Gasline corp. withdraws loan application to AIDEA

  • Gov. Bill Walker speaks at the Alaska Oil and Gas Association gubenatorial debate at the Dena'ina Civic and Convention Center in Anchorage on May 31. Earlier that day the Alaska Industrial Development and Export Authority was briefed on a loan application from the Alaska Gasline Development Corp., which is in charge of the state-led effort to build an LNG export project being championed by Walker. (Photo/Bob Hallinen/Anchorage Daily News)

Editor's note: This story has been updated with the withdrawal of the loan application described in the original story, which follows below.

State gasline officials have pulled their loan application with the state’s development bank, Alaska Gasline Development Corp. spokesman Jesse Carlstrom told the Journal Thursday.

AGDC’s loan application, discussed during an executive session of the Alaska Industrial Development and Export Authority’s May 31 board of directors meeting, was not to directly finance a portion of the $43 billion Alaska LNG Project the corporation is pursuing.

“It was a small loan to explore ways to provide in-state gas to Alaskans,” Carlstrom said.

Corporation officials previously would not acknowledge that the application, listed on AIDEA’s May 31 board meeting agenda simply as an “LNG loan” was from AGDC.

The application was withdrawn just prior to the Wednesday morning online publication of a Journal story outlining the loan, according to Carlstrom.

He declined to comment on the loan amount, citing commercial sensitivity.

An AIDEA spokesman previously noted that if the finance authority’s board ever took formal action on the loan its details would have been made public at that time.

AGDC officials denied a public records request for the loan application documents June 7, citing "information or trade secrets" that "would cause commercial or competitive harm or damage" to the corporation. AIDEA has not responded to a request for documents sent between the two this year.

Both state-owned organizations under the Department of Commerce, Community and Economic Development.

AGDC President Keith Meyer has repeatedly emphasized a desire to disperse LNG shipments to remote Alaska communities wherever possible alongside the large LNG tanker shipments to Asian buyers that would be the economic driver of the proposed LNG export plan.

Original story

Alaska Gasline Development Corp. leaders are asking the state’s development bank for help in financing the Alaska LNG Project, but neither side is willing to say as much.

Multiple sources within the state confirmed AGDC has applied for a loan from the Alaska Industrial Development and Export Authority to fund work on the $43 billion LNG export plan; however, when asked if the state-owned gasline corporation had sought help from its fellow state-owned financing authority, an AGDC spokesman provided neither a “yes” or a “no.”

“AGDC is actively developing financial and business arrangements that are beneficial to moving the Alaska LNG Project forward,” spokesman Jesse Carlstrom wrote in an email. “Due to the confidentiality and competitive nature of these efforts, AGDC cannot publicly disclose any information at this time.”

The agenda for the May 31 AIDEA Board of Directors meeting listed an “LNG loan” as one of the topics the seven-member board would be discussing in an executive session. AIDEA spokesman Karsten Rodvik said the authority had received a loan application to finance an LNG project and authority staff was in the early stages of reviewing the application.

“It was just a quick briefing and heads up on a loan that could come before them (for approval) someday,” Rodvik said.

He added that it was discussed behind closed doors because of a confidentiality statute that precludes disclosing potentially sensitive information of the authority’s prospective business partners.

It is common practice for public bodies to discuss legal, business or personnel matters in an executive session to prevent information that could potentially damage a business deal, for instance, if it became public, but the general topics that are going to be discussed in an executive session must be disclosed.

However, in the case of AIDEA and AGDC, both are public entities under the Department of Commerce, Community and Economic Development and their financials are public information.

AIDEA officials denied a June 1 records request for the documents related to the “LNG loan” citing the authority’s confidentiality statute, but noted the documents would be made public if the board ever took action on the application.

Subsequent records requests submitted June 4 to AIDEA and AGDC seeking documents sent between the two this year are outstanding.

The amount AGDC is requesting and under what loan structure is unknown at this point. AIDEA regularly participates with private banks and credit unions in loans for real estate developments.

The authority has several loan programs and also invests in energy projects but it is typically required to — unless directed via legislative policy — to achieve commercial returns on its investments, which also often require significant collateral.

AIDEA had a net position of more than $1.3 billion at the end of fiscal year 2017, according to its annual report.

And while AGDC leaders have made good on their promise over the last two years to not request additional funding from the Legislature while the state continues to run sizable deficits, legislators further challenged them by not granting the agency the ability to accept third-party investments in Alaska LNG in the state budget passed May 12.

Enough legislators are concerned that authorizing AGDC to accept outside funds would ostensibly be signing away the Legislature’s control over the project — that of the purse string — and the request was pulled from the budget.

The corporation took over control of the project in January 2017 with $106 million remaining from prior gasline appropriations and expects to have $52.5 million at the start of the 2019 fiscal year July 1.

An austerity program instituted by AGDC leaders when they took over the project has helped them under-spend on their budget by $35.7 million since. As a result, the corporation should be able to continue operating on its existing funds through June 2019, according to AGDC Finance Manager Philip Sullivan.

However, lacking a substantial injection of new money could potentially challenge the ability of the corporation to stay on its desired schedule, which is to have a final investment decision in early 2020.

Prior to that AGDC will need to hire at least one, likely multiple, large engineering, procurement and construction firms to manage the massive build-out as well as complete the costly environmental impact statement for the project that is currently being reviewed by the Federal Energy Regulatory Commission.

Elwood Brehmer can be reached at [email protected].

06/08/2018 - 9:06am