Legislature Considers Dedicating Gas Revenue Towards Energy Infrastructure in Rural Alaska

by Ben Matheson on March 26, 2014

Senator Lyman Hoffman. Photo by Skip Gray/Gavel Alaska

Senator Lyman Hoffman. Photo by Skip Gray/Gavel Alaska

With 30 days remaining in the legislative session, the Alaska house is considering gasline legislation that would advance a line from the North Slope to an LNG export facility in Nikiski. The dream of cheap natural gas for Alaskans is one step closer. And for rural Alaska, the bill includes funding that could send gas to communities hundreds of miles from the pipeline.

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The problem, according to Bethel Senator Lyman Hoffman is that that even with gas take-off points, people in small villages far from the line will miss out.

“If you’re in Napakiak, how are you going to go to Fairbanks anchorage where that spigot is and get that gas out here? So even though the bill said it was going to make gas available to Alaskans, basically those communities and residents along the pipeline were the ones that were going to benefit,” said Hoffman.

Hoffman pushed through the amendment to create what’s called the Alaska Affordable Energy Fund.

“…Setting aside a fund that could be spent on infrastructure to get natural gas to other areas to the state that are not connected to the pipeline, trying to get the gas to the burner tip of Alaskans,” said Hoffman.

That could provide money to advance projects like shipping propane down the Yukon River to southwest Alaska communities. As written, 25 percent of royalties would go to the Permanent Fund. After that, 10 percent of the remaining royalties would go into the Affordable Energy Fund.

That money would not be limited to gas projects. It could address bulk diesel, plus hydroelectric dams, tidal energy, wind, and others. Depending on gas prices and production, Hoffman estimates a range of $100 million to $200-plus million per year. He says that will make a difference in residents’ energy bills.

“For people in rural Alaska, this is the biggest change they have will ever seen since statehood,” said Hoffman.

The language to create the fund is very simple and fits on half a page. Another part of the bill requires the state to develop a plan within three years that identifies how to deliver gas to places not directly on the gasline.

The name of the fund was originally the Rural Energy Fund. It was changed to the Affordable Energy Fund to include residents who live very close to the line, but don’t have direct access.

Through LNG export, the state and energy producers are looking to sell much of the gas to Pacific Rim countries. As the gasline legislation advances Hoffman says it’s important to prioritize Alaskans’ energy needs.

“We are finally going to monetize gas for Alaska, but it was my view that Alaskans wanted more than that, we always wanted to monetize the gas, but we did not want to make the same mistake we made with TAPS,” said Hoffman.

That mistake, Hoffman says, was making money off oil, but not reaping the energy benefits.

The gasline bill is currently being discussed in several house committees. It would be among the most expensive projects in history, costing between 40 and 65 billion dollars.

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