Sullivan says 'stars are aligned' for gas pipeline, then asks for another state subsidy

In 2001, John Snow, the chairman of CSX predicted that the time had come for North Slope natural gas to be shipped off the North Slope and exported.

"The stars are aligned,'' Snow announced at a Commonwealth North breakfast attended by about 100 people, including former Govs. Walter J. Hickel and Bill Sheffield.
"People in the state need to get together and make it happen,'' Snow said.

A year earlier, star-gazer Joe Marushack, also saw a clear sign in the heavens about the gas pipeline.

"We sure think the stars are aligned," said Marushack, then the vice president of gas commercialization with Phillips Alaska Inc.

In 2018, the Alaska Gasline Development Corp.toured the state with a slide show it called “The Stars are Aligned for Alaska LNG.”

The latest in the long line of Alaska gas line astrologers is Sen. Dan Sullivan, who sent out a press release claiming “The stars are aligned at long last to make one more major push to get this project done.”

The Sullivan press release is vague, perhaps deliberately so, on what Sullivan is really suggesting. He is proposing a state subsidy for an amount that he failed to identify.

Last spring, AGDC officials told the Legislature that Goldman Sachs was working on a contingency basis to line up investors that would put $150 million into the project to get it to the point where a final investment decision could be made.

After that, there would be no more state money needed to move the project forward.

The $150 million would essentially transfer 75 percent of the AGDC project from the state to a private company or companies. Goldman Sachs would get paid by the buyers for completing the deal.

The companies putting up the $150 million would get control of the project in exchange for a promise to move forward to a final investment decision, the point after which builders would start to spend tens of billions.

“We are looking to the private sector to fund that,” AGDC President Frank Richards testified. Richards said he had high confidence that Goldman Sachs could raise that money.

After getting the $150 million in development capital, the state would no longer control the project.

“After closing on the $150 million the investor or consortium of investors will be the operator and manager of the Alaska LNG project through 8 Star Alaska LLC, and AGDC will be a minority 25 percent non-operating partner within the project,’ said Nick Szymoniak, the venture development manager for the state gas company.

“So we are truly handing the project to private ownership, while maintaining a minority interest with the expectation that there is no commitment or obligation for the state to fund going further, though we will preserve the opportunity for the state to invest in up to 25 percent of the project,” he said.

Szymoniak repeated that after companies put up the $150 million, there would be no need for the state to put any more money into the project, though it would have the option in the future. “Opportunity but no obligation,” said Szymoniak.

Sullivan is now contradicting that series of events.

Here is what Sullivan said about the need for another state subsidy:

“AGDC is working to secure $150 million for the next step in this project to finish the front-end engineering and design. Having the state as a co-investor, alongside the private sector, in this phase would send a strong signal to investors and help Alaska LNG’s chances of getting over the finish line,” Sullivan said.

Having the state as a “co-investor” in this phase is not what AGDC promised in the spring. What happened?

We need to hear from the junior senator about whether this is his convoluted way of saying that the stars are not aligned and that Goldman Sachs failed to raise the $150 million needed to move the project to the point where no more state subsidies will be required.

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