Alaska's LNG tax break now hinges on a gas line to Fairbanks

Alaska wants to give the developer of its big LNG project a temporary tax break. A new Senate Finance work draft says Fairbanks gets paid first.

The bill, a work draft of HB 381, makes Glenfarne's property tax relief conditional. Before any of it takes effect, the company has to do three things: put $40 million into a municipal impact fund within 60 days of a phase-one investment decision, and commit to another $40 million after phase two; sign a project labor agreement; and formally commit to a spur line carrying gas to Fairbanks. The Revenue commissioner must certify all three first.

The spur line is what matters most for the Interior, where gas runs expensive. Borough Mayor Grier Hopkins told lawmakers in May that Fairbanks pays $24 to $26 per thousand cubic feet for trucked North Slope gas. "We don't need more gas, we need affordable gas," he said. The bill answers that by spreading the spur line's cost across utility customers statewide, capping what utilities can be charged for gas, and shielding ratepayers from construction overruns.

Glenfarne, for its part, says it is shouldering the project's risk and expense itself, with no state payback if it falls through. The work draft sets hard deadlines, including a 2037 cutoff that ends the tax benefits, and hasn't had a committee vote.