Month: June 2026

Legislative discussion of Alaska’s system of oil production taxes gained increasing traction this year, as the state grapples with a structural deficit. 

Legislative leaders say they’ve had conversations about hiring consultants that could review the tax system, which has in the past been a key revenue source for the state. Late in this year’s legislative session, Senate leaders unveiled a proposal that would have eliminated some key, company-friendly provisions in the existing law. It didn’t pass, but the topic is likely to generate substantial debate next year.

This week, Alaska’s gubernatorial candidates weigh in on whether they’d change the current production tax system — the foundation of which was put into place by a major 2013 tax rewrite, Senate Bill 21.

We also ask them which musical album they’d take to a remote Bering Sea island, St. Matthew.

Republicans Bernadette Wilson and Treg Taylor did not respond to this edition’s questions; we sent them multiple requests. New entrants into the governor’s race since the survey was circulated include Bill Walker and Lesil McGuire; we’ll add them to our next edition.

Previous surveys include: climate change, schools funding, Alaska’s LNG project, the s-corp tax loophole, the PFD and ferries, and health care costs.

Have suggestions for future survey questions? Email nat[at]northernjournal[dot]com. If you value public interest journalism like this, please consider a voluntary paid membership to Northern Journal.

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Question 1

Alaska’s oil and gas production tax is projected to generate $464 million for the state in the next fiscal year, while companies will produce some $12.3 billion worth of taxable oil, according to the Department of Revenue.

Should the oil and gas production tax structure be changed? Please explain your answer.

Question 1.1

If yes, do you have a target for how much more or less production tax revenue you think the state should be generating? And which aspects of the production tax would you propose changing? Some examples are contained in the latest version of Senate Bill 227, which would reduce the overall production tax level, limit carried-forward annual losses and eliminate per-barrel tax credits and the gross value reduction.

Question 2

To Northern Journal’s knowledge, Alaska doesn’t have many desert islands. It does, however, have St. Matthew Island in the Bering Sea, which is one of the most remote places in the state.

If you were marooned on St. Matthew, which record, CD, tape or digital music album would you want to keep you company, and why?

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Republican podiatrist Matt Heilala

1. I remain agnostic on whether Alaska’s oil and gas production tax structure should be changed pending advisement from oil and gas tax experts. Any evaluation of the tax structure must have nothing to do with budgetary shortfalls or fiscal gaps but must be based on fair market approaches and what is feasible for industry to choose Alaska as their number one choice if they invest, creating stable high paid jobs for working Alaskans. Each project must be negotiated separately for the unique needs of them.

Current considerations and the proposals being discussed are generally threatening projects from moving forward. They create uncertainty, reduce competitiveness, and discourage companies from committing capital here.

This last week in Florida, governors from 11 states in the south and southeast convened at the Boom Belt symposium discussing their basic principles that have created a boom for their respective states, among them low and stable tax regimes for industry. There is no excuse that Alaska is not a Boom Belt-type state as we have far more assets, resources, and energy opportunities than all of those 11 states combined.

Our responsibility is clear: get our state to genuine prosperity so our young adults choose to live, work, and raise families right here in Alaska. 

1.1. I have no target for how much more or less production tax revenue the state should be generating. Our focus must be on creating the conditions that attract major new investment and increased production.

Blanket limits on carried-forward losses or elimination of credits should be approached carefully if they introduce new uncertainty that could still deter projects.

Current proposals are threatening forward momentum by keeping Alaska less attractive than competing jurisdictions. We must fix that so companies choose Alaska first, delivering the high-wage jobs that keep our families and our young people here.

2. If marooned on St. Matthew, I would keep “The Joshua Tree” by U2. As a teen, this album was my constant companion during my tough first year skippering in Bristol Bay at age 18. While I love alternative acts like The Cure, OneRepublic, Blue October, Imagine Dragons, and The XX — plus classics like Pink Floyd — its anthemic sound and themes of searching, hope, resilience and longing perfectly match this remote Bering Sea isolation.

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Democratic former state Sen. Tom Begich

1. I’ve called for real change in oil and gas taxes. Our average take for decades —taxes and royalties — was 27% of gross. In the Palin Administration, it was even higher: 36-38%. After 2013’s SB 21, that average fell to 16.5–18% of gross. SB 21 secured the industry lower taxes, credits, and cash payments while Alaskans lost our fair share. They promised increased throughput and employment, but those never materialized. Instead, majors left and BP sold to a company that used a loophole to forgo $100 million in annual taxes. That pattern will repeat if we don’t change policies now. We must: 1) modify our corporate tax to eliminate the “Hilcorp Loophole”; 2) eliminate the tax credits for our legacy fields — they’re fully developed, made profit and don’t need these credits which lower our effective tax rate to 4%; and 3) ensure tax policy, at the very least, returns us to our historic 27% threshold — no different, and even less, than most jurisdictions in the world. The multinationals using our oil operate in one of the safest areas in the world. As oil regions are threatened, they know they have to develop their product here. As they earn record petroleum revenues year on year, we should at least get our fair share. As governor, I will.

1.1. I lay out those changes in the answer above. Since SB21 we have received $4.5 billion in revenue, but paid out $5.6 billion in production tax credits. That just doesn’t make sense. It’s welfare for multinationals. We should also “ring fence” — that is to say, ensure that we don’t apply tax incentives and production cost write-offs for new production against revenue generated from older production. Incentivize development where appropriate, but don’t give credits to fields that are already mature. These are Alaska’s resources and should be used for Alaska’s future.

2. I hate to say this, but if you are marooned you won’t have electricity – so I’d take a guitar and write an album reflecting the beauty of rural Alaska and the Bering Sea. Never get bored of writing.

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Click Bishop, Republican former state senator

1. When we talk about total oil production, it’s important to keep in mind that Alaska collects oil revenue in four main ways: royalties, production taxes, property taxes, and corporate income taxes. The total amount of taxes paid to the state comes from more than just the production tax. Also, Alaska and the North Slope are more expensive places to develop than other states.

Just last week, we celebrated the first oil production from Pikka, and we are seeing Willow start to come online too. These projects took literally billions of dollars of upfront investment to accomplish. To keep more projects moving forward, our state needs to provide fiscal stability for this kind of investment to help bring production from other new fields.

Any changes in oil and gas taxes must be made in a way that makes sense and recognizes that we have industry partners to develop the resource and increase production. We see that happening today, as the Legislature is currently in a special session to consider a proposal by Gov. Dunleavy to change the property tax laws related to the development of North Slope natural gas.

1.1. Alaska has a long history of changing its oil tax policy, often every seven years or so. This is one of the longest periods without a major change. Rather than setting an arbitrary target for production tax revenue, my goal is a stable, predictable tax structure that encourages investment, supports new production, and ensures Alaskans receive a fair return. As governor, I would bring together industry leaders, lawmakers, and the administration to review the system before proposing changes. Through a collaborative process, we can develop durable policies that provide certainty for investors, taxpayers, and Alaska’s future.

2. Creedence Clearwater Revival’s Greatest Hits. It speaks for itself.

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Dave Bronson, Republican and former mayor of Anchorage

1. Alaska collects oil revenues through a combination of royalties, production taxes, property taxes and corporate income taxes. People often focus on the state’s 4% minimum production tax, but that single figure does not reflect the full amount oil producers pay to the state. When all revenue mechanisms are considered, Alaska’s effective government take is approximately 10.6% — more than twice the roughly 4% average in other oil-producing states.

Equally important is the need for stability and predictability in Alaska’s tax and fiscal policies. Oil and gas projects require enormous upfront investments and often take years, if not decades, before companies realize a return on investment. Investors make decisions based on the rules in place when those commitments are made. So in short: No. Continually changing the tax structure or altering the economic playing field in the middle of the game creates uncertainty, discourages investment and undermines long-term development. Sound business policy requires consistency so companies can confidently invest, create jobs and develop Alaska’s resources while providing sustained revenue to the state.

1.1. Sound business policy depends on consistency and predictability. Companies are more willing to invest, create jobs, and develop Alaska’s resources when they can rely on a stable business environment. These investments generate long-term economic benefits and sustained revenue for the state. Altering the tax structure risks undermining the strong partnerships that currently exist and could discourage future investment by creating concerns about an unpredictable and constantly changing regulatory landscape.

2. Creedence Clearwater Revival — Cosmo’s Factory

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Democratic state Sen. Matt Claman

1. Alaska adopted the current net profit production tax structure, SB 21, in 2013. It has successfully encouraged major investment in our oil fields. But after 13 years, natural production decline and rising industry costs make it the right time to review, update and modernize the structure.

Alaskans want a strong industry, a reasonable tax structure that encourages continued investment and a fair share for the state. Alaska’s tax structure is among the most complex in the world. We should work to modernize and simplify that structure to better support industry and better protect the state’s fair share, including when oil prices are low.

As governor, I will lead an effective, collaborative process with the Legislature, industry, and Alaska stakeholders to modernize and simplify our oil and gas production tax. The work will include review of the minimum tax floor (currently 4%), the per-barrel credits, and other key provisions. While this effort will take time — two years or more — the outcome will be less risk for the state in low price environments and a simplified system that reduces administrative burden.

1.1. N/A

2. Bruce Springsteen, Born to Run. I’ve liked the album since it came out over 50 years ago. It has good songs, good rhythm, a trumpet solo, harmonica riffs and a hopeful message for getting off the island and back home to family and friends.

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Former Alaska revenue commissioner Adam Crum, Republican

1. No.

I disagree with the premise of the question because it focuses on only one component of the revenue Alaska receives from oil and gas. While the production tax is projected to generate about $464 million next fiscal year, that is only part of the state’s petroleum revenue stream.

According to the state’s spring forecast, Alaska is expected to receive $1.883 billion in unrestricted petroleum revenue and another $549.8 million in designated or restricted petroleum revenue, for a total of roughly $2.433 billion from the industry. Looking only at the production tax significantly understates oil and gas’s contribution to revenue.

Just as importantly, Alaska is projecting an increase in oil flowing through the trans-Alaska pipeline system for the first time in many years. That is the result of private-sector investment made possible by a stable and predictable tax system.

Alaska has spent decades changing oil taxes and creating uncertainty. We are finally seeing the benefits of stability. My focus is not on changing the tax structure but on increasing production, attracting investment and putting more oil in the pipeline. More barrels mean more jobs, more economic activity and more revenue for Alaska.

1.1. As stated above, I oppose changing Alaska’s oil tax structure. We are finally seeing the benefits of stability through record investment, strong lease sales, major new developments, and renewed global interest in Alaska’s resources. Companies make investment decisions on projects that span decades, not election cycles. Constantly changing the rules creates uncertainty and discourages investment.

Because I do not support changing the tax structure, I do not have a target for increasing or decreasing production tax revenue. My goal is to increase production. More barrels moving through the trans-Alaska pipeline system generate more jobs, more economic activity, and more revenue for Alaska under the current system.

2. I have eclectic taste. If I have to choose, I’d go with Guardians of the Galaxy Awesome mix vol. 1 and 2 because of its diverse genres. It has “Spirit in the Sky” by Norman Greenbaum and “Ain’t No Mountain High Enough” by Marvin Gaye and Tammi Terrell. Vol. 2 has songs like “Brandy” by Looking Glass, plus Sam Cooke, ELO, Glen Campbell and Jay and the Americans. You can listen to these on repeat.

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Traditional healer Meda DeWitt, independent

1. Yes. Alaska’s Constitution promises Alaskans the maximum benefit from our shared resources (Art. VIII), and right now, we are leaving money on the table. By the Department of Revenue’s own projection, $464 million on $12.3 billion of taxable oil is an effective production tax of roughly 3.8%, below the 4% floor the law is meant to guarantee. Decades of mismanagement in Juneau left us a net-profits system that analysts call one of the most complex in the world, layered with deductions, per-barrel credits, and a gross-value reduction that has allowed some producers to pay little in years when they pumped billions out of the ground.

   We can do better, and we can do it without punishing working families. I support moving toward a simpler, gross-based structure that is predictable for companies and honest with Alaskans, and closing the corporate income tax loophole that lets a major North Slope operator pay no state corporate tax at all. Maximum benefit is not anti-development. It is the deal our founders wrote down, and Alaskans deserve to see it honored.

1.1. My target is the constitutional one: a fair share for the people who own the resource. As a benchmark, the gross-tax approach in SB 227 was projected by its sponsor to roughly double current oil production revenue, moving us from about $464 million toward the $900 million range, with no new tax on residents. I would eliminate the per-barrel credits and the gross value reduction that erode the 4% floor, and tighten the carryforward of losses so deductions cannot wipe out our take in high-price years. I favor a transparent gross-based rate paired with our royalty, with the precise rate set through open modeling with the Legislature rather than behind closed doors.

2. A CD of all the Elder and family interviews I have done over the years, with every recording of my kids’ voices mixed in. Those recordings hold our language, our stories, and the people who made me. Marooned at the edge of the Bering Sea, I would not be alone for a second. The Elders would keep teaching, my kin would be around me, and I would hear my children laugh.

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Mat-Su borough mayor Edna DeVries, Republican

1. I would consider support restructuring but only after we have put a restraint on our expenditure side of the budget.

Simplify the system so Alaskans and the production payers have a more transparent system. So all can see what we’re actually getting.

Modestly increase the state’s share at higher prices while preserving competitiveness at lower prices.

Prioritize stability and predictability over special‑interest carve‑outs and opaque credits.

In short, we should change the structure to secure a fairer, more transparent share for Alaskans while keeping investment viable. In many ways, the state has been a very greedy animals.

1.1. I am interested in perusing the following sections of committee substitute for Senate Bill 227: Section 2: Reduces production tax from 35% to 17%. Section 4: Creates a new subsection for a payment schedule. Section 12: Creates a new subsection to establish a production tax value for oil produced on and after January 1, 2027. Section 14: Limits carry-forward annual loss language to 40% of annual tax liability.

2. Thankful, Old Rugged Cross, Battle Hymn of the Republic, and Just as I am.

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Shelley Hughes, Republican former state senator

Alaska’s oil and gas production tax cannot be evaluated in isolation. The state collects oil revenue by four methods: royalties, production taxes, property taxes and corporate income taxes. Using only one of these — the production tax, especially the 4% minimum by itself — misrepresents what companies pay.

Alaskans should keep in mind:

• Alaska’s total effective government take is 10.6%, 2.5 times the 4% average in other oil producing states.

• In FY25, the industry paid roughly:

• $1B+ in royalties
• $700M in property taxes
• $600+M in production taxes
• $130+M in corporate income taxes

• Alaska is a costly and often risky operating environment with long timelines from discovery to first oil, making cost recovery critical.

Before changing our production tax, policymakers must study the actual tax numbers alongside global competitiveness, and whether Alaska is deterring new investment. Stability, predictability and competitiveness matter if the goal is more production, more jobs, and more revenue long term.

1.1. Any changes to production taxes should focus on one goal: increasing long-term state revenue by encouraging sustained production, not short-term gains that discourage investment.

Rather than setting an arbitrary revenue target, Alaska should focus on policies that increase throughput in the trans-Alaska pipeline system, because higher production also grows royalties, property taxes and corporate income taxes.

Any reform should preserve the ability to deduct legitimate operating and capital costs, avoid making Alaska an outlier at the top of the global cost curve, and evaluate limits on losses or credits only in the context of competitiveness and project economics.

The best way to grow production tax revenue is to grow production.

2. As I would be dining primarily on voles, such fine cuisine requires the “Ratatouille” soundtrack. As for aural delivery method, I’d have to go with the LP so I can spin it when the battery runs out. (This response honors my recently deceased husband who loved to crack jokes and who also spent time hanging out in the Bering Sea — on St. Lawrence Island — caring for patients.)

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Jonathan Kreiss-Tomkins, Democratic former state representative

1. Yes.

Most urgently and obviously, the S-corp loophole that lets one large producer (Hilcorp) skip the corporate income tax that others (e.g., ConocoPhillips) pay makes no sense. The loophole must be closed and the playing field must be leveled.

I am also the only candidate for governor who voted against SB 21 back in 2013. While I felt that the pre-2013 tax structure (ACES) needed to be amended in various ways, I felt SB 21 was a substantial overcorrection. More specifically, I felt that Alaskans conceded too much revenue upside in high price environments with SB 21 (such as this year, when North Slope crude has sold for well north of $100/bbl).

More broadly, I would like to see a fair, durable structure. We’ve relitigated oil taxes every few years for a generation. Sometimes industry has agitated for changes to our tax structure (as was the case with SB 21); sometimes it’s been Alaskans concerned the state is not getting its fair share. Ideally, we settle on a structure that is fair for all parties, and that can last for decades.

1.1. SB 227 raises important policy questions. Carried-forward losses, per-barrel credits, and the gross value reduction are all policy levers that need a serious look. Whether each is trimmed, capped, or left alone is a broader conversation for legislators, producers, and the Department of Revenue.

I will commit to championing a transparent oil tax reform process that results in a tax structure that is fair for Alaskans and also continues to promote North Slope investment.

2. Dire Straits’ Brothers in Arms. I grew up in the CD era. In my late teens I went on a long trip by myself and brought a CD player and only a few CDs, including Brothers in Arms. It got a lot of play and the trip made a lot of memories. The album has a special place in my heart.

This story was originally published by the Northern Journal.

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Alaska school districts that have grown to rely on international teacher hires are likely to do without them this year, even after a federal judge blocked the Trump administration’s fee hikes for highly skilled worker visas on Monday.

The Trump administration raised the fee from $5,000 to $100,000 last September, which put Alaska school districts’ international teacher hiring on hold. Districts have increasingly relied on international hiring to fill an ongoing teacher shortage across the state, particularly in rural and remote districts. The nearly 2,000% cost increase put the visas out of reach for districts that are already facing severe budget deficits and school closures.

Lisa Parady, executive director of the Alaska Council of School Administrators, a non-profit leadership and advocacy group that supports districts in hiring, said the court ruling was welcome news. However, she said there is concern the federal government could appeal and reinstate the fee. 

“So that puts us in a really hard place. We are thrilled because we believe this is the right interpretation of the law, and we really hope that it will be sustained, and that the government will not be able to get a stay or would lose in an appeal, but in the meantime we’re still a little bit in limbo,” she said.

She said that school districts are unlikely to hire through the H-1B visa program now, due to the risk of losing tens of thousands of dollars of application processing fees if the federal government appeals the court decision successfully. 

“The chance of taking a risk of losing those fees, if they could submit now, is just a risk. And I think our districts are largely risk averse because they don’t have those kinds of funds to take risks with,” she said. 

Jennifer Schmitz, director of the Alaska Educator Recruitment and Retention Center, a division of the Alaska Council of School Administration, said some districts previously lost processing fees and even new international hires from the Philippines when the Trump administration enacted the increased visa fee last fall.

“Most districts are going to want to wait and watch over the next month or two and see what happens, and then maybe move forward,” she said.

Currently, roughly 570 international teachers are working in Alaska via the visa program. And there are over 1,200 teacher and staff openings in Alaska posted on a job board run by the Alaska Educator Retention and Recruitment Center.

The H-1B visa is valid for six years. As those Alaska-based teachers’ visas expire in the next several years, Parady said Alaska schools will reach a crisis point for hiring.

“We’re going to be in a full-blown crisis, because we don’t have people standing in line to fill those positions,” she said. “We have been operating in the largest crisis and educator shortage in America, and at the local level in Alaska’s the worst crisis we’ve ever seen. And so while we aren’t feeling the full effect of those not being available to districts, we’re going to. Unless this terrain changes.”

The Alaska Legislature unanimously passed a resolution in May that urges the Trump administration to waive the steep visa fee to allow the continued recruitment and hiring of international teachers. 

Last year, Republican U.S. Sen. Lisa Murkowski introduced legislation to create an educator exemption from the increased fee. After the Monday ruling, her office said she will continue to work with the U.S. Secretary of the Department of Homeland Security, Markwayne Mullin to create an administrative waiver from the fee to help bring teachers to Alaska.

“I will continue working to eliminate this fee permanently so that Alaska’s students are receiving the best education possible, regardless of the outcome of future legal challenges,” she said in a social media post on Monday.

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Abortion-rights advocates filed a lawsuit in Alaska Superior Court on Thursday to overturn a state ban on telehealth for abortion services.

The lawsuit was filed in Anchorage by Planned Parenthood Great Northwest, Hawaiʻi, Alaska, Indiana and Kentucky.

It targets an element of state law that requires patients receiving abortion services to be treated on-site in hospitals or other facilities approved by the Alaska Department of Health or in federal government hospitals.

That requirement bars the use of telehealth for the prescription of abortion-inducing medicine, which advocates say is a breach of the Alaska constitution’s guarantees of privacy and equal protection.

Alaskans are allowed to use telehealth for numerous other medical services, so the ban on its use for abortion services violates patients’ rights to equal protection, the lawsuit argues.

Past court rulings have confirmed that Alaskans have the right to abortion under the state constitution’s privacy provisions, but the telehealth ban compromises privacy rights by taking away the option for medical abortions at home, which many patients prefer, the lawsuit also argues.

In Alaska, where a significant percentage of the residents live off any connected road system, the telehealth ban is particularly onerous, the lawsuit says.

“Planned Parenthood’s patients often must travel significant distances to have an abortion in Anchorage or Fairbanks, sometimes at great expense and difficulty, including due to weather conditions,” the lawsuit says.

Filed with the lawsuit was a motion for an injunction barring enforcement of the telehealth ban while the case is pending.

“The restriction creates unnecessary barriers that fall hardest on people in rural and remote communities, survivors of violence, and those already facing economic hardship — sometimes barring patients from care entirely. Simply put, this telehealth ban is yet another unnecessary barrier to abortion access, and Alaskans deserve better,” Rebecca Gibron, president of Planned Parenthood Great Northwest, Hawaiʻi, Alaska, Indiana and Kentucky, said in a statement.

The Alaska Department of Law was not prepared to comment Thursday on the new Planned Parenthood arguments, said Acting Attorney General Cori Mills.

“We will have to review the complaint and have no comment on the specific allegations. As a general matter, the department will defend the law, which carries a presumption of constitutionality and represents state policy validly enacted by the legislature and the governor,” she said by email.

The lawsuit comes at a time when a legal battle is being waged nationally over access to mifepristone, a medicine commonly used to induce abortions. Some states are seeking to outlaw use of mifepristone, though Alaska is not among them.

Planned Parenthood has already won a related case at the Superior Court level with the same arguments about the state constitution’s privacy and equal protection guarantees.

In that case, Superior Court Judge Josie Garton in 2024 struck down a portion of state law that allowed only licensed physicians to perform abortions. The ruling broadened the availability of abortion services, allowing advanced practice clinicians – such as nurse practitioners, physician assistants and certified nurse midwives – to provide the services. Garton had issued an injunction in 2021 that allowed advanced practice clinicians to perform abortions, temporarily blocking enforcement of the physician-only rule while the case played out.

The state appealed Garton’s ruling, and the Alaska Supreme Court heard oral arguments in the case in October.

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The Alaska House of Representatives is planning to vote as soon as Friday morning on a proposal to cut state taxes in order to encourage construction of the proposed trans-Alaska natural gas pipeline.

On Wednesday, the House Finance Committee voted unanimously to advance a bill that would effectively cut taxes on the project by about 85% for 30 years.

Project developers have said the tax break is necessary to keep the project economically competitive in global markets, and the reduction would reduce the cost of natural gas for Alaskans across the Railbelt.

The finance committee — four Democrats, two independents and five Republicans — voted unanimously to advance the bill, indicating a broad level of support for the proposal.

Rep. Will Stapp, R-Fairbanks and a member of the committee, said on Thursday morning that he expects the bill to pass by a “wide, bipartisan margin” on Friday.

Rep. Andy Josephson, D-Anchorage, said he expects the bill to pass the 40-person House by a 3:1 margin. 

“The fight in at least one chamber is over,” he said.

The bill’s fate is less certain in the Senate, where leading lawmakers have repeatedly expressed concerns about possible risks to the state and Alaska natural gas consumers. 

“The bill still has a long way to go. I think we can do better,” said Sen. Bill Wielechowski, D-Anchorage, on Facebook.

The legislature is currently in a 30-day special session that ends June 19, which puts a strict timeline on action.

Under a draft schedule discussed by House lawmakers on Thursday, the House would pass the bill on Friday or Saturday, allowing the Senate to formally receive it on Monday.

The Senate Finance Committee would have a few days to examine the bill and amend it before sending it to the full Senate for a vote. There would be no time for the House and Senate version to be negotiated further: The Senate is expected to present the House with a straight up or down vote on Friday to determine whether legislators in the House agree with the Senate’s changes.

“The way this is going to play out … is that the Senate is going to have the last touch,” said Rep. Calvin Schrage, I-Anchorage.

The version of the bill that passed out of the House Finance Committee on Wednesday does have the support of Dunleavy and Glenfarne.

In a written statement, the governor thanked the committee for its work.

“Alaska has a tremendous opportunity before us, and this bill is a critical step toward making the Alaska LNG Project a reality,” he said on social media.

Glenfarne also praised the committee’s work in a written statement.

“The hard work by committee members produced a thoughtful bill that, if passed by the legislature, will enable Alaska LNG to go forward and unlock the long-awaited benefits of Alaska’s North Slope natural gas resources while protecting the state’s interests,” said Glenfarne Alaska President Adam Prestidge. 

A $54 billion project from North Slope to Cook Inlet

As currently proposed, the Alaska LNG project would involve constructing an 807-mile pipeline from the North Slope to a port on the Kenai Peninsula.

At the northern end would be a multibillion-dollar industrial plant needed to strip carbon dioxide from natural gas produced on the Slope. That carbon dioxide would be injected deep underground to keep it from being released into the atmosphere and contributing to climate change.

If the gas were left untreated, the carbon dioxide would create carbolic acid within the pipeline, destroying it.

At the southern end of the pipeline would be another multibillion-dollar industrial facility that takes the gas and prepares it for shipping via specialized tankers to customers in Asia and elsewhere around the world.

Prestidge has said that tax incentives are “critical” in order for Glenfarne to obtain loans and attract investors for the project.

Under new cost estimates published June 3, Glenfarne expects the project to cost between $44.5 billion and $54.5 billion altogether. The high end of the developer’s cost estimate has gone up by almost $10 billion.

Alaska currently levies a 2% tax on oil and gas property. The pipeline and associated facilities would be exempt from taxation during construction, but Glenfarne is proposing to build the project in two phases: First, the pipeline, which could transmit gas to Southcentral Alaska as soon as 2029, and second, the associated processing plants, which are expected to be online by 2033.

That schedule, coupled with the setup of the property tax, means Glenfarne would be required to start paying taxes before it begins selling profitable amounts of gas.

In March, Dunleavy introduced a bill that proposed a 90% tax cut for the project by replacing the property tax with a tax on gas shipped through the pipeline. 

Legislators held dozens of hearings on the proposal and House legislators even considered a consequential pipeline-for-pensions trade, but no bill passed during the regular session, which ended May 20.

Special session advanced progress on the issue

Dunleavy immediately called a 30-day special session on the issue, and the finance committees in the House and Senate continued holding hearings. 

Those continued discussions helped move the needle, Schrage said. 

“I think more time to talk, time to move it through the committee process, really has been very helpful, and will help to produce a different outcome than last time,” he said, referring to the failed pipeline-for-pension arrangement.

Josephson said Glenfarne’s willingness to offer new cost estimates also helped convince legislators, as did the revelation that Glenfarne was willing to cap the cost of natural gas to Alaska consumers, preventing Alaskans from shouldering any cost overruns. 

John Sims, president of Southcentral Alaska’s largest natural gas utility, told lawmakers that the utility is already in negotiations with Glenfarne on a 30-year contract for gas at no more than $16 per mmBtu. 

That’s above current prices but below the expected cost of imported gas.

Glenfarne’s Adam Prestidge said the company would be open to a cost cap on similar terms for Alaskans in general.

Members of the House Finance Committee adopted that proposal and others in close consultation with Glenfarne. During frequent breaks, legislators would duck into a hallway connected to the committee room to talk with company officials and lobbyists.

Under the draft of the bill finished Wednesday, Glenfarne would pay no taxes for five years after the first gas begins flowing down the pipeline.

For the following 30 years, Glenfarne would pay 6 cents per thousand cubic feet of gas that flows through the pipeline, 13 cents per thousand cubic feet through the North Slope plant, and another 13 cents per thousand cubic feet through the gas liquefaction plant on the Kenai Peninsula.

Ken Alper, an aide to Josephson and adviser to the Finance Committee during its deliberations, said that roughly amounts to an 85% tax cut when compared to the current property tax rate.

Of the collected taxes, 93% would go to boroughs along the route of the pipeline. The remaining 7% would stay with the state.

The new tax rate is conditional. Glenfarne would have to sign labor agreements with local unions, agree to construct a pipeline spur to Fairbanks, and pay $80 million into an impact fund.

That fund would be used to compensate borough governments for costs they incur to deal with as many as 12,000 temporary workers who would be employed building the pipeline.

Only six communities are eligible for the money in the fund: the North Slope Borough, Fairbanks Borough, Denali Borough, Matanuska-Susitna Borough, Anchorage and the Kenai Peninsula Borough. 

Pipeline construction isn’t guaranteed

Even if the current bill passes the Legislature and is signed into law, it doesn’t guarantee a pipeline. 

In presentations to the finance committees, various consultants and experts from the Alaska Department of Revenue have said that the forecast cost of natural gas exported by Alaska LNG is very close to the cost of gas available from other sources internationally.

If the project costs more than anticipated, if natural gas from the North Slope costs more than expected, or if buyers aren’t willing to pay as much as forecast, the pipeline is uneconomical and doesn’t get built.

“I think there is a broad belief that it’s going to be a difficult project to pull off, but we want to give them a chance, and we wish them the best in doing so, because I think most Alaskans do want to see our natural gas brought to be able to benefit Alaskans,” Schrage said.

Stapp, sitting in the halls of the Capitol on Thursday and awaiting the final draft of the bill, said he believes that without the bill, there is a “zero percent chance of a pipeline.” With the bill, “there’s a 10% chance.”

Tomaszewski is more optimistic. 

“I’m looking forward to the groundbreaking ceremony,” he said.

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