Alaska LNG soliciting investors, needs lawmakers’ permission

The Legislature nixed a multi-billion dollar “receipt authority” request from Alaska Gasline Development Corp. as it ended its 2018 session. This limits AGDC’s ability to accept equity investments the state corporation is hoping to attract later this year. This can be resolved if investors actually appear but it will still be in the 2019 session. The timing is awkward with Goldman Sachs, hired as investment advisor, starting work to solicit investment. The Chinese entities AGDC is now negotiating with, to be LNG purchasers and possible partners, may also wonder how committed the state really is. Also, Gov. Bill Walker, the project’s champion, is running for reelection and he may not be governor after December.

AGDC needs about $800 million to do final engineering on the $43-billion-dollar LNG project in 2019. The corporation will be down to $34.6 million of state-appropriated funds by the end of December, according to information presented at AGDC’s board meeting May 10, and without third-party funding AGDC could be out of business in 2019. It’s unlikely more state funds will be forthcoming.

The Legislature’s turndown came at the request of state senators. The authority to receive third party funds (“receipt” authority is needed for all state entities receiving non-state funds) was in the operating budget and was backed by the Democrat-led House. When Republican senate leaders asked that it be deleted from the budget bill the House agreed. Senate leaders said they want more information on what the equity money would be used for, and they don’t want to give AGDC a “blank check.” A bit of background: There is still resentment among Republicans over Walker’s razor-thin defeat of former Gov. Sean Parnell in 2014. That doesn’t help Alaska LNG, the governor’s pet project. However, there are also Democratic House leaders who are skeptical of the idea of a big state-led gas project.

Despite that, AGDC is moving ahead in supplying information to the Federal Energy Regulatory Commission for the Draft Environmental Impact Statement now in preparation. AGDC officials told its board they hope to begin procurement planning, and to do some procurement, in 2019.