State economist: even with tax breaks, the gas line barely works

Even with the tax breaks in the Senate's gas-line bill, Alaska's $44 billion LNG project still barely pencils out — and might not pencil out at all. That was the message the state's chief economist brought to a legislative conference committee Friday, and lawmakers didn't love what they heard.

Dan Stickel, the Department of Revenue's chief economist, showed that the bill's tax relief nudges the project's break-even export price down only modestly — from $9.05 to $8.62 per thousand cubic feet. The problem: LNG delivered to Asia is currently selling for around $8. In other words, even after the break, Alaska's gas would cost more to produce than buyers are paying. "It does look like a challenging project even with the tax relief," Stickel said.

Rep. Justin Ruffridge thought "challenging" was too gentle — especially since the developer has signaled real costs could run up to 20 percent above the $46.2 billion baseline. "None of the items I'm looking at on that screen seem to be even in the definition of marginal," Ruffridge said. "It seems like they don't work."

Stickel didn't argue. He cautioned that the whole model is shaky, because much of it rests on assumptions from 2018 and 2019 — before Glenfarne took over the project. "A lot of these assumptions were developed before Glenfarne came onto the scene," he said. "We have not received a lot of detailed information and details on project plan from them, given confidentiality." Refreshing those numbers would take months.

And the picture only darkens at a more realistic price tag. Sen. Bert Stedman pointed out that if costs climb toward $60 billion, the math gets worse with nothing to offset it. "The price that they can sell the gas for doesn't change," Stedman said.

The committee reconvenes Saturday to finish the presentation and take up Senate floor amendments.