This story was originally published by Dermot Cole, Reporting From Alaska.
The Alaska Gasline Development Corporation can’t find a private company willing to pay $50 million for the final design and engineering work on a proposed gas pipeline unless there is a pledge to get that money back from the state.
It may take $50 million to update the costs for a detailed package upon which a investment decision to build or abandon the project can be made in late 2026.
Lacking $50 million, the cash-poor AGDC asked another state-owned corporation, the cash-rich Alaska Industrial Development & Export Authority, to provide a $50 million guarantee to entice a private gasline company to do the study.
AIDEA agreed to pledge the $50 million in early December, clearing the way for a private gasline company to undertake the design and engineering work without risking its own money.
After the $50 million in gasline study work is finished — and if the gasline company decides to build a gas pipeline for billions — the $50 million study will be paid for by the private company, not the state.
But if the private pipeline company decides in 2026 not to build a gas pipeline, as seems more likely without a major state subsidy, AIDEA will cover the $50 million bill.
That’s what the AIDEA board and AGDC management told the public in December meetings. Here is the AGDC announcement about the $50 million pledge.
There was no discussion among the AIDEA board members in public about exactly where the $50 million would come from.
I thought at the time that this was just because AIDEA has hundreds of millions in cash and it could easily withdraw $50 million. AIDEA is flush and sits on what amounts to a giant slush fund.
AGDC said that the money would be coming from AIDEA and that AGDC would have to pay AIDEA for putting $50 million aside for the backstop.
“That means that AIDEA and AGDC are going to execute agreements to compensate AIDEA for providing the backstop. So AIDEA as a funder is looking for some return on their capital. So that is, we will recognize that and they will get some return on their capital,” AGDC President Frank Richards said at a December 13 meeting.
It must be understood that AIDEA, AGDC and the Dunleavy administration did not tell the truth, the whole truth and nothing but the truth about the proposed source of the $50 million.
The plan is not to draw from AIDEA’s cash resources, but to have the Legislature add $50 million in 2025 to AIDEA’s $600 million account.
Lacey Sanders, director of management and budget for Dunleavy, said in a budget presentation December 12 that the AIDEA $50 million would be part of a supplemental budget that Dunleavy wants to see enacted quickly in 2025.
“One key item that you will see is a $50 million appropriation to the AIDEA corporation that will backstop the AK LNG project, the Alaska natural gas pipeline project, for front end engineering and design. This $50 million appropriation is identified as a supplemental in the bill to allow for it to move forward very quickly,” Sanders said.
That was eight days after the AIDEA board committed $50 million.
The governor, AIDEA and AGDC will be asking legislators for forgiveness, not permission. I doubt they will get it.
I said here on December 12 that this was a gasline con. I still think that is a fair criticism.
AIDEA had no business approving a $50 million pledge while keeping the legislative request for $50 million to pay for it secret. The governor had no business making this request after the fact.
The Legislature has no business giving AIDEA $50 million more.
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