House Republicans pitch new Hilcorp gas subsidy to 'save Anchorage'

Hilcorp, owned by Texas billionaire Jeff Hildebrand, could qualify for a new state subsidy for gas drilling in Cook Inlet under a plan approved by the House Finance Committee Wednesday.

The vote was 7-4, but don’t expect this provision to survive in the final version of HB 271.

Fairbanks Rep. Will Stapp said his proposed reduction in the state’s royalty share from all Cook Inlet natural gas leases was the “Save Anchorage” or “Save Southcentral” amendment.

It would give Hilcorp, the company that produces 85 percent of the natural gas in Cook Inlet, a chance to earn more millions for natural gas production.

The GOP amendment to reduce the state royalty rate to 5 percent would be “under the condition that the producers, the companies can demonstrate to DNR that a reduction in royalty will result in a cost savings for the end users of natural gas,” Stapp said.

The big problem with the amendment, a proposal that may have actually originated with Rep. Zack Fields, is that it would allow the commissioner of the Department of Natural Resources to decide whether anything is saved.

The way the bill is written if consumers were to save 1 cent a year, that would be a cost savings and it would allow Hilcorp to reduce royalty payments to the state. The total could be in the range of $30 million to $50 million for Hilcorp alone, the major Cook Inlet supplier. There is nothing in the plan that says the consumer savings would have to be that high.

This is a Fail Mary, not a Hail Mary.

I expect the smart people at Hilcorp could easily demonstrate scenarios that the cost to consumers would be lower by pennies or dollars than it would otherwise be.

This is an open invitation for creative accounting, akin to the state’s failure to update the income tax law after the BP sale of its assets to Hilcorp left a giant loophole for the Texan.

Stapp is right that the state is “almost certainly” going to run into a natural gas supply crisis in Southcentral that will raise the cost of living and cause economic distress.

But the idea that part of the solution is to hand more money over to the Texas billionaire is hard to swallow, especially when Hilcorp is profiting immensely from its North Slope operations and not paying the taxes that other companies pay. Trump’s war in Iran is helping oil companies a great deal.

The state could end the Hilcorp loophole and collect funds that could be directed to deal with problems like the state energy crisis.

Fields said that the royalty reduction would only go to companies that apply and demonstrate how consumers would benefit, but that assumes a level of transparency that may not materialize.

Rep. Andy Josephson wanted to know who would decide that the cost cut to consumers deserved a state subsidy. The DNR commissioner.

The problem in energy supplies for Alaska is clear.

If Anchorage fails, the state fails, Stapp said.

If Anchorage fails, it will be in part because of the lack of leadership by Gov. Mike Dunleavy, the guy who announced in early 2025 that the Golden Age of Alaska had arrived. He is the guy who said he wanted to cut electric rates to 10-cents a kilowatt hour by 2030. And the guy who says the Trump war with Iran is a brilliant “strategic master stroke.”

Dunleavy’s the guy who said In his State of the State speech this year that “President Trump said, and I quote, that he has secured ‘unprecedented funding’ from South Korea and Japan through his trade deals to develop the Alaska LNG Project.”

Dunleavy, Sen. Dan Sullivan and Rep. Nick Begich the Third, all members of the unprecedented Trump sycophant society, have claimed that we will build a great pipeline and Japan, Korea, Taiwan and Thailand will pay for that great pipeline.

Dunleavy now says the only energy option for Southcentral Alaska is to keep praying that the gas pipeline becomes a reality immediately.

A year ago this week Dunleavy said the pipeline would be under construction by now. Sullivan said pipe would be going in the ground by now.

Last fall Dunleavy said he would be “shocked, shocked, not surprised, shocked” if Glenfarne didn’t make a final investment decision to build by January 2026. Shocking.

In addition to Stapp, Republican Reps. Jamie Allard, Frank Tomaszewski, Jeremy Bynum, Elexie Moore, independent Calvin Schrage and Democrat Nellie Jimmie voted yes.

The four who voted no were Josephson and fellow Democrats Sara Hannan, Neal Foster and independent Alyse Galvin.

Stapp said, “this coming winter and maybe next year, if there's a potential crisis on gas supply in Cook Inlet, you guys get to go home and explain to your voters what you did and what you didn't do and if they run out of gas God help us,” Stapp said.

Voters should know that a giving a subsidy to Hilcorp in exchange for undefined “cost savings” that could be many years in the distance would not help. On the other hand, closing the Hilcorp loophole would help immediately.

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