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The proposed Alaska Liquefied Natural Gas Pipeline (AK LNG) could deliver natural gas for Alaskans and generate millions in revenue for the state through sales to Asian buyers. But there are significant questions about the viability of the project. The proposed project would be constructed in three parts: a gas processing plant, a 700-mile pipeline, and a liquefaction facility to enable exports. Past analyses estimated the total cost for the project at $44 billion, but the state does not have an updated analysis that accounts for inflation and the cost is likely higher.
Last year, the Alaska Gasline Development Corporation (AGDC) entered into a partnership with Glenfarne, giving that company 75% ownership in the project and maintaining a 25% state share. The details of that agreement, including financial liabilities and contractual responsibilities, are confidential and have not been released.
And the cost of gas that could be delivered by the pipeline is also unknown. The pipeline will deliver gas to Alaskan utilities and homeowners, as well as to Asian markets. Without more information, it is extremely difficult to knowing what the gas will cost.
The Senate Resources Committee is considering legislation to enable the gasline and ensure that the developers build it responsibily.
Senate Bill 275, by the Senate Resources Committee, allows for greater transparency and project oversight by the Legislature and restructures project taxes. It would allow project partners to enter into non-disclosure agreements with Legislative offices and gives the Legislative Budget and Audit Committee oversight over AGDC. And it establishes a $.15 surcharge for every 1,000 cubic feet of gas processed in the state.
Senate Bill 280, by the Governor, would significantly reduce property taxes on the project. It would replace the state and local property tax with an Alternative Volumetric Tax that would result in a roughly 90% reduction in revenue to local governments. On March 27th, five borough mayors testified that the proposed legislation needs additional work.
The project has not yet reached a final investment decision (“FID”).
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