Trump says long-promised LNG pipeline will be paid by South Korea. They haven’t decided to invest.
ANCHORAGE, Alaska (KTUU) — “I don’t think we’ve ever had an announcement like this,” Sen. Dan Sullivan, R-Alaska, told Alaska’s News Source on Wednesday.
Hours prior, the president told the nation the Alaska liquified natural gas pipeline was set to receive $54 billion from a South Korean investment — enough to build the entire pipeline, according to developer figures.
Behind President Trump: Sullivan, Gov. Mike Dunleavy, Rep. Nick Begich, lead pipeline developer Glenfarne CEO Brendan Duval and members of the president’s cabinet.
“We’ve had announcements, we’ve had reasons for skepticism,” Sullivan added.
“People have signed different agreements and have tried to move this forward. But this is different, right? There’s no doubt.”
But maybe there is doubt. In any case, South Korea has some.
“No decision has been made on whether to invest or on the size of the investment,” Seoul’s industry ministry said in a statement reported by Reuters.
Even before the widespread reporting questioning the authenticity of the president’s claims, two bipartisan majority leaders in the legislature said the administration’s claims warranted scrutiny.
“The press conference itself was pretty much devoid of detail,” Senate Majority Leader Cathy Giessel, R-Anchorage, said after the press conference.
“Are we any closer? That remains to be seen.”
House Speaker Bryce Edgmon, NA-Dillingham, called the news exciting, but “the devil’s in the details.”
“There are still many unanswered questions, everything from a start date to the project to the true involvement of South Korea,” he said.
Both raised another concern: ownership.
“The first thing that occurred to me when I first heard about the potential investment that came out yesterday was, ‘Okay, [a] $54 billion investment from a foreign country — that means they own our pipeline,’” Giessel said.
“Where does it leave Alaska’s little 25%? Do we still have 25%? These are important questions for Alaskans because we may find ourselves negotiating to buy LNG from South Korea — who owns our gas, even though it’s our gas.”
Giessel went on, adding that it posed national security concerns as well, saying that “has been our concern, certainly on the [state] Senate side, since day one.
“We wanted control, that there would be no foreign investors investing in our pipeline.”
Dunleavy said it’s not a concern.
“My focus is on ensuring that the gas line can be built to help Alaskans for their price of energy. That should be the focus for legislators.
“South Korea is going to be an investor in the project [and] Glenfarne is currently the lead in conjunction with the Department of Commerce.
And for those who stood behind the president, the optimism remains.
“I think this is an important milestone, really important milestone,” Sullivan said. ”We’re not there yet. But … one of the biggest challenges of this LNG project for Alaska has been the 800-mile gas line.
“What we saw today was one of our allies, in partnership with the federal government, working to say, we’re going to fund that component in a big way of the project.”
Dunleavy also said the alleged investment doesn’t guarantee anything but gets close.
“I think it was certainly a commitment, and I believe that money is there,” he said.
“Secretary of Commerce Lutnick has said today, he said that it’s going to happen. I don’t know why people would believe that the Secretary would just say it’s going to happen. I mean, this is the United States of America. We’re in the Oval Office with the President. This is not something they just slapped together.
“I am grateful and as positive as one could be on this right now,” he said.
Funding aside, the decades-long proposed pipeline still has fundamental issues for the project’s future that remains unresolved, the most notable of which being property tax exemptions.
Glenfarne said the company needs property taxes exemptions to make the project economic, an issue at the center of the entire legislative session and months of back-to-back special sessions called in by Dunleavy. Majority lawmakers have largely contested that the exemptions the company wants are too steep and they wouldn’t be paying their fair share.
By the end of the second special session, about eight months after the legislative session began, lawmakers were the closest they’ve been to passing a plan. The bill included a desired property tax scheme for the gas line but also had a contested corporate income tax for privately held oil and gas companies classified as S-Corporations.
Though the tax did not affect the gas line, Dunleavy and Republican lawmakers called the S-Corp tax a “poison pill.” The Senate passed the bill 11-8, but the House failed by a single vote with House Majority Leader Chuck Kopp, R-Anchorage, defecting from his caucus.
Speaking to Alaska’s News Source, the governor said Wednesday the tax conversation would need to continue.
“The continued due diligence, the continued discussions on gas purchases, the continued discussion on off-takes — all of this is continuing now. It’s running in parallel and at the same time,” he said.
“Hopefully we get a tax regime that really benefits the people of Alaska because there’s no cheap gas without a pipeline, and tax policy will play a role in that.”
What that tax structure looks like, though, may not be as much of an issue to the current administration anymore.
After eight years of tension between his administration and the legislature, a record-setting number of vetoes in the latest session (including one veto created from a quid-pro-quo on the LNG issue: pass the property tax exemptions or lose the pension plan) and numerous special sessions preventing lawmakers from campaigning under state law, lawmakers said the governor lost the good will for a compromise — teeing the issue up to the next legislature and governor.
“I feel like the circumstances only get more difficult from here and unless the governor and Hilcorp are willing to reconsider the package, I think there’s very little appetite to deal with this this year,” Rep. Calvin Schrage, NA-Anchorage and chair of the final committee to draft a compromise plan, told Alaksa’s News Source in July. “This will have to be something to come back and deal with it in January.”
Dunleavy, Trump nor Duval mentioned anything about property tax relief during the Wednesday press conference.
Gubernatorial spin
Alaska’s next governor is already putting a keen eye on the issue. Of the four candidates, each say the announcement is meaningful.
Jonathan Kreiss-Tomkins, the top vote-getter and sole Democrat in the race, said the state should “welcome foreign investment that helps responsibly develop our resources, creates good-paying jobs, and builds new markets for Alaska’s natural gas.”
Bernadette Wilson, a businesswoman and top vote-earning Republican, praised Trump, Sullivan, Begich and Dunleavy for “securing financing to finally build the Alaska LNG gas line.
“On November 3rd it is critical for Alaska to elect a Governor that will continue to collaborate with the President’s administration and our federal delegation to lower the cost of energy, secure good-paying jobs, and deliver on the projects that matter most,” she said in a statement.
Dave Bronson, Anchorage’s former Republican Mayor and the fourth highest vote-earner, said Trump’s announcement is a “major step forward.”
“This project has the potential to create good-paying jobs, expand opportunities for Alaska businesses, and bring our natural gas to markets that need a reliable energy supply,” he said in a statement. “This is especially important for places like the interior where people are paying more to heat their homes than their mortgages.”
The day before the announcement, Bronson called on Trump to “federalize” the gas line.
Treg Taylor, Dunleavy’s former Attorney General, who qualified for the general election after Democrat Tom Begich dropped out, said in a social media post the announcement marked “a day to celebrate” and it was “huge news.”
Term-limited Dunleavy said that all but one candidate should take on the project.
“I’ve heard, all three Republicans are fully supportive of the project,” Dunleavy said. “They want the project to go forward, and they want cheap gas for Alaska.”
When asked where his endorsement for a candidate was, Dunleavy said “stay tuned.”
Trump has also not endorsed a candidate for governor. Alaska is one of three states with a sitting-Republican governor where he has not issued an endorsement.
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