Governor Walker’s statement on this week’s Joint Senate/House Resources Committee hearing on the status of the AK LNG project - P.O.W. Report

Monday, August 29, 2016

Governor Walker’s statement on this week’s Joint Senate/House Resources Committee hearing on the status of the AK LNG project

8/25/16 - I appreciated the testimony by world renowned energy analyst Wood MacKenzie on the viability of the current AK LNG project. This independent analysis, contracted by our producer partners and AGDC, indicated that the traditional model of a producer owned and financed gasline is not likely appropriate given today’s market environment. However, I was very pleased to see that there remains a strong potential for an economically viable Alaska LNG project, even at $45 /bbl oil prices, by exploring some of the alternate project structures currently being investigated by AGDC. Alternate ideas such as third party investors, project financing and other advantages resulting from a state led project could make the difference.

I am pleased the AGDC Board and staff continue to work with our industry partners and the Legislature to advance viable options that could bring billions of dollars of revenue to Alaska each year, while lowering the cost of energy state-wide. If the AK LNG project can prove to be competitive on the world market, we would see untold advantages of what it would do to propel Alaska’s economy, well beyond the bounds of this project alone.

What is most needed now is a collaborative cooperative spirit by all decision-makers and stakeholders to adapt to changing conditions and work together to determine if there is a viable path forward.

One critical misconception is that the project will forge ahead under any circumstance financed by the permanent fund. Let me be clear, a project that is not economically viable will not be built. If economically viable, it will be financed by long term purchase contracts secured before the first piece of pipe is laid, not by the permanent fund. This is how projects around the world are financed and Alaska’s will be no exception.

The project team, which includes our industry partners, have spent several years and completed over $500 million in engineering, permitting and necessary work to complete pre-FEED. Now is not the time to shelve that excellent work and start again at a future date.

The most common denominator for every growing economy is low cost energy. Monetizing our gas on the world market makes it possible to deliver low cost energy to Alaskan homes and businesses and to create thousands of construction and long term operational jobs. As was the case with the LNG projects in Australia for example, Alaska’s mining industry could be but one of many significant beneficiaries of this project as a result of potentially low energy prices in areas of Alaska that previously have been excessively high.

I have said many times and continue to believe that monetizing Alaska’s vast amount of stranded gas via a gasline/LNG project would be Alaska’s most significant and most immediate financial get well card, one that will bring generations of benefits to Alaskans.

Read More: Alaskanomics: "Risk and Reward" The Permanent Fund as a Source of Income for Alaska"

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