Alaska governor asks Trump to throw his weight behind Alaska LNG project

By Alex DeMarban, Alaska Dispatch News - March 6, 2017

Alaska’s governor is asking U.S. President Donald Trump to lend his support to what he termed an “ideal” megaproject — a $45 billion gas pipeline — as the president moves ahead with his $1 trillion plan to rebuild the nation’s infrastructure.

In a Feb. 7 letter addressed to Trump, Gov. Bill Walker also includes the ultimate federal wish list to help expedite the Alaska LNG project that seeks to sell huge reserves of North Slope gas to Asian utilities. Walker asks for a federal tax exemption, reduced federal oversight giving the state more control, and a $40 billion federal loan guarantee.

Gov. Bill Walker gave is State of the State address to a joint session of Alaska's House of Representatives and Senate at the State Capitol in Juneau on January 18, 2017. (Marc Lester / Alaska Dispatch News)
Gov. Bill Walker during his State of the State address at the Capitol in Juneau on Jan. 18 (Marc Lester / Alaska Dispatch News file)

“Everything but the proverbial kitchen sink is in here,” said Larry Persily, the federal gas line coordinator during an earlier Alaska project and a different presidential administration.

“If you were to conceive of federal legislation dealing with every potential roadblock to the project, this is what you’d put together,” said Persily, now oil and gas adviser to Kenai Peninsula Borough Mayor Mike Navarre.

Walker could not be reached for comment Friday. Part of his day included meetings related to the liquefied natural gas project, with the state gas line agency hosting a summit in Girdwood for potential investors or gas buyers from Asia, a state official said.

The Alaska Gasline Development Corp. said at least 10 companies would attend, but the agency refused to release company names, citing competitive concerns the companies might have.

In his letter to the president, Walker highlights Alaska LNG’s colossal stats, including:

* Directly employing up to 10,000 people over five years of construction, “creating a multi-year national economic boon.”

* A $40 billion to $45 billion cost, with more than 800 miles of pipeline, 647,000 tons of steel and compressors, with many components that can be built in America.

* Providing energy security and helping correct the nation’s trade deficit with Japan and other countries in the “geopolitically significant Asia-Pacific” region.

“As you seek to rebuild our country and make critical investments in our future, Alaska stands ready to assist with an ideal infrastructure project of major national and international significance,” Walker writes.

[First shipments of Yamal LNG set to head to market before October]

Walker’s staff said that as of Friday the Trump administration had not responded to the letter. White House press secretaries did not return emails and a phone call seeking comment for this story.

Trump said on Tuesday he will ask Congress to approve a bill that will lead to $1 trillion in spending — involving public and private investments — to tackle aging national infrastructure such as roads and bridges.

Alaska’s project — to ship natural gas off the North Slope by pipeline, liquefy it at a factory in Nikiski and ship it in tankers to Asian buyers — would be an entirely new undertaking, not a rebuild.

Walker focuses much of his letter on Japan’s interest in Alaska’s gas, saying the concept has been “very well received by Japanese ministries and major utility customers.” He says Japan could be the project’s “anchor customer.”

Japanese Prime Minister Shinzo Abe has said he’s considering buying more supplies of energy from the United States, and Trump promised economic cooperation with the country after the two leaders met in the White House early this month.

In the letter, Walker proposes “budget neutral” and “innovative” ways the U.S. can help the project, including “relatively minor amendments” to the federal loan guarantee in the 2004 Alaska Natural Gas Pipeline Act.

That act was designed to help facilitate an earlier Alaska gas line project to deliver gas by pipeline through Canada to the Lower 48, creating the federal coordinator position held at one time by Persily. The law remains on the books, though the project in 2011 changed to meet market needs, with the state turning its attention to selling gas in Asia.

The two-page letter includes several pages of attachments, produced by the state gas line agency, that suggest changes to align the 2004 law with today’s project. The ideas include boosting the federal loan guarantee limit from $18 billion to $40 billion, expediting federal permitting decisions and making the project exempt from federal taxes.

The letter also suggests numerous changes that could be made by the executive branch, including removing the Environmental Protection Agency’s ability to “veto” federal authorizations for the project under the Clean Water Act and exempting the project from the conditions of the Cook Inlet Beluga Recovery Program meant to protect the endangered whale population.

Persily said it’s hard to say whether the project will get backing from Trump.

“We know President Trump likes huge projects — huge anything — and this is certainly a huge wish list,” Persily said.

“But with Trump, who the heck knows what that boy will do,” Persily said.

Changes to the law will require congressional support.

Alaska Sens. Lisa Murkowski and Dan Sullivan are working to remove one hurdle with legislation that would allow the pipeline to run through the non-wilderness portion of Denali National Park and Preserve, said Nicole Daigle, communications director for the Senate Energy and Natural Resources Committee chaired by Murkowski. Murkowski has said that would help reduce project costs.

The Alaska delegation also continues to talk with state officials about “what else is necessary and possible at the federal level to help advance the project,” Daigle said.