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Gasline Special Session Update
Following dozens of hearings from the Resources Committees during the regular session, the House and Senate Finance Committees have been continuing to hold hearings on the gasline bills throughout this special session, sometimes twice a day. The House is expected to take action on HB 381 next week, with the Senate taking up consideration beginning the week of June 15.
Throughout this process, we've seen the pressure campaign mounting to "Build the Line." That includes advertisements published by Gov. Dunleavy and Glenfarne promising low-cost energy and political attacks against those who "don’t support the gasline."
The reality is that no legislation is needed to build the Alaska Liquefied Natural Gas (LNG) pipeline - they can build it right now, with no action necessary from the Legislature. The permits are all there. The federal loan guarantees are in place. In fact, a leader of the Alaska Gasline Development Corporation (AGDC) warned the Legislature last year to do nothing, saying "I believe that if the Legislature gets involved that this project will go away." The CEO of AGDC told legislators last year the project was "economically viable and “there’s no consideration for property taxes. The existing statutes are what are in place and will be abided by.”
The reason for the special session is about one thing, the same thing we have seen for decades in Alaska: wealthy Outside developers demanding billions in tax breaks from Alaska, threatening they will leave unless they get their way.
Alaska has a long and unfortunate history of being duped by multinational Outside developers. In 1991, during the nearly 20-year case Alaska v. Amerada Hess, a judge found that major oil companies had deliberately falsified records to reduce royalty payments to the state. The judge sharply criticized Alaska officials for their gullibility, ruling the state was guilty of "inexcusable trustfulness" in its dealings with big oil.
Under the Alaska Gasline Inducement Act (AGIA) in 2008, a Canadian pipeline company persuaded the State that if we only “put skin in the game,” they would build a natural gas pipeline. The resource development industry decried anyone who opposed it as anti-development and as opposing cheap gas for Alaskans. Later, the project was shelved. That cost $327 million out of Alaska’s treasury.
Remember SB 21 in 2013 - the bill that cut oil taxes by billions. We were promised more jobs, more revenue, the PFD would be "saved," and it would spur a gasline. Since then, oil jobs are down by 40%, State revenue has plunged by billions per year, and we’ve all seen what’s happened to the PFD. The oil companies quietly killed the gasline project a few years later.
Enter Glenfarne, the 16th group in State history to declare its intention to build an Alaska natural gas pipeline. Despite its previous assertions that nothing was needed from the Legislature, a couple months ago the developer changed its tune, demanding a 90% break in State and local property taxes. This would result in billion dollars per year, every year, drained from the state and localities, in the pockets of these Outside companies. When the Legislature’s expert testified that any tax breaks would only be needed for a maximum of 10 years, Glenfarne and the Governor objected, and demanded these tax breaks be forever.
After Glenfarne testified on the record that they would be a good corporate citizen and supported paying corporate income taxes, they demanded they should - like Hilcorp - pay zero corporate income taxes. The cost to Alaskans from this would be $462 million per year at peak production. To put Glenfarne's demands in perspective, that means that they will eventually be the most profitable corporation in Alaska, making $5 billion in profits annually, while paying zero corporate income taxes and virtually no property taxes.
And when Glenfarne testified that cost overruns from the project would not be passed on to Alaskans, my colleagues and I put language to do that in the Senate Resources version of the gasline tax break bill, SB 280. Glenfarne then demanded it be taken out. When Gov. Dunleavy demanded the legislature pass his gasline tax break bill, he chastised legislators - saying the gasline would result in Alaskans paying $5 natural gas (we currently pay $10-13). So we put that cap in the Senate Resources bill too, then Glenfarne and the Governor demanded we take that out as well. When the Senate Resources Committee requested Dunleavy’s Department of Revenue to calculate what the cost of natural gas prices would be for Southcentral consumers in Phase 1 of the gasline project, they finally calculated the number: $22.96 in the absolute best-case scenario. This may more likely be closer to $30 -- more than double what we pay now.
I don’t know any legislators who oppose developing our natural gas resources or finding affordable energy solutions. But as legislators, we have a fiduciary duty to protect the State’s interests and to do our due diligence. That’s what the Legislature has been doing and continues to do: ensure we are protecting the State treasury and the consumers who ultimately may have to bear the burden of exorbitant cost overruns.
At a time when our schools and infrastructure are crumbling, the PFD is being cut, roads aren’t being fixed, and the cost of living is through the roof, this is about protecting Alaska’s interests. Alaskans deserve that, and should demand it.
Now is not the time to succumb to expensive industry lobbying for what’s best for them. It’s about time we did what’s best for Alaska.
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