Gasline agency laying off 60 percent of staff

The Alaska Gasline Development Corp. is drastically cutting its staffing while it is in the midst of permitting the $43 billion Alaska LNG Project.

The state-owned corporation issued a statement to the Journal Wednesday afternoon from Interim President Joe Dubler that reads: “AGDC is restructuring to reflect our primary focus on completing the FERC permitting process to advance the Alaska LNG Project. AGDC will continue to pursue (Federal Energy Regulatory Commission) authorization, expected in June 2020, with an eight-person technical staff plus contract support as needed, and reduce employee headcount by twelve. Completing the permitting process will substantially de-risk Alaska LNG and open the door to a wider range of potential project parties with the broad expertise required to unlock the value and manage the risks associated with a project of this magnitude.”

Spokesman Tim Fitzpatrick said Dubler is responsible for staffing at the corporation and the decision was made under his authority. Most of the changes are expected to be complete by the end of July, according to Fitzpatrick.

FERC released a draft version of the Alaska LNG Project environmental impact statement June 28. A final EIS is expected next March.

Sources within AGDC said Dubler — who took the job in January on an interim basis and has no long-term plans to stay — and Vice President of Program Management Frank Richards will be the only executive-level employees that will be retained full-time. Vice President Fritz Krusen, who briefly served as acting AGDC president in early 2016, will be retained on a contract basis.

Cutting back to a staff of eight means the group leading what has the potential to be one of the largest infrastructure projects in the world will be nearly as small as its board of directors, which is comprised of seven individuals.

Staffing levels at the corporation have always been low considering the massive scope of the project it is working on and AGDC has relied on contractors and consultants to help complete major tasks.

Still, the layoffs mark a complete shift in the state’s pursuit of a gasline project from former Gov. Bill Walker to current Gov. Michael J. Dunleavy.

Under Walker, who for decades has touted the economic benefits exporting North Slope natural gas could bring to the state, AGDC accepted control of the Alaska LNG Project from the North Slope producers and worked to find investors and customers while also attempting to expedite the complex pre-construction work for the project.

Walker and former AGDC President Keith Meyer regularly stressed a need to have the project start producing LNG in the mid-2020s to meet a global LNG market window of unmet demand in that timeframe.

Dunleavy insists the project is too large and complex for the state to manage and has said repeatedly he wants private sector companies — whether the North Slope producers of BP, ConocoPhillips and ExxonMobil or other companies — to partner with the state.

AGDC under Walker also signed approximately 15 early-stage agreements with potential Alaska LNG investors and customers, most notably the November 2017 joint development agreement with three large nationalized Chinese corporations. That signing was conducted at a trade ceremony in Beijing in front of President Donald Trump and China President Xi Jinping and at the time seemed to indicate Alaska’s long-awaited gasline was gaining significant momentum.

Fitzpatrick said AGDC has a number of confidential agreements with potential customers that remain in effect and some other agreements have been allowed to expire. He would not disclose what entities AGDC still has agreements with or how many preliminary agreements are still active.

The cutbacks are not being driven by near-term state financial considerations, according to sources. The timing of the decision was not linked to the governor’s $444 million of budget vetoes to dozens of state programs. AGDC’s roughly $10 million annual operating budget was not subject to a veto from the governor.

Fitzpatrick could not provide what the budget savings would be at this point.

Sources said the decision to shrink AGDC was made by officials in the governor’s office after significant time was spent reviewing the project.

A spokesman for the governor did not immediately respond to questions regarding the layoffs.

On May 29, Lt. Gov. Kevin Meyer announced BP and ExxonMobil are contributing $10 million apiece to help the state finish the FERC process. The major producers signed a memorandum of understanding with AGDC in March to provide technical assistance on the project. They also signed separate confidential gas sales precedent agreements with AGDC last year that outline the terms — including price — under which they would sell gas from the Prudhoe Bay and Point Thomson North Slope fields into the project.

The companies are also currently assisting AGDC in reevaluating the overall economics of the project and its $43 billion cost estimate amid new global LNG market conditions.

Spokespersons for BP Alaska and ExxonMobil could not immediately be reached.

AGDC is scheduled to hold its next board of directors meeting Aug. 8 in Anchorage.

Elwood Brehmer can be reached at [email protected].

Updated: 
07/15/2019 - 3:22pm

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