Balash plays point in pursuit of LNG project

Photo/Michael Dinneen/AJOC

Joe Balash says he’s often teased about being a 38-year-old point man for the state on a prospective multibillion-dollar deal for Alaska to partner with industry on one of the world’s largest gas projects.

Balash makes light of it: “I’m young enough that I know I’ll be around to see the results of what I do.”

That answer, however, has a serious aspect, because it reflects a sense of deep responsibility that what he does is the right thing.

Balash isn’t the youngest of Gov. Sean Parnell’s commissioners — Department of Fish and Game Commissioner Cora Campbell was 31 when she was appointed in 2010 — but given the financial stakes the youthfulness of some on the state’s top gas team is striking. Deputy Revenue Commissioner Mike Pawlowski at age 36 is younger than Balash, who is the youngest DNR commissioner in Alaska history.

This team epitomizes the new generation of talented public officials taking the helm in state government, although some legislators worry the youngsters will be taken advantage of by more seasoned, and gray-haired, executives in the major oil and gas companies.

Balash does bring something else that’s unique, however. He is the ultimate state “insider,” having has worked in government since 1998 in the Legislature or in top policy positions in the state administration. Despite his youth, he brings institutional knowledge, historical context, and the ability to lend continuity.

Balash has seen 17 legislative sessions and intimately knows the corridors of power in Juneau.

Balash grew up in an Air Force family at Eielson Air Force Base near Fairbanks. He and his wife, Brenda, came to Juneau as newlyweds in 1998. Balash was a college intern manning the front desk in former state Sen. Gene Therriault’s office. Brenda Balash got a job in the office of Parnell, who was then a state senator.

After graduating with a political science degree from Pacific University in Oregon, Balash returned to work for Therriault in Juneau and began a fast-track rise in government, going to the governor’s office and then to the Department of Natural Resources as deputy commissioner and now Commissioner.

That career track brings a lot of value in state government, because turnover is frequent in the state capitol and institutional and historical memory are scarce.

Lessons learned

The current gas proposal offers a case in point: Having been involved in the Legislature’s review of Gov. Frank Murkowski’s Stranded Gas Act gas pipeline proposal in 2006 and Gov. Sarah Palin’s Alaska Gasline Inducement Act, or AGIA, plan with TransCanada Corp. in 2010, Balash has a sense of why those plans didn’t work and how to make the new proposal work.

For example, while there are similarities between Murkowski’s 2006 plan and the current one — the state taking an equity interest, for example — there are important differences that are a result of lessons learned from 2006.

The most important of those, Balash said, is the staged, step-by-step approach of this plan, which allows the Legislature, and the public, to take it in bite-sized chunks, a series of approvals up to a hoped-for final decision between the state and the industry partners in 2019.

The 2006 plan was fairly well developed when it was presented to the Legislature and public, and the detail and complexity of it was overwhelming.

While the AGIA proposal that followed under Palin was unsuccessful, it did help set the stage for the current proposal, Balash believes.

He also turns aside criticism of AGIA, in which Balash was involved.

“People quibble about AGIA, but having the state articulate what we want for the first time gave the producers something to work with. Having a counterparty know what it wants is essential to making a deal,” he said.

Two of the AGIA goals were provisions to protect state revenues, through an agreed-on debt-equity ratio in financing, and mechanisms to facilitate expansions of the pipeline to encourage new companies to explore and find gas so that the North Slope, and the pipeline, would not be seen as a monopoly of three large companies. Those concepts are preserved in the state’s proposed new contract with TransCanada.

AGIA also brought TransCanada officially to Alaska, as the licensee, and deepened the pipeline company’s commitment to a gas project. TransCanada would now be the state’s key partner in the new plan, which is the other main difference from 2006.

Having a strong, experienced pipeline company partner is important because it is doubtful the state has the financial strength to take on a major equity stake on its own.

Balash believes AGIA also set the stage for the breakthrough in the state’s relationship with the North Slope producers. That came in 2009 when ExxonMobil Corp. decided to join TransCanada as a partner in its project developed under AGIA.

This was a watershed event.

“It started the companies talking among themselves, and with the state,” Balash said.

This led directly to a settlement of the contentious Point Thomson lawsuits, which had tied up the Point Thomson gas field, a fourth of the North Slope’s resource. Resolving the complex dispute over past work obligations was necessary for any gas project to move forward, Balash said.

Balash was involved in the later parts of the settlement and he gives credit to former Natural Resources Commissioner Dan Sullivan, who Balash succeeded, for the heavy lifting. Under Sullivan’s leadership, the basic terms of the settlement had been agreed to by late 2010, although it was not signed off on by other lease owners at Point Thomson until a year later. Sullivan resigned as DNR commissioner to run for the Republican nomination for U.S. Senate.

Under the settlement, companies agreed to begin development of Point Thomson in a first phase of a large gas project, which is now under construction.

The settlement also led, however, to Chevron selling its leases at Point Thomson to ExxonMobil. That gave ExxonMobil the majority of North Slope gas ownership, and made it the leader today in the drive to develop a large project.

Balash gives credit to others in negotiation of the current gas proposal. Angela Rodell, the state’s revenue commissioner, has played a key role, he said.

“Her ability to quickly grasp the issues and her background in finance were really important as we wrestled with the equity investment issues. We could not have moved along as quickly without her,” he said.

Not just the gas man

Meanwhile, there are other things than the gas project on Balash’s plate.

“I don’t want to be known as just the Commissioner of Natural Gas,” he said. “DNR is the premier state agency. It’s what makes our state go, and allows us to do what we want to do. This is where I want to be.”

Balash sees his role as an asset manager rather than just a resource manager.

 With the assistance of 1,100 employees and professionals in the DNR, he is responsible for 160 million acres of state land, which include the largest state parks in the nation, state forests and minerals and agricultural lands.

Agriculture has historically been a stepchild in the Department of Natural Resources, Balash believes, and has suffered from a lack of attention within the commissioner’s office. He intends to change that.

The state’s agricultural potential came home to him, he said, as the DNR was completing the regional area plans for state lands in the Yukon and Tanana regions of the Interior.

Balash learned that the state lands west of Nenana, southwest of Fairbanks, are prime for agriculture in terms of soil thickness and quality. The area is no longer cut off from infrastructure.

The city of Nenana is now engaged in a planned bridge across the Nenana River, providing access, and Doyon Ltd., the Interior Alaska regional Native corporation, has built an eight-mile gravel road west from the river crossing to a site for an oil and gas exploration well.

Balash also believes the Division of Geological and Geophysical Surveys, or DGGS, a part of the DNR, can among other things expand its airborne minerals mapping program as a catalyst for minerals exploration.

“Whenever the DGGS releases its airborne maps there is an uptick in exploration and mining discoveries follow,” he said.

State parks and forests have untapped potential but both need attention. There is a $50 million backlog of deferred maintenance in the state’s park system, but the new South Denali visitor center taking shape in Denali State Park, south of Denali National Park, offers a template for new possibilities.

DNR is working with the state’s major tour operators to develop South Denali as an alternative visitor experience to the congested “glitter gulch” strip of hotels and development adjacent to the national park, and Balash believes a revenue stream stemming from new vendors could help sustain other state parks.

There are similar possibilities in other big state parks, like Chugach State Park near Anchorage and Wood-Tikchik in the Bristol Bay area.

11/15/2016 - 5:24pm