06/05/2026
I recently wrote that Glenfarne can build the Alaska natural gasline right now - with no legislation. Instead, they are demanding billions in tax breaks from Alaska. Some insist we just give it to them. No questions asked. I don't think that would be following our fiduciary responsibilties.
What does a fair deal look like for Alaska and Glenfarne? Fortunately, Chair Cathy Giessel of the Senate Resources Committee led 36 hearings on this exact issue. Here is what the Committee concluded a fair deal looks like:
- Property tax break sunset
Glenfarne is seeking a 90% property tax break FOREVER. Worth at least $1 billion per year. According to our Legislative consultant, LNG projects in the Lower 48 sometimes get property tax breaks, but they sunset after 10 years. He testified that a property tax break sunset after 7-10 years was reasonable.
- Cost overrun protection for Alaskans
When the TransAlaska Pipeline was initially proposed, its cost was estimated to be $900 million. It ended up costing $8 BILLION. It didn't matter much to the producers who built it though, because they just raised the pipeline tariff - which they paid to themselves as owners of the pipeline. The increased tariff resulted in more write offs for the oil companies however, which resulted in Alaska losing billions in tax and royalty revenue.
In Glenfarne's case, the only place they could initially pass increased costs are to the consumers of the gas - Alaskans. Glenfarne testified they will not pass the costs of any overruns onto Alaskans. When we put that in the bill, they objected.
- Corporate tax loophole closure
Upon full buildout, Glenfarne will become the most profitable company in Alaska, making $5 billion in profits per year. Yet, because of loopholes in our tax structure will pay zero corporate income taxes, costing Alaska $462 million per year. Glenfarne originally testified they supported closing this loophole. When we put this in the bill, they objected.
- Price protection for Alaskans
The developer has been running ads saying this project will provide low cost gas. Gov. Dunleavy has publicly said this project will result in natural gas costing Alaskans between $4.50-$4.75. Dunleavy's own Dept. of Revenue testified natural gas prices will be, BEST CASE SCENARIO, $22.96 for consumers. If politicians and the developer are going to sell this project on promises of low cost gas, that deserves to be put in statute. So we put a cap of $5 natural gas in the bill. Glenfarne and Gov. Dunleavy objected to this.
-Limit the losses to the State during gasline buildout
Under our existing oil and gas tax structure, expenses for natural gas exploration, development, feeder lines and more are deductible against oil taxes. Because of this, the State will see a reduction of tens to hundreds of millions of dollars in revenue before gas even starts flowing. In working with the Department of Revenue, we identified a way to help fix this - by increasing the gross oil tax floor from 4% to 6%. This was actually a change proposed by Gov. Dunleavy in a different bill. He objected when it was included in our bill.
-The complete subsidization of the Dalton Highway must end
The Dalton Highway is the haul road leading to Prudhoe Bay. It is used predominantly by the oil and gas industry. It needs $450 million in repairs over the next 6 years. Similar to a provision that Gov. Dunleavy proposed in a different bill, we proposed a surcharge of 30 per barrel of oil to help fund these repairs. He objected when it was included in our bill.
- Communities and the State must be fairly compensated during the construction phase of the project.
There will be increased costs for police, fire, schools, roads, infrastructure. We believe the appropriate amounts should be at least $50M for construction impacts and $30M/year for 5 years for community impacts
- Solid repeal language should be included to protect the State and local communities in a variety of situations:
Any property tax cuts should be temporarily repealed if impact payments are not timely made. Any property tax cuts should be repealed if construction on the project does not commence by 2028. Any property tax cuts should be repealed if the pipeline is not fully operational by 2032.
- In order to protect instate businesses and workers, we recommend provisions requiring the use of Alaska contractors and a strong project labor provision.
