Background Information
In 2007 the Alaska Legislature passed AGIA - the Alaska Gasline Inducement Act (Alaska Statute AS 43.90 et. al.). AGIA was intended to encourage expedited construction of a natural gas pipeline that facilitates commercialization of North Slope gas resources, promote exploration and development of oil and gas resources on the North Slope, maximize benefits for Alaskans from the development of our state's oil and gas resource and to encourage oil and gas lessees and other persons to commit to ship natural gas from the North Slope to a gas pipeline system for transportation in Alaska and elsewhere.
To meet this intent AGIA called for establishing a license and enacting statutory requirements for maximizing benefits for Alaskans during and after the construction of a pipeline. The entity selected to be the AGIA licensee was required to put forward a plan for a pipeline project that produces low tariffs (transportation costs) so that tariffs are not a barrier to continuing exploration, development and investment in Alaska's gas basin. Other required commitments include regular expansions of the pipeline, local hire, instate delivery service at reasonable costs and a firm timeline for development.
In exchange for meeting the state's requirements, the successful AGIA project applicant is entitled to certain inducements that will facilitate project development. An AGIA license entitles the licensee to up to $500 million in state matching funds to offset some of the initial risk borne by the project developer, and to a project coordinator who will help facilitate and expedite project permitting requirements.
AGIA also addresses the "upstream" needs of the project. Upstream is where the gas resource is produced, gathered and processed for shipping in the pipeline for delivery to market (the pipeline is "downstream"). AGIA provides for "resource inducements" to encourage North Slope oil and gas producers to commit gas for shipment on the pipeline. An oil and gas leaseholder who commits to ship gas in the pipeline in the first binding open season will be entitled to favorable changes to the state's royalty valuation method and to a 10-year freeze on gas tax rates with the rate set at the start of the first binding open season and beginning at the commencement of commercial operations.
In August 2008 the Alaska Legislature passed House Bill 3001, authorizing the administration to award the AGIA license to TransCanada Alaska. A comprehensive discussion about AGIA and the analysis that went into awarding the AGIA license can be found in the Findings and Determination made by the Commissioners of the Departments of Revenue and Natural Resources.
In June 2010 the project gained momentum when ExxonMobil and TransCanada announced that they had reached terms on a gas pipeline development agreement. This resulted in the creation of the Alaska Pipeline Project (APP). Since its formation, the APP has completed the commercial work necessary to develop an Open Season plan to identify the terms and details under which it would issue a precedent agreement seeking firm transportation commitments from entities interested to commit gas to an Alaska pipeline project. The plan was submitted to the Federal Energy Regulatory Commission (FERC) on January 29, 2010. FERC approved the plan on March 31, 2010. On April 30, 2010, TransCanada Alaska, through the APP, held the first-ever Open Season for Alaska North Slope natural gas. On July 30, 2010, APP announced that it had received multiple bids for significant volumes from major industry players and others. At this time, APP continues to negotiate with potential shippers to reach precedent agreements.
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What's New...
January 2012 AGIA Disbursement Report to the Legislature
Notice of Public Scoping Meeting for APP in Anchorage
APP Filed Draft Resource Reports with FERC
Notice of Cancellation of January 18th Scoping Meeting
Notice of Scoping Meetings for Alaska Pipeline Project
Alaska Pipeline Project
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