{"id":3326,"date":"2014-03-19T17:10:10","date_gmt":"2014-03-20T01:10:10","guid":{"rendered":"http:\/\/bertstedman.com\/new\/?p=3326"},"modified":"2014-03-19T17:10:50","modified_gmt":"2014-03-20T01:10:50","slug":"senator-stedman-votes-no-on-gasline-bill","status":"publish","type":"post","link":"http:\/\/bertstedman.com\/new\/?p=3326","title":{"rendered":"Senator Stedman Votes No on Gasline Bill"},"content":{"rendered":"

Yesterday I voted against Senate Bill 138<\/a>, the Governor\u2019s proposed Liquefied Natural Gas Pipeline Project.\u00a0 My vote against SB 138 was not a vote against a natural gas pipeline.\u00a0 Like most Alaskans, I support the construction of a pipeline to get our natural gas to market.\u00a0 My vote was a statement against the fiscal structure in the bill and the misalignment for the state.\u00a0 I\u2019m encouraged that we\u2019re closer to the reality of a gas pipeline than we\u2019ve ever been because of the alignment of interests between ExxonMobil, BP and ConocoPhillips.\u00a0 But my objection comes from the fact that the state\u2019s interests as a sovereign are not in alignment with the inclusion of TransCanada owning the state\u2019s share of the pipeline and gas treatment plant.<\/p>\n

Beyond any doubt, this gasline will be the largest financial commitment in the history of the state.\u00a0 There are many troubling risks to the state from this megaproject including: low gas prices due to a potential oversupply from competing international projects under development; the state\u2019s lack of expertise and ability to market its share of the gas received in lieu of royalties and taxes; and handing over the state\u2019s ownership share of the pipeline and gas treatment plant to TransCanada.\u00a0 The last point is what gives me the most indigestion.<\/p>\n

Make no mistake; the producing companies (ExxonMobil, BP, and ConocoPhillips) and not the state are in control of moving this pipeline project forward.\u00a0 TransCanada is a pipeline company but who actually builds this pipeline will be decided by ExxonMobil with concurrence from BP and ConocoPhillips.\u00a0 TransCanada is simply acting as our lender to cover the upfront project costs at a guaranteed rate of return through construction.\u00a0 The deal looks like this: TransCanada will hold an ownership interest in the gas treatment plant and the pipeline equal to the state\u2019s estimated 25% share of the gas; the state would have a one-time option to buy back up to a 40% of its ownership interest from TransCanada so long as TransCanada\u2019s share doesn\u2019t fall below 14% leaving the state with only an 11% ownership interest. Furthermore, regardless of whether the state exercises its option to buy an ownership interest from TransCanada, we are obligated to pay TransCanada\u2019s development costs plus an interest rate of 7.1% if the project is not sanctioned.<\/p>\n

The state entered into an agreement like this with TransCanada once before when the legislature passed the Alaska Gasline Inducement Act (AGIA) in 2007.\u00a0 That law guaranteed the state would reimburse TransCanada up to $500 million for costs incurred related to the development of a large diameter gas pipeline through Canada.\u00a0 Today, most legislators would agree that tying ourselves to TransCanada through AGIA was a mistake.\u00a0 I\u2019m concerned that we didn\u2019t learn our lesson and we\u2019re making the same mistake again but instead of a $500 million mistake, this could turn out to be a multi-billion dollar mistake.<\/p>\n

I\u2019m uncomfortable supporting this proposed commercial arrangement that doesn\u2019t align the state\u2019s interests with ExxonMobil, BP and ConocoPhillips.\u00a0 These companies will see to it that this project is profitable for them or they won\u2019t proceed.\u00a0 Similarly, TransCanada is guaranteed to make a handsome profit.\u00a0 Unfortunately it looks to me like the state of Alaska as a sovereign and the owner of the oil and gas resource is assuming the most exposure and risk.\u00a0 Making a bad situation worse, reduced revenue from oil taxes will result in year after year deficit spending to balance our budget, depleting our savings accounts around the same time pipeline construction will begin.<\/p>\n

One of our own legislative consultants hired by the Legislative Budget and Audit Committee warned, \u201cIn its totality, however, the proposal will result in a radical departure from the State\u2019s historical position and role as a Sovereign, as a Royalty Owner, as a Taxation Authority and as a Regulator which raises a number of issues and presents substantial risks.\u201d<\/p>\n

A sole source, non-competitive bid resulting in a multi-generational contract with TransCanada is not in the state\u2019s best interest.\u00a0 In my opinion, the Legislature should put SB 138 on the shelf and work on it over the interim.\u00a0 We have the time and the obligation to do it right.<\/p>\n","protected":false},"excerpt":{"rendered":"

Yesterday I voted against Senate Bill 138, the Governor\u2019s proposed Liquefied Natural Gas Pipeline Project.\u00a0 My vote against SB 138 was not a vote against a natural gas pipeline.\u00a0 Like most Alaskans, I support the construction of a pipeline to get our natural gas to market.\u00a0 My vote was a statement against the fiscal structure […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"ngg_post_thumbnail":0,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3326","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"http:\/\/bertstedman.com\/new\/index.php?rest_route=\/wp\/v2\/posts\/3326","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/bertstedman.com\/new\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/bertstedman.com\/new\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/bertstedman.com\/new\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"http:\/\/bertstedman.com\/new\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3326"}],"version-history":[{"count":3,"href":"http:\/\/bertstedman.com\/new\/index.php?rest_route=\/wp\/v2\/posts\/3326\/revisions"}],"predecessor-version":[{"id":3329,"href":"http:\/\/bertstedman.com\/new\/index.php?rest_route=\/wp\/v2\/posts\/3326\/revisions\/3329"}],"wp:attachment":[{"href":"http:\/\/bertstedman.com\/new\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3326"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/bertstedman.com\/new\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3326"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/bertstedman.com\/new\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3326"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}