Morning Headlamp — Walker to reopen discussion on AKLNG changes

Gov. Bill Walker’s administration is considering major changes to the Alaska LNG project, the effort to build a massive natural gas pipeline from the North Slope. Keith Meyer started work as president of the state-owned Alaska Gasline Development Corporation last week. In an interview today, he said if the state increases its ownership, it would look for outside investors to fund the project. “So this is significantly different from the way it was done [to date],” Meyer said. “However, it’s very similar to the way that most of the pipelines in the U.S. have been built, and also the way most of the LNG facilities now have been built.” Headlamp will continue to cover any megaproject developments, hopefully the Walker administration continues to recognize the importance of private sector partners.

Appetite for duress. Alaska, which plans to sell $128 million of bonds on Wednesday, lost its AAA rank from the three biggest credit-rating companies this year amid a political standoff over how to close a $4 billion budget deficit — equivalent to about $5,400 for every one of its 738,000 residents. “The rebound to $50 per barrel is nice, but it won’t make up for the gap between revenues and expenditures,” Moody’s analyst Dan Seymour said. “It’s ultimately an unsustainable situation.” If “they don’t come up with a fix for the deficit and adjust for what might be a more prolonged lower price of oil, this is a credit you have to price in a future downgrade,” Gabe Diederich, a Wisconsin-based money manager at Wells Fargo Asset Management, which oversees about $39 billion of municipal bonds.

Alaska Permanent Fund Corp. CEO Angela Rodell told the Fairbanks Daily News Miner editorial board that an annual draw of 5.25 percent of the market value of the fund could be tough to meet every year. That money would come from the fund’s earnings reserve account, not the fund’s principal. The Alaska Permanent Fund Corp.’s Board of Trustees has not taken a position on any of the proposals put forward by Gov. Bill Walker or the Legislature. It did, however, endorse the transition of the management of the fund into a percent of market value model in the early 2000s.

A federal judge has struck down the Interior Department’s effort to regulate fracking for oil and natural gas. “Congress has not delegated to the Department of Interior the authority to regulate hydraulic fracturing,” Judge Skavdahl wrote in deciding a lawsuit brought by industry groups and a number of Western states. The “effort to do so through the Fracking Rule is in excess of its statutory authority and contrary to law.” The Interior rules would have regulated well construction, the storage of waste water left over from the process, and required the public release of the chemical mixes used. Headlamp applauds Judge Skavdahl’s defense against government overreach.

 

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First Reads

State considers major changes to Alaska LNG project
Alaska Public Radio News, Rachel Waldholz, June 21, 2016

Alaska Gets No Relief From Oil Rebound as Downgrades Sting Bonds
Bloomberg, Molly Smith, June 22, 2016

Permanent fund CEO: Dividend bill too optimistic about the market
Fairbanks Daily News Miner, Matt Buxton, June 22, 2016

Obama administration’s fracking rules struck down by federal judge
Washington Times, Victor Morton, June 21, 2016