Alaska natural gas project may not get federal subsidies under proposed timeline

Monday, September 20, 2010

Alaska natural gas project may not get subsidies

FAIRBANKS, Alaska — A proposed liquefied natural gas project in Alaska may not be ready in time for federal loan subsidies.

A consultant says the Alaska Gasline Port Authority may have to withdraw an application for the subsidies available under the 2009 federal stimulus plan, the Fairbanks Daily News-Miner reported.

But Craig Richards, an attorney on the project, told Port Authority directors last week that the project can still go ahead.

The subsidies are part of “recovery zone” bonds offered to Fairbanks and poorer communities across the country.

The Borough Assembly voted to let the port authority apply the aid to about one-tenth of the project’s estimated $250 million price tag.

Richards said the loss of subsidies would add 2 percentage points to a borrowing rate that would have covered just that portion of the project.

Municipal leaders voted in January to give the publicly led Alaska Gasline Port Authority access to ultra-low interest rates.

Richards said a separate consultant is reviewing engineering and construction plans on the project. The timeline made access to the aid appear unlikely, he said.

The port authority, managed largely by Anchorage attorney and former Valdez Mayor Bill Walker, has been preparing for a year to approach state regulators for approval to buy Fairbanks Natural Gas and pursue the development plan.

It would then develop the North Slope for the trucking operation. The two groups also are working with Golden Valley Electric Association on supply contracts, and after securing development permits would look to issue bonds.

If the port authority withdrew its subsidy application to the state Industrial Development and Export Authority, the subsidies would be available to other applicants, said Karsten Rodvik, a spokesman for the development authority.

Mike Musick, the assembly’s presiding officer, said he’s unsure how the assembly would act if the opportunity to influence the direction of that aid re-emerged. He said Friday he was disappointed the authority might not get help.

Jim Whitaker, a member of the Alaska Gasline Port Authority board, said the careful pace of the project’s review is merited even if it costs the subsidies.

“The due diligence has to be complete,” he said. “That’s just good business.”

Information from: Fairbanks Daily News-Miner,

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