Gov. Bill Walker signs the bill to buyout TransCanada's share of the AKLNG project as Sen. Anna MacKinnon, R-Eagle River, left, Rep. Steve Thompson, R-Fairbanks, and Rep. Mark Neuman, R-Big Lake, right, watch at the Capitol on Thursday.

Gov. Bill Walker signs the bill to buyout TransCanada's share of the AKLNG project as Sen. Anna MacKinnon, R-Eagle River, left, Rep. Steve Thompson, R-Fairbanks, and Rep. Mark Neuman, R-Big Lake, right, watch at the Capitol on Thursday.

Done deal: Walker signs bill buying out TransCanada’s share of pipeline

Gov. Bill Walker was all smiles as he signed a bill that will give Alaska one-quarter ownership of a natural gas pipeline — once it’s built.

Walker signed the legislation Thursday, a day after the House voted 39-0 to approve spending $161.25 million to buy out TransCanada’s share of the proposed pipeline during special session.

“It was a vote for Alaska’s future is what it was,” he said before putting pen to paper. “Nobody is against the pipeline — nobody in the Legislature, nobody in this building.”

AKLNG, as the pipeline project is known, is expected to generate as many as 10,000 construction jobs if work begins in the mid-2020s, and current estimates indicate the state will earn about $1 billion to $1.2 billion per year in revenue once gas begins flowing.

As envisioned, AKLNG includes construction of an 800-mile natural gas pipeline from the North Slope to an export terminal on the Cook Inlet at Nikiski at the cost of $45 billion to $65 billion. The state partnered with North Slope oil and gas companies BP, ConocoPhillips and ExxonMobil to pay that price and build AKLNG. It’s expected to supply 5 percent of the world’s natural gas once completed, according to state officials.

The state’s share of the project is estimated to be between $12 billion and $18 billion, and in return for spending that sum, it takes one-quarter of all gas that flows through AKLNG.

The state originally entered into an agreement with Canadian pipeline builder TransCanada to avoid paying up front for its share in the project. Under the terms of the agreement, TransCanada would have payed all of the state’s direct costs until construction began, then half of the state’s share of construction costs. In return, the state was to give TransCanada a cut of its revenue once gas starts flowing. With the buyout, Alaska now avoids repaying TransCanada’s costs plus 7.1 percent interest, as outlined in the contract.

 

BUDGET CUTS,

TAXES STILL NEEDED

While Walker smiled as he talked to reporters Thursday about the advance of the long-term AKLNG natural gas project, his first major accomplishment since being elected governor in 2014, he was serious as he talked about the problems facing Alaska in the coming year.

With the 49th state facing a $4 billion per-year deficit due to low oil prices, drastic action will be needed to make ends meet.

“There most likely will be some form of revenue that most likely will be a tax of some sort,” Walker said.

But what about budget cuts?

“Absolutely,” Walker said.

“It’s in pencil, not pen at this point,” he added. “I really can’t be any more specific than that.”

Walker has until Dec. 15 to release his budget for the next fiscal year, which runs July 1, 2016 to June 30, 2017.

“It’ll be as soon as possible, but no later than Dec. 15,” he said of the budget’s release.

The state has $9.09 billion in the Constitutional Budget Reserve and another $7 billion in the Permanent Fund earnings reserve, each accessible through a vote of the Legislature and necessary to keep the state running as long as there is an annual deficit.

While AKLNG promises billions in revenue, it isn’t expected to begin construction until the end of the decade and even the most optimistic estimates don’t have it producing gas before 2025.

When the Legislature returns to Juneau in January, it will face decisions on the state’s deficit and other aspects of the pipeline project.

The second session of the 29th Alaska Legislature begins Jan. 19.

Gov. Bill Walker hands out pens to Sen. Anna MacKinnon, R-Eagle River, left, Rep. Steve Thompson, R-Fairbanks, and Rep. Mark Neuman, R-Big Lake, right, after signing the bill to buyout TransCanada's share of the AKLNG project at the Capitol on Thursday.

Gov. Bill Walker hands out pens to Sen. Anna MacKinnon, R-Eagle River, left, Rep. Steve Thompson, R-Fairbanks, and Rep. Mark Neuman, R-Big Lake, right, after signing the bill to buyout TransCanada’s share of the AKLNG project at the Capitol on Thursday.

Gov. Bill Walker speaks to members of the media before signing the bill to buyout TransCanada's share of the AKLNG project at the Capitol on Thursday.

Gov. Bill Walker speaks to members of the media before signing the bill to buyout TransCanada’s share of the AKLNG project at the Capitol on Thursday.

Gov. Bill Walker shakes hands with Sen. Anna MacKinnon, R-Eagle River, left, Rep. Steve Thompson, R-Fairbanks, and Rep. Mark Neuman, R-Big Lake, right, after signing the bill to buyout TransCanada's share of the AKLNG project at the Capitol on Thursday.

Gov. Bill Walker shakes hands with Sen. Anna MacKinnon, R-Eagle River, left, Rep. Steve Thompson, R-Fairbanks, and Rep. Mark Neuman, R-Big Lake, right, after signing the bill to buyout TransCanada’s share of the AKLNG project at the Capitol on Thursday.

Senate President Kevin Meyer, R-Anchorage, left, shakes hands with Sen. Gary Stevens, R-Kodiak, after Meyer gaveled out of the third special session of the 29th Legislature on Thursday.

Senate President Kevin Meyer, R-Anchorage, left, shakes hands with Sen. Gary Stevens, R-Kodiak, after Meyer gaveled out of the third special session of the 29th Legislature on Thursday.

More in News

Jasmine Chavez, a crew member aboard the Quantum of the Seas cruise ship, waves to her family during a cell phone conversation after disembarking from the ship at Marine Park on May 10. (Mark Sabbatini / Juneau Empire file photo)
Ships in port for the week of July 20

Here’s what to expect this week.

Juneau Municipal Attorney Robert Palmer reacts to praise for his service from Assembly members after his resignation was announced during a May 13 meeting. (Mark Sabbatini / Juneau Empire file photo)
Three city attorney finalists to be interviewed in public sessions this week by Juneau Assembly

Two Juneau residents with CBJ experience and D.C.-based Army attorney seek to replace Robert Palmer.

Angela Rodell, former CEO of the Alaska Permanent Fund Corp., speaks to the House Finance Committee on Thursday, June 24, 2021. (Peter Segall / Juneau Empire file photo)
Angela Rodell, former Alaska Permanent Fund Corp. CEO, says she’s running for mayor

First-time candidate to challenge incumbent Beth Weldon; filing deadline for local election is today.

Republican U.S. House candidate Nick Begich, with sign-holding supporters, waves to Midtown Anchorage motorists on Election Day in 2022. (Yereth Rosen/Alaska Beacon)
Some Alaska Republican candidates pledge to withdraw if they aren’t atop GOP votes in primary

Pledges are a way to circumvent ranked choice voting, according to one supporter.

People protesting the death of Steven Kissack gather at Marine Park after marching through downtown Juneau on Sunday afternoon. (Jasz Garrett / Juneau Empire)
Protesters demand police accountability following death of Steven Kissack

Advocates gather where he was shot, say they are raising their voices because “he’s unable to speak.”

A U.S. Coast Guard Air Station Sitka helicopter hovers over Sitka Sound during routine hoist training. (U.S. Coast Guard Photo by Lt. Cmdr Wryan Webb)
Yakutat-bound charter flight missing from Juneau

Flight departed from Juneau on Saturday with three people aboard, according to U.S. Coast Guard.

President Biden at the White House on July 3. (Doug Mills/The New York Times)
President Joe Biden drops out of race, scrambling the campaign for the White House

Withdraws under pressure from fellow Democrats; endorses Vice President Kamala Harris to take on Trump.

(Michael Penn / Juneau Empire file photo)
Police calls for Thursday, July 18, 2024

This report contains public information from law enforcement and public safety agencies.

Most Read