alaska and Phase Two would be to develop the
export project.
3:50:20 PM
SENATOR KAWASAKI recalled the history of the Alaska LNG project,
including developers such as Exxon, BP, ConocoPhillips and the
state. He asked what changed in the economics of the project
that made a pipeline feasible now when it was not as part of a
comprehensive plan ten years ago.
3:51:15 PM
MR. KISSINGER said the biggest change is in [the cost] of the
alternatives for supplying gas to SC Alaska. He said Cook Inlet
gas costs were eight to nine dollars per MMBtu, with some
contract prices as high as $13. Imported LNG would be even
higher than that and so, not a viable alternative. Revisiting
Phase One revealed that it would be a better alternative, even
without an anchor tenant, than importing LNG.
3:52:27 PM
SENATOR WIELECHOWSKI said President Trump announced a joint
venture in his press conference with the Prime Minister of
Japan. He asked for details about the joint venture:
• parties involved
• when gas would start flowing from the project
• how much gas would be produced
• fiscal terms of the project
3:52:54 PM
MR. RICHARDS said AGDC had not yet heard what the President and
his team agreed to with the Prime Minister of Japan. He said
AGDC was engaged with Japanese companies but did not have any
signed agreements.
3:53:16 PM
SENATOR WIELECHOWSKI asked whether AGDC had any knowledge about
the proposed joint venture before President Trump announced it.
3:53:25 PM
MR. RICHARDS said AGDC knew from their own talks with companies
from Japan for either off-take or investment that they were
keenly interested. The outcome of the discussion between
President Trump and Japan's Prime Minister was not known.
3:53:42 PM
SENATOR WIELECHOWSKI noted that AGDC was the organization tasked
with developing Alaska's gasline and asked whether AGDC had any
knowledge of a joint venture with Japan.
3:53:54 PM
MR. RICHARDS said, in terms of a joint venture, AGDC had been in
discussions with Japanese companies to partner with them.
SENATOR WIELECHOWSKI asked whether AGDC had a joint venture with
any Japanese companies.
3:54:05 PM
MR. RICHARDS answered that AGDC did not have a joint venture
with any Japanese companies yet.
3:54:11 PM
SENATOR WIELECHOWSKI asked whether Mr. Richards had any
knowledge of the joint venture President Trump announced.
3:54:17 PM
MR. RICHARDS stated that he did not know what the president
identified as a joint venture with Japanese [entities].
3:54:33 PM
SENATOR WIELECHOWSKI asked whether Mr. Richards knew any details
at all about the announced joint venture.
MR. RICHARDS said he did not know what was said in the private
meeting.
3:54:42 PM
SENATOR WIELECHOWSKI asked whether Mr. Richards had been
informed at all about the joint venture.
MR. RICHARDS said he was scheduled for a debriefing in a couple
of days.
SENATOR WIELECHOWSKI asked who AGDCs point of contact with the
[Trump] administration was and whether AGDC had contacted the
administration.
3:55:02 PM
MR. RICHARDS said there were two points of contact: Senator
Sullivan through the National Security Council and Mr. Richards
had been directly engaged with the Economic Council.
3:55:15 PM
SENATOR WIELECHOWSKI said it seemed odd that the head of the
AGDC did not know anything at all about the proposed joint
venture that the president of the United States recently
announced.
3:55:27 PM
MR. RICHARDS said AGDC's engagement with parties interested in
investing in the [Alaska LNG] project was bound by
confidentiality rules. He reiterated that AGDC did not have a
joint venture.
3:55:50 PM
SENATOR DUNBAR said he understood that an advantage of the
Alaska LNG project was that the permitting was basically done.
He asked whether that was correct.
3:56:03 PM
MR. RICHARDS concurred.
3:56:08 PM
SENATOR DUNBAR asked whether the State of Alaska held the
permits or AGDC.
3:56:15 PM
MR. RICHARDS said AGDC applied for and held the permits as the
100 percent owner.
3:56:25 PM
SENATOR DUNBAR noted that President Trump announced a joint
venture with Japan for the Alaska LNG project and that venture
would have to use [AGDCs] permits. He asked whether that was
correct.
3:56:38 PM
MR. RICHARDS affirmed that the existing permits would have to be
used to execute the Alaska LNG project.
3:56:46 PM
SENATOR DUNBAR asked whether it was correct to state that if the
Alaska legislature determined it did not want to enter that
joint venture, and did not want AGDC to employ those permits,
the joint venture could not go forward.
3:56:58 PM
MR. RICHARDS asked what action the legislature would take to
prevent AGDC from entering the joint venture.
3:57:12 PM
SENATOR DUNBAR said he presumed that AGDC would need permission
to move forward with the Alaska LNG project but acknowledged
that AGDC might already have the required permissions and is
just informing the legislature of its intent to move forward to
build the line with these permits.
3:57:27 PM
MR. RICHARDS said the legislature empowered AGDC with the
authority to make the decision to enter joint ventures, to
divest themselves from ownership, to acquire debt financing, to
acquire capital to move forward and to seek partners to move
forward.
3:57:46 PM
SENATOR DUNBAR suggested that the legislature would have to
dissolve AGDC through legislation [to prevent a joint venture].
MR. RICHARDS concurred.
3:57:58 PM
SENATOR DUNBAR stated that he had no intention to take such
action.
3:58:12 PM
CHAIR GIESSEL noted the need to have access to gas and that the
Alaska Oil and Gas Conservation Commission (AOGCC) authorized
the offtake of gas from the North Slope. She observed that the
Alaska LNG Phase One project would likely involve gas from
Pantheon, not the North Slope and asked whether AOGCC
authorization would be required.
3:58:50 PM
MR. RICHARDS said he did not know the answer to that.
MR. KISSINGER said he thought AOGCC authorization would be
required. He clarified that the Great Bear Pantheon oil field
was a good opportunity for low-cost gas with low CO2, but that
the Alaska LNG Phase One project would require financing and
financing required bankable gas. He said there would always be
back-up gas supply from either Prudhoe Bay or Point Thomson.
3:59:29 PM
SENATOR MYERS noted that back-up gas was required and access to
back-up gas would require additional pipeline and a gas
treatment plant. He asked why those costs weren't included in
the Wood-MacKenzie Phase One study.
4:00:05 PM
MR. Kissinger explained that [the costs] were included in the
tornado chart of sensitivities in the Wood-MacKenzie report.
MR. KISSINGER further explained that the primary source of gas
[for Alaska LNG Phase One] would be the Great Bear Pantheon gas,
which will be less than one dollar. He provided a breakdown of
the costs for the entire Alaska LNG project:
$44 billion - total Alaska LNG project
$10 billion - Arctic carbon capture facility
$14 billion - full pipeline with compression
$20 billion - LNG facility
MR. KISSINGER compared the characteristics of gas from Great
Bear Pantheon with gas from Point Thomson, the infrastructure
and processing required to get each of them to consumers, and
the associated costs.
4:01:54 PM
CHAIR GIESSEL noted that Point Thomson gas was at relatively
high pressure, and it was her understanding that no gas was
currently produced there.
4:02:10 PM
MR. KISSINGER said there was some gas. He explained that the
initial production system was designed for 200 million cubic
feet (MMCF)and 10,000 barrels of liquid per day. He said Great
Bear was not operating at that capacity today, though he said
that was not a facility constraint but well deliverability
issues and that they re-inject the gas at 10,000 psi rather than
putting it into the pipeline.
CHAIR GIESSEL said it would be interesting to talk to Exxon
about that because she thought she remembered that there were
some issues with the facilities there.
4:02:49 PM
SENATOR WIELECHOWSKI asked whether Great Bear Pantheon had
funding to develop their resource and what volume of gas they
had at their disposal.
4:03:00 PM
MR. RICHARDS said Great Bear Pantheon was seeking a capital
raise to be able to advance. They completed their Megrez well.
He said that would assist them in their resource profile. He
said AGDC had Ryder Scott [Oil and Gas Consulting] provide an
independent analysis of Great Bear Pantheon's work.
4:03:36 PM
MR. KISSINGER said the Ryder Scott due diligence commissioned by
AGDC considered the independent expert reports and subsurface
information and confirmed there is far more than enough
producible gas for in state needs.
4:03:59 PM
SENATOR WIELECHOWSKI asked what Great Bear Pantheon's market cap
was and what interest and other terms they could expect in their
quest for capital.
4:04:15 PM
MR. KISSINGER said some of these questions would be better asked
of Great Bear Pantheon. He said AGDC was keeping track of Great
Bear Pantheon's progress toward final investment decision (FID).
4:04:31 PM
SENATOR WIELECHOWSKI restated his question, asking what Great
Bear's market cap was and whether they were publicly traded.
MR. KISSINGER affirmed that they were publicly traded. He did
not recall their market cap but estimated that it was around
$200 million.
4:04:45 PM
CHAIR GIESSEL said it would be interesting to have Great Bear
Pantheon come to the committee. She said it was interesting they
could sell their gas for one dollar. She noted that Mr.
Kissinger appeared eager to answer.
4:04:57 PM
MR. KISSINGER said Great Bear Pantheon used an unconventional
oil development in which the pursuit was for the liquids. He
said the gas doesn't provide much for them on re-injection as it
did for Prudhoe Bay. He said if gas had not been re-injected at
Prudhoe Bay, there would have been extreme oil losses. He said
that was not the case in these extremely tight oil reservoirs.
He explained that the gas is almost a by-product of the pursuit
for oil in this case. He said it was similar to Point Thomson.
4:05:38 PM
MR. RICHARDS said the volumes Great Bear Pantheon was looking to
produce were in the eight to nine trillion cubic feet range.
4:06:01 PM
MR. KISSINGER moved to and narrated slide 8, advocating for the
developer-led model and the progress AGDC made:
[Original punctuation provided.]
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
4:07:24 PM
SENATOR WIELECHOWSKI suggested that AGDC's work toward the
Alaska LNG project was now moot with the announcement by
President Trump of a joint venture with Japan.
4:07:37 PM
MR. RICHARDS noted that the presentation was intended to
communicate to the committee AGDC's work to date to seek private
investors for the Alaska LNG project.
4:07:50 PM
CHAIR GIESSEL asked whether Japan had less expensive options
than gas from Alaska.
4:08:00 PM
12:58
MR. RICHARDS said Japan was importing LNG from many places,
including Australia, the Middle East and Russia and was seeking
other sources, specifically Pacific basin gas, with Alaska being
a key consideration. Japan had set goals to reduce energy
demand, increase renewable energy use, and achieve net carbon
reduction by 2050, however they have experienced economic
growth, driven by data centers and AI computing, necessitating
additional energy. He mentioned a recent press conference where
Japan's Prime Minister Ishiba committed a trillion dollars in
investments in the United States, He explained that the
investment included LNG and energy off-take, as well as other
opportunities within the US. He said that Alaska's strategic
location and long-standing relationship with Japan make Alaska a
prime candidate for supplying energy resources.
4:10:00 PM
1:01
MR. KISSINGER moved to transitional slide 9:
[Original punctuation provided.]
Alaska
Introduction to Glenfarne Gasline
Development Corp.
MR. KISSINGER moved to slide 10 and said AGDC had begun
negotiating definitive agreements with Glenfarne. He said
representatives from Glenfarne would be on hand over the
following couple of days to meet with legislators. He
highlighted Glenfarne's mission statement and their impact in
Columbia, providing grid stability and renewables. He emphasized
the new phenomenon of data centers taking the energy world by
storm in the way that fracking did in 2006 - 2008. He noted that
Japan's energy plan had forecast a decrease in total power
demand for many years but was now forecasting increased energy
demand due to the data center revolution and its energy demands:
[Original punctuation provided.]
Glenfarne Mission and Vision
Glenfarne
Energy Transition, LLC
Company Tear Sheet:
~2.2 GW Power Portfolio
12.8 MTPA FERC-Approved
LNG Export Capacity
~800 team members
Glenfarne is a global energy transition specialist
that is guided by its core mission and vision.
Mission: To realize the potential of the world's
energy transition.
Vision: Responsibly grow our renewables, grid
stability, and flexible fuels businesses to provide
economically viable solutions to our communities and
customers to realize the potential of the world's
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 market's energy
transition journey will be driven by the interaction
of domestic gas and global LNG.
4:12:10 PM
MR. KISSINGER moved to slide 11 and said was building out their
business and growing at a very fast pace. He emphasized that
Glenfarne had an established development team with over 800
employees. They operate all the facilities they own and possess
expertise in project finance and bringing the right capital to
projects. He said that was fundamental to making Alaska LNG
work:
[Original punctuation provided.]
Glenfarne at a Glance
Renewables
417 MW [See Note 1]
35 Renewable Assets [See Note 1]
~2.2 GW Power Portfolio
Grid Stability
1.8 GW
14 Grid Stability Plants
GAS Infrastructure
12.8 MTPA [See Note 2] LNG Exports
1. Includes 68 MW of Solar PV under construction
2. FERC-approved capacity
STABLE U.S. GAS RESOURCE BASE
"HERE AND NOW" ENERGY TRANSITION
HIGH-GROWTH EMERGING MARKETS
LOCAL FOCUS AND GLOBAL CAPABILITIES
[World Map showing Glenfarne's Markets in North America, South
America, Europe and Korea; their Co-headquarter Offices in New
York and Houston as well as offices in Panama City, Bogota,
Santiago Barcelona and Seoul.]
4:12:55 PM
SENATOR KAWASAKI said he had not heard of Glenfarne and asked
with whom they do business in which countries.
4:13:28 PM
MR. KISSINGER pointed out that the company Venture Global was
unheard of as recently as three years ago but made their $60
billion initial public offering (IPO) [January 23, 2025] on the
back of their two developments in the Gulf of Mexico. He said
LNG development was a rapidly changing landscape.
MR. KISSINGER said Glenfarne was operating primarily in Latin
America with an import terminal in Columbia, pipelines and power
plants in Panama, and power plants in Chile. They also had the
Texas LNG project and the Magnolia LNG project in their
development phase. He noted that Texas LNG was the only LNG
project able to fully subscribe in the past year.
4:14:28 PM
SENATOR KAWASAKI asked whether Glenfarne's other investments,
LNG or otherwise, would detract from their commitment to Alaska.
4:14:43 PM
MR. KISSINGER said there were guardrails in place on the terms
of negotiation with Glenfarne. He said there were certain
milestones Glenfarne would be required to fulfill regardless of
their other projects.
4:14:59 PM
SENATOR WIELECHOWSKI mentioned that Glenfarne had acquired
stalled LNG projects that had yet to be advanced to closure. He
asked whether AGDC had determined the funding sources for
Glenfarne's projects.
4:15:21 PM
MR. KISSINGER said AGDC had not identified Glenfarne's future
funding sources; but had identified their expertise at
attracting capital for their projects.
4:15:35 PM
SENATOR WIELECHOWSKI asked how big Glenfarne's market cap was.
4:15:42 PM
MR. KISSINGER said Glenfarne was a private company, so the
market cap was not published.
4:15:48 PM
SENATOR WIELECHOWSKI recalled that Goldman Sachs screened
investors [in 2024] to determine they had adequate access to
capital and the necessary technical capability [to advance the
Alaska LNG project]. He noted Goldman Sachs was not used to vet
Glenfarne and asked what proof AGDC had of their suitability. He
asked why Goldman Sachs was not used in the vetting process.
4:16:29 PM
MR. KISSINGER said AGDC did a full due diligence study of
Glenfarne's finances and of their technical capability. He
emphasized that the evaluation was on-going.
4:16:42 PM
MR. RICHARDS said Goldman Sachs worked with AGDC for several
years to identify financial and strategic partners [for the
Alaska LNG project] He maintained that Goldman Sachs was engaged
with Glenfarne and was still an active participant [with AGDC].
4:17:29 PM
SENATOR WIELECHOWSKI asked whether Goldman Sachs recommended
Glenfarne.
4:17:36 PM
MR. RICHARDS said Goldman Sachs did not recommend for or against
Glenfarne.
4:17:45 PM
SENATOR WIELECHOWSKI asked whether the [State of Alaska] was
paying Goldman Sachs for their vetting services.
MR. RICHARDS said the contract between AGDC and Goldman Sachs
was that [Golman Sachs] would be paid at capital raise: when a
project has been committed to and funds are raised, they would
receive their fee. He emphasized Goldman Sachs was working on
their own behalf and at their own expense.
4:18:08 PM
SENATOR WIELECHOWSKI asked whether an exclusivity agreement had
been made with Glenfarne.
MR. RICHARDS affirmed.
4:18:19 PM
SENATOR WIELECHOWSKI noted that the Alaska Attorney General was
the statutory legal counsel for AGDC and asked whether the
attorney general approved the Glenfarne exclusivity agreement.
MR. RICHARDS affirmed that the attorney general was legal
counsel for AGDC and was actively engaged in legal agreements.
4:18:41 PM
SENATOR WIELECHOWSKI asked whether the attorney general or
someone else approved and signed off on the exclusivity
agreement with Glenfarne.
MR. RICHARDS said the attorney general, and the attorney
general's assistants were part of the discussion and provided
counsel to AGDC, but were not asked to provide a sign-off.
4:19:10 PM
SENATOR WIELECHOWSKI asked whether the attorney general drafted
the exclusivity agreement or reviewed it prior to [AGDC's]
signing.
MR. RICHARDS affirmed.
4:19:20 PM
SENATOR WIELECHOWSKI asked whether the attorney general was made
aware that Glenfarne was not subject to screening by Goldman
Sachs.
MR. RICHARDS said the attorney general's assistant assigned to
AGDC was involved in all conversations, including those with
Goldman Sachs.
4:19:40 PM
SENATOR WIELECHOWSKI asked for confirmation that the attorney
general was made aware that Glenfarne was not subject to the
Goldman Sachs screening process.
4:19:48 PM
MR. RICHARDS noted that AGDC sought partners who had development
expertise and capabilities, financial expertise and
capabilities, the ability to raise capital, and more importantly
the operational expertise to develop projects as well as execute
and maintain ongoing operations. He said Glenfarne had been
successful in what they do have, what they do operate, and how
they're progressing forward.
4:21:01 PM
SENATOR WIELECHOWSKI asked whether there would be a penalty if
the state withdrew from the agreement with Glenfarne.
MR. RICHARDS said AGDC was bound by confidentiality agreement,
so was not able to offer specifics about penalty clauses.
4:21:18 PM
SENATOR WIELECHOWSKI noted that the United States president told
the world he had a joint venture with Japan. He expressed
concern that the state of Alaska would be on the hook for
damages to Glenfarne for breaking the exclusivity agreement if
the president decided not to use Glenfarne.
4:21:37 PM
MR. RICHARDS said partners coming in to work with Glenfarne
would be welcome. He said a joint venture with Japanese, Koreans
or Americans with Glenfarne will be a positive to move the
[Alaska LNG] project forward. He said Glenfarne would be acting
in a leadership role for the project, bringing in other partners
to augment their capabilities to be able to move the project
forward expeditiously and with the right technical and
operational oversight for a successful project.
4:22:27 PM
SENATOR WIELECHOWSKI asked whether the AGDC board approved the
exclusivity agreement with Glenfarne and what were the means of
approval.
4:22:52 PM
MR. RICHARDS said AGDC did not ask for a board action to sign
the exclusivity agreement. He said definitive agreements were
being drafted and the terms of those agreements would be brought
to the board for approval, per statute.
4:23:24 PM
SENATOR WIELECHOWSKI suggested that entering an exclusivity
agreement was a major decision and that AGDC should have sought
board approval for that action.
4:23:45 PM
MR. RICHARDS said AGDC engaged its board in ongoing discussions.
The board was made aware of the exclusivity agreement when it
was being discussed with Glenfarne, but the board was not asked
to provide approval for the agreement. He said the board would
be informed as negotiations progressed so they would have the
knowledge they needed to review and decide on the completed
definitive agreements.
4:24:34 PM
SENATOR WIELECHOWSKI asked whether AGDC was seeking money, $50
million, from the legislature.
4:24:44 PM
MR. RICHARDS said the governor's budget included a fast-track
supplemental for $50 million. He said it was his understanding
that the amendment would be withdrawn with amendments coming out
the following week.
4:24:59 PM
SENATOR WIELECHOWSKI asked whether AGDC would acquire the
funding for Glenfarne from Alaska Industrial Development and
Export Authority (AIDEA) or somewhere else.
4:25:08 PM
MR. RICHARDS explained that AGDC was working toward a definitive
finance agreement with AIDEA for the front-end engineering and
design of Phase One of the Alaska LNG project. At the same time,
AGDC was working on definitive agreements with Glenfarne for a
commitment to fund the entire $150 million Alaska LNG project.
He sought to clarify that the $50 million request from the
legislature in 2024 was for Phase One of the complete project
and this figure was validated by the Wood-MacKenzie study. He
emphasized that the funding from AIDEA was expected to be a
backstop and that Glenfarne was committing to funding the entire
Alaska LNG project, estimated to be $150 million.
4:27:03 PM
SENATOR WIELECHOWSKI asked whether AGDC would continue to pursue
funding from AIDEA and the partnership with Glenfarne or pause
to learn more about the joint venture announced by President
Trump. He noted that the announcement suggested there were
agreements already in place.
4:27:37 PM
MR. RICHARDS said AGDC was proceeding forward on the definitive
agreements with AIDEA and with Glenfarne.
4:27:49 PM
SENATOR WIELECHOWSKI charged that AGDC would potentially spend
$150 million, and the president could announce something
completely different and the $150 million would be wasted state
money.
4:28:01 PM
MR. RICHARDS said Glenfarne would be committing the money, not
the State of Alaska.
SENATOR WIELECHOWSKI asked if there was a backstop investment by
the state.
MR. RICHARDS said there may not ever be a backstop agreement
with AIDEA, in which case it would be a full funding commitment
by Glenfarne to move the project forward.
4:28:31 PM
CHAIR GIESSEL noted that Glenfarne's website said they had never
completed a project; they bought completed projects and operated
them. She asked whether there was a project like the Alaska LNG
project that Glenfarne took on and brought to completion.
4:29:04 PM
MR. KISSINGER said he could not name projects Glenfarne had
taken all the way through to development.
4:29:14 PM
MR. RICHARDS said Glenfarne provided information about their
South American projects for which they designed, executed and
operated existing power production facilities.
4:29:37 PM
CHAIR GIESSEL noted Glenfarne had built power plants, but she
opined the Alaska LNG project was quite different from that. She
also noted Glefarne's work in South America and the southern
United States, not in arctic environments. She asked whether
AGDC had concerns that Alaska LNG would be quite different from
power plants in South America.
4:30:11 PM
MR. RICHARDS said that was a concern and that Glenfarne would
act in a quarterback role to bring on partners that do have the
expertise and capabilities to execute a mega-project in the
arctic and sub-arctic. He also noted the challenge of the marine
environment in Cook Inlet. He said modules would be developed in
the U.S. gulf coast or in Asia and brought to the north slope
for fabrication and operation.
4:30:42 PM
SENATOR DUNBAR referred to slide 18 and asked whether AGDC was
confident in the proposed timeline and what could occur to
disrupt it.
4:31:40 PM
MR. RICHARDS moved to slide 18 and said it would take 12 to 14
months to complete and update the cost estimates, look at the
execution plans and determine pipe mill slots available for pipe
to be manufactured in US Mills to finalize front end engineering
and design (FEED). Concurrent with completing FEED, the
financing components of the project, which would ultimately
require both debt financing and equity financing would likely
take about two years. He emphasized that AGDC completed FEED,
including geotechnical work and hydraulic analysis, for the 36-
inch Alaska standalone pipeline project that was planned for the
very same right of away as the Alaska LNG project:
[Original punctuation provided.]
Actions to Build Phase 1 Pipeline
2025 FEED
2026 Financing
2027 /\
2028 Pipeline
2029 Construction
2030 \/
2031 First Gas
• 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
4:33:25 PM
SENATOR DUNBAR asked for confirmation that it appeared AGDC was
no longer asking the legislature for $50 million to backstop
[the Phase One project]; and that they had worked that out with
AIDEA. AGDC also apparently have $150 million from Glenfarne and
are now informing the legislature that AGDC was moving forward
with Phase One and no longer asking for anything from the state.
He suggested there was nothing the legislature was required to
do, or could do, to change the timeline.
4:33:56 PM
MR. RICHARDS said AGDC had not completed the agreement with
AIDEA and that was why FEED had not begun. He reiterated that
the goal for executing Phase One was to provide gas to Alaskans
as soon as possible. He emphasized the [international interest
in] off-take opportunities for the {Alaska] LNG project and
impetus coming in with additional investment or partnership or
joint ventures and said that was very positive for moving
forward.
SENATOR DUNBAR said AGDC did not need that money from the state.
MR. RICHARDS concurred.
4:35:03 PM
SENATOR WIELECHOWSKI noted that AGDC was asking AIDEA for $50
million instead of from the state of Alaska.
4:35:12 PM
MR. RICHARDS explained that AGDC applied to AIDEA for up to $50
million for backstop [funding for Phase One].
4:35:19 PM
SENATOR WIELECHOWSKI suggested AIDEA did not have legal
authority to give that money to AGDC. He said the funding
through AIDEA would be an appropriation from the state requiring
legislative approval. He asked why AGDC removed their request
that funding be appropriated through the legislature and applied
for funding through AIDEA instead.
4:35:45 PM
MR. RICHARDS said there were amendments to the budget expected
in the coming week from the Office of Management and Budget in
the governor's office. He acknowledged that it was the
legislature's purview to make appropriations.
MR. RICHARDS recalled that AGDC, at the direction of the 2024
legislature, sought to determine whether Phase One, a pipeline
to deliver gas to Alaskans at a rate equal to or less than the
cost of import LNG, could be economically built. He reported
that it was determined by AGDC and confirmed by the Wood-
MacKenzie study that the pipeline would provide positive
economic value to the state of Alaska and the expectation was
that all would work together to execute and move forward on the
pipeline.
MR. RICHARDS emphasized the effort to address expected supply
shortages. He said the whole concept of Phase One was to bring
gas from the North Slope to meet Alaska's needs first, while at
the same time moving forward with the development of the Alaska
LNG project.
4:37:11 PM
SENATOR WIELECHOWSKI acknowledged the authority granted to AGDC.
He challenged whether AGDC had the right to go behind the
legislature to get funding from a state corporation without
going through the legislative appropriation process. He
expressed concern about the terms and penalties of the agreement
with Glenfarne which were unknown to the legislature and the
additional unknown details of the joint venture with another
country announced by the president. He urged slowing down.
4:37:47 PM
SENATOR KAWASAKI referred to language in the Wood-MacKenzie
report stating they did not guarantee the fairness, completeness
or accuracy [of their statements]. He asked for clarification
about the current presentation by AGDC and the Wood-MacKensie
report and whether they were addressing the entire Alaska LNG
project, the pipeline alone or the gas treatment plant or some
combination thereof.
4:38:27 PM
MR. RICHARDS apologized for confusion about aspects of the
project. He said the intent was to be clear in the explanation
of the phases of the project, in this case the pipeline phase of
the project as opposed to the entire project. He explained that
Wood-MacKenzie was an international natural resource
consultancy, and he suggested the quoted language was to provide
cover for Wood-MacKenzie, though he didn't know why.
4:39:07 PM
SENATOR KAWASAKI asked whether the $50 million [requested from
AIDEA by AGDC] was specifically for the Phase One pipeline or if
it was for the entire [Alaska LNG] project for which AGDC and
Glenfarne have an exclusive contract.
4:39:39 PM
MR. RICHARDS said the $50 million backstop was specifically for
the initial Phase One pipeline portion of the {Alaska LNG]
project.
4:39:58 PM
SENATOR KAWASAKI quoted a published Glenfarne statement about
the exclusive agreement with AGDC which specified that the
export facility, pipeline, and carbon capture facility were
included. He asked for clarification.
4:40:25 PM
MR. RICHARDS answered that Glenfarne entered into an agreement
for the entire Alaska LNG project.
4:40:40 PM
CHAIR GIESSEL asked whether Glenfarne would take on the Alaska
LNG project without a $50 million backstop.
4:40:53 PM
MR. RICHARDS said the $50 million backstop would allow for the
execution of FEED. He said Glenfarne was aware that AGDC was
seeking the $50 million backstop, but it was not a deciding
factor. He said Glenfarne's commitment was for the full funding
of the FEED for the entire [Alaska LNG] project.
4:41:21 PM
CHAIR GIESSEL noted that in March 2024, at [Cambridge Energy
Research Associates Week] CERAWeek it was noted that Glenfarne
had $20 billion of transactional experience. She said the Alaska
LNG project was a $44 billion project. She noted Goldman Sachs
had not identified Glenfarne as a potential development partner
for the Alaska LNG project and expressed concern that they may
not have the capacity to bring the project to completion.
4:42:08 PM
MR. RICHARDS noted that the Glenfarne as an entity had been in
existence 11 years and said $20 billion was a very large amount
for 11 years. He emphasized that the founder of Glenfarne came
from Macquarie Infrastructure [Corporation], a business which
invested tens of billions of dollars in private developments
across the country in energy, transportation, etc. projects.
4:43:04 PM
SENATOR DUNBAR asked for confirmation that the Wood-MacKenzie
study for Phase One penciled out with the Alaskan market [for
LNG] alone.
4:43:19 PM
MR. KISSINGER concurred.
SENATOR DUNBAR noted a recent announcement that Hilcorp and
Chugach were going to work together to do LNG import. He
presumed that at least some long-term contracts would be
required for the effort to make financial sense. He also noted
the partnership between ENSTAR and Glenfarne to pursue LNG
import. He asked whether the Wood-MacKenzie study included
consideration of utilities entering long- or medium-term
contracts with LNG import facilities. He asked whether the
Alaska LNG project would be compromised by utilities long-term
contracts [with other LNG sources].
4:44:14 PM
MR. KISSINGER said it would act in much the same way as existing
Cook Inlet contracts, reducing some of the demand on the
pipeline. He said it was possible the Chugach contract would
allow them to dovetail into pipeline gas [when available]. He
said tolls for gas could be sculpted during the first few years
of the pipeline to keep the cost from being too exorbitant. He
noted that the Wood-Mackenzie study did account for toll
sculpting. He said he would have to review the study to
determine the exact impact of a Chugach contract but said he
didn't think it would be a great impact.
4:45:27 PM
SENATOR CLAMAN said the description of Glenfarne suggested their
expertise was as a private equity investor selecting and
investing in ongoing projects, which generally turn out to be
profitable. He questioned whether they had experience planning
and leading large-scale projects, as their role seems to be more
in selecting investments rather than managing the projects
themselves.
4:46:30 PM
MR. RICHARDS agreed that Glenfarne had not planned a pipeline of
this length or complexity in the arctic. However, he said they
would bring partners that have the capability in to do that
work.
4:46:56 PM
SENATOR CLAMAN summarized his understanding that there were
assurances Glenfarne could execute the plan, though they had
never executed a similar plan and it wasn't known who their
partners that would be doing the work were or what level of
experience or success they'd had. He asked for clarification.
4:47:21 PM
MR. RICHARDS affirmed that the partners had not yet been named.
4:48:08 PM
CHAIR GIESSEL directed the presentation continue to slide 19 and
20 for the financial details.
MR. RICHARDS moved to and narrated slide 19:
[Original punctuation provided.]
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 buildit requires
full construction funding committed and deployed by
third parties.
Phase 1 FID will follow established project finance
principles
[Slide 19 includes a graphic representation of the
factors that would lead toward final investment
decision (FID)for Phase One:]
Factors:
Operator and Management Agreements
Equity Financing
Debt Financing
North Slope Gas Purchase Agreements
Gas Offtake Agreements to Utilities and Industrial
Users
Credit Support if Needed by Utilities
Permits
Class 3 Cost Estimate
EPC Contracts to Construct Pipeline
4:50:35 PM
SENATOR KAWASAKI asked whether an off-take for Fairbanks was
included in the FEED for the Alaska LNG project.
MR. RICHARDS explained that the 2015 joint venture LNG project
led by Mobil Exxon limited off-takes to three: one at Fairbanks
and two in the Cook Inlet area. He said a lateral [section of
pipeline] to Fairbanks was not included in the Alaska LNG
project sought through the Federal Energy Regulatory Commission
(FERC). However, he said the interconnection point at Chatanika
was in place and would be part of the updated design. He said
AGDC completed the FEED for the pipeline as part of the Alaska
standalone project and would update that work from 2015 to
reflect 2025 costs.
4:51:57 PM
SENATOR KAWASAKI noted that the Golden Valley Electric utility
and some large industrial and military users would benefit from
access to LNG.
4:52:11 PM
CHAIR GIESSEL recalled that the Wood-MacKenzie study did not
include the [lateral off-take] pipeline to Fairbanks.
4:52:22 PM
MR. RICHARDS said AGDC was established by the legislature to
address the delivery of North Slope gas to South Central and
Fairbanks and to consider future growth and military needs in
Fairbanks. He emphasized the desire to replace the military's
last coal-fired power plant [at Fort Wainwright]. He said the
gas from the Alaska LNG project would provide cleaner burning
energy to Fairbanks and [Fort Wainwright].
4:53:10 PM
CHAIR GIESSEL asked whether AGDC asked Wood-MacKenzie to include
Fairbanks in their study.
4:53:18 PM
MR. RICHARDS said AGDC asked Wood-MacKenzie to look at the
pipeline specifically from the North Slope to South Central,
including the interconnection or off-take point [at Chatanika]
to Fairbanks.
CHAIR GIESSEL added that the pipeline was not included.
MR. RICHARDS affirmed that it was not.
4:53:35 PM
MR. RICHARDS moved to and narrated slide 20:
[Original punctuation provided.]
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
• Cheaper to supply gas to pipeline than reinject
• Price to be reduced based on cost-savings
Low-Cost Access
• 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
4:55:28 PM
MR. RICHARDS moved to and narrated slide 22:
[Original punctuation provided.]
Transition to Lead Party
Key Milestones:
• Pre-Definitive Agreements:
o AGDC is leading and funding Alaska LNG Project
development
• Pre-FID:
o 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:
o The State's equity in 8 Star is carried at 25
percent to FID and AGDC is responsible for
project transition functions
• Post-FID:
o 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
4:57:50 PM
SENATOR KAWASAKI noted that in the recent past, Exxon and BP
were discussed as potential producer partners with Prudhoe Bay,
Point Thomson and North Slope satellite fields. He asked whether
they would be part of the Alaska LNG project.
4:58:21 PM
MR. RICHARDS said producers Exxon, Hilcorp and ConocoPhillips
have said they would like to sell their gas into the project. He
said they were previously equity participants when it was under
a joint venture agreement.
4:58:50 PM
MR. RICHARDS moved to slide 23. He explained that the slide was
a [Responsible, Accountable, Consulted and Informed] RACI chart
depicting the rights and roles of each party as they move
through the stages of developing and executing the agreements.
He said during the current Pre-Definitive Agreement time, AGDC
was accountable for the Alaska LNG project and consulting with
Glenfarne as the Lead Party. At the signing of the Definitive
Agreements, he explained that accountability and responsibility
would switch to Glenfarne as the lead developer. He said AGDC
would then have the responsibility for assisting with commercial
and technical aspects of the project, and accountability for
seeing to the state's 25 percent interest that will be retained
as the project moves toward final investment decision (FID).
4:59:52 PM
SENATOR DUNBAR asked whether construction could begin pre-FID.
5:00:02 PM
MR. RICHARDS said pre-FID occurs during the front end
engineering and design stage. He said permits were in place, but
an updated cost estimate was not complete to allow FID.
SENATOR DUNBAR noted one source projected post-FID would occur
in 2028 and slide 17 suggested construction could begin in 2027.
He asked for clarification.
5:00:33 PM
MR. RICHARDS noted the six-month difference between fiscal years
and calendar years, but he said the goal was to reach FID toward
the end of calendar year 2026 or beginning of 2027.
5:01:05 PM
CHAIR GIESSEL noted that the remaining slides focused on polling
and support for the project. She concluded the presentation.
5:01:15
5:01:18 PM
CHAIR GIESSEL noted that the state of Alaska had invested $635
million dollar to date in the Alaska LNG project. She also noted
that $500 million had been invested in the trans-Canada project,
totaling over $1 billion invested in some sort of gas pipeline.
5:02:03 PM
There being no further business to come before the committee,
Chair Giessel adjourned the Senate Resources Standing Committee
meeting at 5:02 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 2.10.25 Alaska Gasline Development Corporation Senate Resources Presentation.pdf |
SRES 2/10/2025 3:30:00 PM |
|
| 2.10.25 Timeline to Gasline.pdf |
SRES 2/10/2025 3:30:00 PM |