Glenfarne, AGDC seek to stiff Fairbanks on spur line tariff

Something important happened this week on the gas pipeline.

The “Build the Line!” cheerleaders in Fairbanks and elsewhere parroting Glenfarne propaganda without examining any details didn’t notice.

The sloganeers were so busy getting angry at legislators they didn’t object when Glenfarne asked for a “technical amendment” that would make the Fairbanks spur line more expensive for Alaska customers of the gas pipeline.

The dream of cheap energy is founded on the notion of immense LNG exports to Asia. Those potential customers would pay a tariff as part of the project to cover transportation costs.

But Glenfarne is now claiming that the tariff on the so-called Fairbanks spur line should be paid only by Alaska customers.

The company asked for a change in the gasline bill this week that would ban the foreign customers of the project from having to pay tariffs on the Fairbanks spur.

Let’s be clear about this: The failure of the Alaska Gasline Development Corporation, Gov. Mike Dunleavy, the Legislature and Glenfarne to include the Fairbanks connection to the pipeline as an essential part of the project is wrong.

AGDC does not have a cost estimate on the spur line. Frank Richards, the head of AGDC, said he has never seen the cost estimate developed by a third party, “but I’m told it’s less than $150 million.” He said he believes this would extend the spur line to Eielson.

That cost estimate is nothing to bank on. Glenfarne suggested to senators that the difference between applying spur line costs to all consumers and Alaska consumers would be minor, but it is too soon to bank on that either.

We are in this position because of the repeated failure by state and local officials going back more than a decade to define the Fairbanks connection as an integral part of the project.

And now we have Glenfarne saying the cost of the spur line cannot be spread out among the customers who will buy most of the gas for the project if it is built.

“The concept there is that the cost of the Fairbanks spur line would be spread across other gas buyers from the domestic pipeline. There is a technical amendment that we think would be the right thing to make in this bill which would be to remove the portion of the language that says the costs would be spread to export consumers also,” Adam Prestidge, the Glenfarne president, told the Senate Finance Committee Wednesday.

It’s not a “technical amendment.”

The Fairbanks spur line is not an addon to the project, though that is how Glenfarne and the AGDC want it to be defined.

Prestidge told the Senate Finance Committee that the RCA had already “explained the concept that the causers of the cost should bear the cost, extending it to all the ratepayers across Alaska stretches that concept a little bit. Extending it to global LNG buyers extends it far outside of the bounds of commercial sensibility,” he said.

“And so we recommend removing that. I think it also opens up a number of questions of jurisdictions over the LNG project and LNG sales and becomes quite complicated. So we recommended removing that as one of the technical cleanups to the bill,” he said.

The “bounds of commercial sensibility” from the Fairbanks perspective are that the spur line costs are an integral part of the entire project.

The special session ended Friday night with the Senate approved an amended bill on a 12-8 vote, but the House refused to bring it up.

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