Alaska House examines $4 billion LNG equity option, Fairbanks spur-line tax break

The Alaska House Finance Committee examined Thursday how the state could invest in the Alaska LNG project through optional equity stakes while weighing property tax relief for the pipeline.

Alaska Gasline Development Corporation officials told the committee the state would have a 180-day window each time equity is raised after final investment decision to purchase between 5 and 25 percent equity in each project phase. To maintain 25 percent ownership in the Phase 1 pipeline, estimated at $15.5 billion, the state would need to contribute $1.18 billion. At 25 percent equity across all phases, the commitment would exceed $4 billion.

Frank Richards, AGDC president, said the option would be offered to the state legislature, Alaska corporations, and individual Alaskans. The project will proceed without Alaskans' investment if they decline, Richards said.

Fairbanks spur-line provision

Fairbanks North Star Borough Mayor Grier Hopkins highlighted spur-line language in the bill requiring the developer to permit a 30-mile connection to Fairbanks as a condition for the full tax break. If the spur line is not being permitted by the developer by the time construction begins, the developer would not get access to the full tax break, Hopkins said.

Hopkins said Fairbanks ratepayers currently pay $24 to $26 per thousand cubic feet for trucked North Slope gas. Spreading spur-line costs across the statewide tariff is essential to make the gas economic for Fairbanks users, Hopkins said. Interior leaders have stated that Fairbanks would likely need delivered spur-line gas priced below about $19 per thousand cubic feet to justify exiting its existing Hilcorp natural gas contract.

The House Finance Committee will hear Friday from the four North Slope producers and the mayors of the North Slope Borough and Kenai Peninsula Borough.