Commentary: A once-in-a-generation moment for Alaska’s energy future

By ALASKA GASLINE DEVELOPMENT CORPORATION BOARD

The North Slope holds one of the largest natural gas basins in the world. But this gas is worth nothing without the infrastructure to deliver it to buyers, and Alaskans have never given up on realizing the benefits of this natural gas.

We’ve heard promises about projects to deliver North Slope gas for years. As the Anchorage Daily News recently reported, “Several similar projects to tap Alaska’s North Slope gas and send it to buyers have failed to be built over the decades. But Alaska LNG stands out for making progress that others haven’t.”

For Alaskans, this project offers reliable, low-cost energy. Affordable natural gas is not just about energy bills. It brings jobs, population stability, manufacturing, mining, data centers, and the ability for families to stay in Alaska rather than leave for cheaper states. High energy bills are a silent tax that raises the price of our schools, businesses, and family budgets. Lower them and Alaska’s entire economy gets stronger.

We are closer than ever to building a gas pipeline that can finally bring long-awaited, lower-cost energy to Alaskans. Glenfarne, the new majority owner and developer of Alaska LNG, anticipates significant public announcements demonstrating major additional progress during the next two to three months. Engineering, commercial alignment, and financing discussions have advanced beyond any previous efforts. This is no longer a distant vision. It is a deliverable project within reach.

AGDC is charged with safeguarding the state’s investment in Alaska LNG. Our to-do for the upcoming legislative session is very short. It includes only one item: long-overdue property tax reform critical for maintaining project momentum in the face of our looming Cook Inlet energy crisis.

Alaska’s property tax rate for this project is abnormally high. For more than ten years our legislature and our boroughs have recognized that without reform, our high tax rate is a major impediment to project progress and results in higher in-state energy bills. In effect, it is a tax on Alaskans.

Part of the needed reform involves timing. LNG projects incur high up-front capital costs and investments are recouped over a period of decades. High early-stage property taxes, before assets start to depreciate, are detrimental because they increase financing costs, raise tariffs, and drive up the price of gas delivered to homes, businesses, and utilities. We recommend that property taxes should begin once pipeline throughput reaches 1,000,000,000 cubic feet of gas per day, about a third of the project’s maximum capacity. Taxing the pipeline too early makes the gas more expensive for the Alaskans it is meant to help.

The second part of tax reform involves fixing the rate. A two-mill rate is comparable to tax structures for Gulf Coast LNG projects. The current high rate on our books is twenty mills, about ten times higher. Pipelines are long-lived infrastructure with modest margins. Reforming our rate allows communities to participate in the long-term value of the project while providing affordable energy for consumers and certainty for investors.

Alaska will benefit in numerous, substantial ways from this project through royalties on gas production, severance and production taxes, corporate income taxes from expanded economic activity, and indirect revenue from job creation and population stability. As low-cost energy enables new industries, local governments benefit through higher property values, additional construction, and broader tax bases.

Tax reform does not mean municipalities are left out. It does not mean the state loses revenue. History shows that projects burdened with excessive early taxation often never get built. Today we receive zero in natural gas project property taxes. One look at our depleted state savings and thin state budget tells us we need a project of this magnitude more than ever before. This pipeline is foundational infrastructure, no different from the roads, ports, and transmission lines we built to unlock a better future.

Alaska LNG represents a generational opportunity to finally break our cycle of high energy costs. A chance to make Alaska a destination, not a repellant, for investment. A reason for young families to stay. Every unnecessary dollar added to pipeline costs shows up in our energy bills. Every unnecessary hurdle delays benefits that we should have received years ago.

The finish line is in sight. With discipline, unity, and smart policy choices, Alaska can finally turn its vast natural gas resources into affordable energy for its own people. We stand ready to do our part and work with the legislature for a swift and positive outcome on tax reform.

Authors of this column are the Alaska Gasline Development Corporation Board of Directors, including Warren Christian, Chair; Mike Chenault, Vice Chair; Dennis Michel, Secretary/Treasurer; Doug Tansy, Director; Ryan Anderson, Director; Julie Sande, Director.