The True Facts About House Bill 4
The City of Valdez is running an unprecedented ad campaign against a bill currently before the Legislature – House Bill 4, which would give the state-created Alaska Gasline Development Corporation the tools necessary to keep its Alaska Stand Alone Pipeline project on schedule for an Open Season next summer.
Representative Mike Hawker and I sponsored the bill to continue the good work being accomplished by the Alaska Gasline Development Corporation. We need to do everything within the State’s power to ensure their Alaska Stand Alone Pipeline project gets to a go or no-go decision and finally deliver Alaska’s gas to Alaskan homes and businesses.
To that end, we are going to address the form letter they’re asking Alaskans to send to their legislators line by line, issue by issue. Our goal is to separate fact from fiction.
HB 4 fails as a project, so vote no
House Bill 4 is exactly the opposite – it is the only project currently before the Legislature. AGPA/MVP/Valdez doesn’t have a project. TransCanada and the producers have a working idea they’ve all coalesced around, but nothing with meat or anywhere close to being ready for permitting or discussion.
We won’t know success or failure until the completion of an Open Season. But unless we try to move a project forward we won’t know the outcome.
AGDC’s project – the Alaska Stand Alone Pipeline – is the only project going. They have their Final Environmental Impact Statement in-hand, state Right of Way leases with a federal lease pending and have a project plan with clear milestones and timelines, all of which they’ve met.
Dan Fauske and his team at AGDC have answered the bell rung by passage of House Bill 369 in the prior Legislature and are diligently working towards supplying Alaskans with desperately-needed, reasonably-priced, clean-burning, and secure energy.
We’ve seen the continued failures or fade-outs of major export projects, and AGDC is looking to feed Alaskans’ needs first, not overseas markets.
The ASAP project being promoted through HB 4 will leave approximately 50 percent of our residents in the dark.
No pipeline itself will serve more than the people along the route. Here the authors are being unreasonable. The ASAP line would feed communities along the Railbelt; Fairbanks, with the greatest need on the road system, would be connected, lowering residents energy bills. The line would run south from the North Slope through Southcentral, tapping into markets without a unified, secure and stable supply. The plan also allows for expansions, including the Kenai Peninsula, where high concentrations of Alaskans don’t have access either.
AGDC doesn’t stop with ASAP. Once the line is in place, other regions of the state could benefit. Opportunities abound for considering additional pipelines connecting other hubs and communities across the state.
The possibilities of barging propane on the Yukon or establishing a barged CNG/LNG system for coastal Alaska are just two of the exciting possibilities once we unlock the gas and put the in-state spine or core in place.
The line, regardless of whether it ends up being the AGIA or AGDC project, must include off-take points for Alaskans and serve Alaska’s needs first, not primarily market our gas to Asian markets. Valdez seems to want another TAPS line with only one off-take point (the Flint Hills refinery in North Pole) and an emphasis on export. This is not the best plan for an Alaska gasline.
The so-called “ASAP” line will take upward of 10 years to build under ideal conditions. This project is not a short-term solution and will do nothing to solve our immediate energy woes.
Under AGDC’s current project timeline gas would flow by 2019. That’s six years from now. That date is contingent on passage of HB 4 and adequate funding from the Legislature this session, to keep the project on track. The longer we wait to start, the longer it takes to get gas, while the costs keep escalating.
The truth is any mega-project is going to take years to plan, permit, litigate, and build. Even with only a carrying capacity planned at a quarter of that allowed by AGIA, the ASAP line will still be one of the largest projects in North America. It’s of the scale of Valdez’s own TAPS, which took years as well. Would they say that TAPS wasn’t worth it because it would take too long to build today? No. The AGPA/MVP/Valdez fictional project would take just as long, if not longer to construct.
AGDC also has a leg up on any other project, real or imagined, because it already has many of the necessary permits, and the State’s right-of-way in hand. The fact is, AGDC’s line is the best positioned for success. The ASAP line would get gas to Alaskans faster than any project being talked about today, and it hasn’t even reached the go or no go stage yet.
Finally, it’s characteristically false to call ASAP a short-term solution – patently untrue and unfair. ASAP is a long-term solution that would bring a long-term, stable, secure supply of energy to Alaskan homes and businesses. House Bill 4 DOES NOT BLOCK any other project from moving forward.
According to the ASAP project plan, energy costs for residents of Southcentral Alaska will increase significantly under the small-volume gas line being promoted through HB 4.
In a cost comparison between current natural gas prices in Southcentral and the ASAP plan, in today’s dollars, ASAP is competitive. Natural gas rates are in the $9 range today, and ASAP projects a $15 range in 2019, which is $9-11 in today’s dollars. A reasonable person would conclude that ASAP is fair, yet the AGPA/MVP/Valdez contingent would rather not deal in facts.
It’s also important to note that the ASAP prices would come in absolutely lower than import prices, should no line advance, exploration in the Cook Inlet continue to stagnate, and the Railbelt utilities have to bring in foreign or Lower 48 LNG. What type of message would that send? We have 35 trillion cubic feet of known natural gas reserves on the North Slope, but AGPA/MVP/Valdez would rather tear down the legitimate project and compel Alaskans to have to import gas. That’s unacceptable. Railbelt mayors, assemblies, councils, and consumers should be angered at the gall of the group behind these blatant distortions.
AGDC’s ASAP is economic and adds a critical level of energy and economic security to Southcentral communities.
The ASAP project will not generate a single dime in new revenue for Alaska.
Let’s flip that back at AGPA/MVP/Valdez – they publish that their non-project will result in $419 billion in revenues to the State. No impartial projection in the world would have natural gas prices anywhere near the astronomical prices they would have to attain to reach even a quarter of that stated target. You would have to push all the known and anticipated gas in Alaska through that line and hope – hope – the market didn’t saturate to the point that readily-available tidewater supplies didn’t undercut the market. That’s also if you beat the Russians, Chinese, Australians, Canadians, and states in the Lower 48 to project completion.
Now, back to their claim on revenues – AGDC’s ASAP is about serving Alaskans first. This pipeline isn’t about exports that serve some unknown foreign country’s purposes or energy needs. ASAP is about gas for Alaskans – clean, secure, reasonably-priced, and stable – for use in our homes and businesses. We in the Legislature and executive branch swear an oath to protect and serve the people of Alaska, not foreigners.
Also note that we would still have the ability to tax any gas not used in-state, which is why, ideally, the ASAP line would include an export component that would return revenue to the State.
AGPA/MVP/Valdez also fails to grasp the important perspective that revenue to the state treasury is not the panacea they’d lead you to believe. Money to the state is money not to Alaskans’ pockets; it’s not going to the direct economic survival of Alaskan families and businesses, but instead, under their plan, it goes to the State, meaning more bureaucrats and union middle managers would be employed, propping up government. ASAP takes care of Alaskans, and would provide private sector jobs while diversifying our state’s economy through construction and those industries it could spur.
No one knows what revenue to Alaska will be until we set a gas tax – FOR ANY PROJECT.
HB 4 will exempt the Alaska Gasline Development Corporation (AGDC) from public records laws and remove the checks and balances that should be provided by the people, the governor and the Legislature.
HB 4 does not exempt AGDC from public records laws; HB 4 simply allows that some information of a commercial nature or that is an ‘asset of the state’ may be kept confidential. Commercial projects of this nature require certain aspects of negotiations and information be kept confidential to protect the competitive integrity of bids and other aspects. No megaproject in the world could be constructed in any other way, especially with the complicated financing and planning involved.
HB 4 also doesn’t remove checks or balances within government oversight. Instead, AGDC must keep the governor, the Legislature and Alaskans informed of its progress and must be annually accountable for state funds it invests in the project. The bill has many checks and balances, and does so without allowing politics to inject into or disrupt the process. It’s a clear and direct vehicle to get the market to move and deliver gas to Alaskans, which is in direct opposition to the politicized nature of the lobbying and public relations campaign MVP is spending Valdez tax payer money on.
We have learned, over and over in the reasons cited in the opening of this blog, that removing politics from the process and letting the market decide is critical to project success.
Also, Bill Walker, the spokesman for AGPA and the City of Valdez, told the Legislature last year he couldn’t answer some of the questions he was asked because the information was confidential.
The ASAP project being promoted through HB 4 will leave the valuable gas liquids (propane, butane, etc) stranded on the North Slope. These liquids are a much-needed source of jobs and new economic development for our state.
The piece of fiction stated immediately above is a perfect example to pass along a pretty cool part of ASAP’s design: the ability to ship a stream of propane along with the ‘lean’ gas. It’s a dual-purpose line. The plan calls for the ability to ship the propane provided there is a market for it. That would be determined during its Open Season, the process where shippers and buyers make their commitments to the project.
The complicating factor here is the recent trend of falling prices for gas liquids, so the current interest in them doesn’t justify the higher construction costs required to ship the liquids, and would add a punitive cost to Alaskans who need the gas. If the market changes between today and the Open Season, however, AGDC is able to adjust its plan accordingly.
In conclusion, the plan outlined in HB 4 and being pursued by AGDC is not an immediate solution and never has been presented that way.
There are a number of viable short term alternatives for Alaskans to consider as we continue to eat the gasline elephant one bite at a time: importing LNG and financing a gas trucking project from the North Slope to Fairbanks, the latter of which has broad legislative support from the governor and legislators, including me and HB 4 sponsor Representative Mike Hawker.
The trucking plan can be put into place at a lower cost and quicker timeframe than ASAP, but it’s not the long term solution. It’s a bridge to a gasline future. Trucking or importing also buys us time and provides flexibility to continue work on the line and ensure Alaskans get the best project and product without worrying about the clock ticking to zero or window for getting gas closes; it means the correct project gets built – a large-volume gasline from the North Slope to tidewater, one which provides cheap energy for all Alaskans and a steady stream of income to help offset our declining oil revenues.
The decades of benefit HB 4 would provide makes the six-year lead time worth it for Alaskans. ASAP offers opportunity for expansion, diversified delivery options, and could lead to more development across the state. Mining companies could use the gas to power their operations, making many projects more viable, while still lowering the cost of energy for consumers and businesses throughout the state.
Competition won’t come from HB 4 and ASAP. The plan doesn’t interfere with the Fairbanks LNG trucking plan before the Legislature. Proponents of the LNG trucking plan even agree with us that their project is a bridge to a gasline – they want the cheap, consistent supply of gas to the Interior a dedicated line would provide.
Alaskans need to understand that AGPA/MVP/Valdez’s whole premise is a pipe dream, not a pipeline. Haven’t we had enough regional factions and over-zealous political brow-beating? Alaskans deserve an honest debate and discussion. Alaskans deserve a fair analysis of the ASAP plan.
We hope Alaskans can see past the slick million-dollar PR campaign being unleashed by the City of Valdez and understand we take our duty to protect and serve Alaskans seriously here in the Capitol.
Our recent Alaska House Majority Caucus survey found a clear and decisive majority of Alaskans do agree with us, which is why it is critically important to re-enforce our message that ASAP/HB 4 is in the State’s best interest and offers Alaskans the best opportunity for gas.
Alaskans need to take care of Alaskans and in-state energy needs first, not foreign markets.
Maybe it’s time you write the City of Valdez leaders and express your opinions to them. And make sure you write a letter of support to your legislator and the governor for HB 4 as well.
Please do the right thing for Alaska and support House Bill 4.
Finally, we won’t spend $900,000 of public money on a PR campaign, but if we did advertise, it would be something like this: http://video.housemajority.org/28th_Legislature/Audio/mvp.mp3
Thank you for taking the time to get informed.
HB 4 sponsors:
Representative Mike Hawker
Representative Mike Chenault