Conference committee members include House Speaker Rep. Bryce Edgmon, I-Dillingham, Reps. Calvin Schrage, I-Anchorage, Justin Ruffridge, R-Soldotna, and Sens. Bert Stedman, R-Sitka, Lyman Hoffman, D-Bethel, and Mike Cronk, R-Tok, who unveiled a draft compromise bill for the proposed AKLNG gas line project on July 2, 2026. (Photo by Corinne Smith/Alaska Beacon)
House and Senate conference committee members unveiled a draft compromise bill on Thursday for the proposed Alaska LNG gas line project, pledging that debate, input and revisions will continue on the state tax break legislation up until a floor vote scheduled for July 16.
“We know we have more work to do,” said House Speaker Rep. Bryce Edgmon, I-Dillingham, following the committee hearing. “It’s a complex topic, and our goal today was to first get through the working draft that had, we thought, a lot of areas of compromise between, you know, sort of all the partners involved in crafting the bill.”
The six member conference committee is tasked with negotiating a compromise bill from the versions of House Bill 381, which was passed by the House and Senate in a special session in June.
Amid high political pressure, lawmakers are now in a second special session called by Gov. Mike Dunleavy to hammer out a state tax proposal that is workable for both the state and the project developer, Glenfarne, which owns 75% of the project. Glenfarne executives say the multibillion dollar tax break is essential to the project’s economics — and that it must come before the company determines a final investment decision with investors.GET THE MORNING HEADLINES.SUBSCRIBE
Dunleavy and members of the House and Senate have taken decidedly different approaches to the size and scope of the state tax break for the proposed project. The project would be built in two phases — first, an 807-mile gas line from the North Slope to Cook Inlet, then gas treatment facilities on the North Slope and on the Kenai Peninsula to export gas internationally.
One of the most fiercely debated provisions in the draft compromise is a proposal to apply the state’s corporate income tax to privately-owned oil and gas companies that currently do not pay them. The provision is favored by some lawmakers and was included in the version of the bill passed by the Senate. But Dunleavy has called the tax a “poison pill” and pledged to veto any bill that includes it. Legislative leaders say they will revisit the topic and expect to make changes to the draft.
Edmon called the corporate tax provision the “elephant in the room” and said further negotiation will continue after the holiday weekend. “I’m really looking forward to after this period of what I would call percolation that we come back and make further changes to the bill,” he said.
Rep. Calvin Schrage, I-Anchorage, who chairs the conference committee, said its members will continue hearing input on the draft bill from relevant groups, and many provisions will be further debated and revised.
“We’re going to continue that work, see how far apart the goal posts are, and do what it takes to try and bring those together,” he said. “And again, ultimately arrive with a bill on the floor that we think can be successful, and give this project a chance.”
House Speaker Rep. Bryce Edgmon, I-Dillingham, speaks during conference committee discussions on a new draft compromise bill for the proposed AKLNG gas line on July 2, 2026. (Photo by Corinne Smith/Alaska Beacon)
A spokesperson for Dunleavy said his office is reviewing the new draft bill, called a committee substitute, or CS, and repeated the governor’s objections to the corporate income tax provision, known as the S corporation tax, which was included in the draft bill on Thursday.
“Our initial take on the CS is that while it appears to address several of the harmful provisions for the gasline, it still contains the S corp tax that the governor and the developer have said will hurt the project’s ability to secure financing,” said Jeff Turner, Dunleavy’s communications director in an email.
In the draft compromise bill unveiled Thursday, legislators are offering a significant tax break that would replace the state’s property tax with a volumetric tax on the gas flowing through the gas line after five years, or when the gas flow reaches 500 million cubic feet per day, whichever comes first. The plan includes gradual tax increases over time as gas flows from the North Slope.
Lawmakers have proposed extending a deadline for construction to be completed on the gas line and phase one from 2032 to December 31, 2034. The provision allows the Commissioner of Revenue to review the tax deal if there are unforeseen delays outside of the developer’s control like severe weather or litigation.
The draft bill requires the gas price cap for Alaskans to rise with inflation at the national inflation rate, rather than Alaskan inflation rate, and the increase may not exceed 3% annually. It requires a variety of reporting requirements for labor agreements, filings with federal oversight agencies and construction updates on a public dashboard.
Another provision requires Glenfarne and developers to disclose their investment agreements with foreign companies investing in the project. It requires notice of any “significant changes” in the project’s ownership structure, defined as changes in entities holding more than 5% ownership interest of the gas line or 10% of the gas treatment plants.
“We’d like transparency and forthright information on who’s involved in this project and who owns a piece of that pipeline that’s dividing our state down the middle,” Schrage said.
The draft also contains a provision that prohibits the project developer from seeking payment from the state if the project is abandoned, and requires the developer to return all shares and assets to the state within six months in such a case. The issue was spotlighted by reporting on a confidential draft agreement between Glenfarne and the Alaska Gasline Development Corp. that under some conditions, the state could be ordered to pay in order to take the project back.
“It’s very important that if the state is going to offer tax concessions, that those concessions not then be leveraged against the state for a payout to the project developer,” Schrage said. “In the event that this project goes awry and the developer tries to exit, we don’t want to pay them for our concessions.”
Rep. Justin Ruffridge, R-Soldotna, raises concerns about the local contribution provision for municipalities and required payments for school districts during discussions on the draft tax bill for the proposed AKLNG gas line project on July 2, 2026. (Photo by Corinne Smith/Alaska Beacon)
Rep. Justin Ruffridge, R-Soldotna, raised questions and objections to a provision around how much municipalities’ gas line tax revenue would apply to their school funding formula, known as the local contribution. According to a legislative memo, the Kenai Peninsula would be required to contribute millions more to its school district beginning in 2034.
Ruffridge, a member of the all-Republican House minority caucus, said it was one of several provisions he objects to and cautioned the committee against “putting additional barriers” up for the project.
“We’re seeking maximum government take. I think in here we’ve asked the question, ‘How much can we extract from this project?’ And I think we’ve missed the fact that we are asking potentially to put on the line jobs, cheap energy and potentially a boon to Alaska’s economy in the form of revenue,” he said.
He said the proposal needs more work.
Several members of the House Republican minority flew down to Juneau this week to raise objections to the conference committee process and urge swift action on the bill. A full vote on a compromise bill was tentatively scheduled for Wednesday, but postponed. Technical House floor sessions were canceled on Wednesday and Thursday, to avoid what House Speaker Edgmon called “political hijinks or theatrics.”
House Minority Leader Rep. DeLena Johnson, R-Palmer, and Reps. Dan Saddler, R-Eagle River, and Garrett Nelson, R-Sutton, were among the Republican minority members that traveled to Juneau to encourage urgency on the bill, and attended the conference committee hearing on July 2, 2026. (Photo by Corinne Smith/Alaska Beacon)
“There’s no time for games, and as the presiding officer, I’m not going to play games like this,” he said.
Edgmon said the committee has been deliberating with legislative attorneys, finance officials, various related departments and project developers in a process that would normally take years.
Rep. Donna Mears, D-Anchorage and a member of the House Resources Committee, also attended the conference committee hearing on Thursday and said rushing the process is not in the best interest of the Legislature or Alaskans. She said hammering out a compromise bill that will be approved by a majority of legislators and by the governor is an enormous task.
“Trying to rush through is not feasible. We’re making a lot of big changes, and the details matter,” she said. “And the process today wasn’t obstructionist, it was moving along and making progress, and even without big huge policy decisions, there’s a lot of little things that need to get ironed out.”
Lawmakers said they are tentatively planning for the compromise bill to go before the House and Senate for a full vote on Thursday, July 16. The special session is scheduled to end on July 19.
The Alaska House convened for a third special session and voted to reject a Senate version of a tax break bill for the proposed AK LNG gas line project on June 20, 2026. (Photo by Corinne Smith/Alaska Beacon)
The Alaska House of Representatives on Saturday rejected a Senate-drafted multibillion-dollar tax break for a proposed trans-Alaska natural gas pipeline project, as members of the House declined to abandon a different proposal they drafted.
Members of the House voted down the Senate’s revised bill 12-28, nine votes short of what was needed to adopt the Senate plan. In a separate 0-16 vote, the Senate declined to abandon its version in favor of the House’s plan. Lawmakers will now convene a conference committee with representatives from both bodies to hammer out a compromise agreement.
In an interview following the House vote, House Speaker Bryce Edgmon, I-Dillingham, said objections within the House varied, and lawmakers with the conference committee need time to evaluate the changes.
“Given the breadth and just the wide range of things that happened to House Bill 381 in the Senate last night, you know, we’re going to take that vehicle and use it as a starting point going forward, and we’re going to work very diligently and also with a strong sense of resolve to try to bring it all to an agreement,” Edgmon said.
Lawmakers agreed to reconvene for potential final votes on July 1.
Members of the all-Republican House Minority Caucus huddle outside the House chamber behind the Capitol ahead of a vote to reject the Senate’s version of a tax break bill for the proposed AK LNG gas line project on Saturday, June 20, 2026. (Photo by Corinne Smith/Alaska Beacon)
While conference committees typically negotiate behind closed doors, Edgmon said there will be public meetings as well.
Lawmakers said negotiations would begin soon but there was no confirmed schedule for the conference committee.
From the House, the conference committee will include Edgmon, Reps. Calvin Schrage, I-Anchorage, and Justin Ruffridge, R-Soldotna. From the Senate, the committee includes Sens. Lyman Hoffman, D-Bethel, Bert Stedman, R-Sitka, and Mike Cronk, R-Tok.
At issue is the size and scope of a tax break for the proposed trans-Alaska natural gas pipeline project, known as Alaska LNG.
As currently proposed, the project would include construction of a 807-mile gas line from the North Slope to Cook Inlet, in phase one. In phase two, it would include a new large gas-treatment plant on the North Slope and an export facility on the Kenai Peninsula to export gas internationally.
The House passed the bill with a larger tax break on June 12. The Senate revised the bill, reducing the size of the tax break and passed a variety of changes on Friday, with a smaller tax break on the gas tax, known as the alternative volumetric gas tax, and a plan for gradual increases in tax over time.
Senators also included a variety of changes to the bill, including a previously contentious provision voted down by the House this spring to levy corporate income taxes on privately-owned oil and gas companies that currently do not pay them. That would apply to Hilcorp and Glenfarne, the company developing the LNG project.
The Senate also included amendments to the bill seeking more protections for the state and Alaskans: one an amendment would limit the gas price cap for residents in Southcentral Alaska to rise with inflation and prohibiting developers from passing on cost overruns to Alaskans; a labor-related proposal would require the pipeline builders to pay prevailing wages in the state and employ Alaskans and apprentices. An amendment would require Glenfarne and developers to disclose their ties to foreign companies. Another amendment declared that if pipeline developers abandon their efforts, the project will return to the state at no cost. Currently Glenfarne owns 75% of the project while the remaining 25% is held by the state-owned Alaska Gasline Development Corp. Glenfarne could not seek a buyout from the state if it failed to move forward with the project.
The Senate imposed deadlines on the project, mandating construction of the pipeline and phase one to be completed no later than 2032, and phase two to be done no later than 2036.
The Alaska Senate convened for the third special session on June 20, 2026, voting to move a tax break bill for the proposed AK LNG gas line project to a conference committee. (Photo by Corinne Smith/Alaska Beacon)
Late Friday night, Gov. Mike Dunleavy voiced objections to the Senate’s version of the bill, saying there were “serious questions about all the amendments.”
Friday was the last day of a 30-day special session devoted to the gas pipeline project. Dunleavy has proclaimed another 30-day special session, which began Saturday, and legislators spent the morning taking procedural actions that allow them to resume work without interruption.
Dunleavy urged lawmakers to work quickly, but four senators were excused absent from Saturday’s votes, and members of the House rapidly left the Capitol on Saturday afternoon in order to catch flights home from Juneau.
Edgmon said he expects negotiations with the governor’s office to continue.
“If he’s not involved, and that’s going to make the pathway ahead problematic,” he said.
A spokesperson for Dunleavy’s office said on Saturday that the governor supports the bill moving forward to a conference committee.
“Governor Dunleavy is encouraged by House and Senate leadership’s decision to send HB 381 to a conference committee,” said Jeff Turner, Dunleavy’s communications director, by email. “It’s an opportunity for both bodies to agree on a version of the bill that can incentivize the Alaska LNG Project while still providing steady, predictable revenue to communities along the pipeline corridor using a volumetric tax mechanism.”
The governor and members of the House were particularly opposed to the corporate income tax provision.
House Majority Leader Chuck Kopp, R-Anchorage, joined a news conference with Gov. Mike Dunleavy on June 19, 2026. (Photo by Claire Stremple/Alaska Beacon)
“It is considered economically counterproductive at the moment the state is trying to attract final investment decisions on phase one and phase two of the gas pipeline,” House Majority Leader Rep. Chuck Kopp, R-Anchorage, said on the House floor ahead of Saturday’s vote, adding that he believes the provision undercuts certainty and competitiveness of the project.
“These amendments were not vetted or extensively explained on the other body’s floor, and we do not yet know their full impact,” Kopp added.
But Sen. Bert Stedman, R-Sitka, who co-chairs the Senate Finance Committee said lawmakers still need more financial information from Glenfarne to determine if that’s the case, and to determine the project’s economic viability.
“They still haven’t clearly delineated how much benefit or burden the property tax existing structure actually is on it,” Stedman said after the Senate vote. “Even if we made no property tax on the gas line, it does not make it economic. It helps economics, it does not get it over the hurdle.”
“We gotta protect the treasury, that’s our job,” Stedman added. “If you’re going to give concessions, they need to show us why they need them, and the impact.”
If legislators do not adjourn early, the new special session is set to end on July 19.
Senate Minority Leader Mike Cronk, R-Tok, listens to a speech by Rep. Will Stapp, R-Fairbanks, on Thursday, Jan. 22, 2026, during a joint session of the Alaska Legislature. (James Brooks photo/Alaska Beacon)
By: James Brooks, Alaska Beacon
Senate Minority Leader Mike Cronk, R-Tok, listens to a speech by Rep. Will Stapp, R-Fairbanks, on Thursday, Jan. 22, 2026, during a joint session of the Alaska Legislature. (James Brooks photo/Alaska Beacon)
The 14 members of Alaska’s Senate coalition majority met behind closed doors twice on Wednesday to decide the fate of a multibillion-dollar tax break for the proposed trans-Alaska natural gas pipeline.
The state House voted 34-5 on Friday to approve the break, which also has the approval of Gov. Mike Dunleavy and pipeline developer Glenfarne, but the tax break won’t become law unless it also has the approval of the Senate.
As of Wednesday afternoon, there were not 11 majority votes for the bill, which would replace a 2% property tax on the project with a tax on gas pumped through the line.
Under current law, the pipeline would generate $47 billion for the state and boroughs along the route through 2062, according to figures from the Alaska Department of Revenue.
The House-passed bill would drop that figure to about $31 billion. The $16 billion difference is the result of the switch from a property tax to a gas tax. The state would still collect production taxes, royalties and other fees.
Lawmakers are also interested in lowering natural gas costs for Alaska residents. If built as planned, the pipeline would provide in-state gas to the Railbelt at a rate cheaper than imports.
In a newsletter, Sen. Loki Tobin, D-Anchorage, became the latest lawmaker to voice opposition to the House’s version of the bill.
“A 90% tax cut for Glenfarne raises concerns that our state and local governments may not have enough funds to support essential services such as sanitation, schools, and roads, which directly impact our communities and families,” she wrote in part, referring to the property tax cut.
Glenfarne has said the bill is critical in order to obtain financing for the Alaska LNG project, which would build an 807-mile pipeline from the North Slope to Cook Inlet and major processing plants at either end of the line.
Senators are considering amendments to the House bill that could ease the bill’s passage in the Senate, but Glenfarne has warned the Senate Finance Committee against making big changes.
“We’re encouraged by the House progress and strong outcome and are optimistic the Senate will pass a bill that works for Alaska by helping enable this project,” said Tim Fitzpatrick, a spokesperson for Glenfarne.
On Wednesday, the Senate majority canceled a scheduled meeting of the full Senate and two scheduled meetings of the Senate Finance Committee, which is considering changes to the bill.
The next meeting of the full Senate is scheduled for 11 a.m. Thursday.
Lawmakers are in a 30-day special session that ends at 11:59 p.m. Friday. If they don’t pass the tax-break bill by that deadline, the bill will die.
Dunleavy could call legislators into another special session, and while the governor’s office declined to say whether he is prepared to do so, the six members of the Senate’s all-Republican minority caucus said they have seen a draft special-session proclamation.
In separate interviews, all six said they support the House version of the bill, with only minor technical fixes needed.
Sen. Robb Myers, R-North Pole, said that while the pipeline isn’t guaranteed to happen if the bill passes, it’s guaranteed to not happen if the bill doesn’t pass.
Sen. George Rauscher, R-Sutton, offered a similar position.
“Glenfarne has to have numbers that work, or they can’t build it. We can ask for anything we want — we can demand all the taxes — but in the end, if it isn’t built, we don’t get anything,” he said.
Senate Minority Leader Mike Cronk, R-Tok, called the majority’s 11-vote rule “pathetic.”
“We should all have the ability to cast a yes or no vote on this,” he said, noting that collectively, the minority’s six members represent more than 180,000 Alaskans.
Cronk said he believes the Senate will ultimately vote on the issue.
“I’m hoping we all get our chance to say yes or no. That’s what Alaskans expect. It shouldn’t be dictated by 11 people,” he said.
Cronk and Sen. Cathy Tilton, R-Wasilla, observed that the Senate Majority already broke its 11-vote rule during the regular session by calling up a pension bill, a medical licensing bill and a bill pertaining to gambling.
Despite Wednesday’s lack of action, Sen. Robert Yundt, R-Wasilla, remained optimistic, saying he believes the Senate will ultimately bring the pipeline issue to a vote.
“A majority of the state depends on natural gas. We’re either going to be using our own or importing, and when all is said and done, I think we’re going to be using our own,” he said.
President Jimmy Carter takes questions at a press conference on June 30, 1977. (Photo by Marion Trikosko/Provided by the Libarary of Congress)
The president of the United States urged lawmakers to do everything they can to make the long-desired Alaska natural gas pipeline a reality.
“It is in the national interest to bring Alaskan gas reserves to market at the lowest possible price for consumers,” the president said in an official message. “Every effort must be made to ensure timely completion of the pipeline at the lowest possible cost consistent with Federal regulatory policies.”
The president was Jimmy Carter. The year was 1979. The Alaska natural gas pipeline project was already several years old, with official presidential approval issued two years earlier. The 4,748-mile pipeline project, which Carter touted as “the largest privately financed energy project ever undertaken,” was to be completed by 1984 at a cost of $10 billion to $15 billion, according to the approved plans.
That project never happened, nor did any of the other iterations of an Alaska natural gas pipeline plan that followed.
Now, five decades later, Gov. Mike Dunleavy is describing an alternate version of the yet-unbuilt pipeline as an imminent megaproject.
“For decades and decades and decades, this gasline project has been a dream of many Alaskans. And we’re closer today than we ever have been,” he said in comments posted on Facebook on May 29.
As Carter did, Dunleavy uses superlatives to describe the plan. “That project will be the largest on the face of the earth, probably the largest in terms of investment ever,” he said in opening remarks on May 19 at the Alaska Sustainable Energy Conference in Anchorage.
Dunleavy has called the legislature into a special session to consider sweeping tax concessions that he says are necessary to make the project work economically. His plan, which the legislature is considering, would eliminate nearly all of its state and municipal property taxes on project-related infrastructure in exchange for the promise of a share of the revenues once gas starts flowing through the line.
The current project sponsor is Glenfarne LLC, a New York- and Houston-based company founded in 2011. Glenfarne, a privately held investment and management company specializing in energy, entered the Alaska gas pipeline history last year when it acquired 75% of a project promoted by the state-owned and state-financed Alaska Gasline Development Corp. It has never built or operated a major natural gas pipeline or LNG facility.
Glenfarne says the project would cost between $44.5 billion and $54.5 billion.
Decades of proposals
The Glenfarne plan, for a phased-in pipeline to carry natural gas from the North Slope to a liquefaction plant in Cook Inlet, is the latest in a long series of pipeline plans and campaigns that emerged over the past half century.
The oil fields on Alaska’s North Slope that have been producing since 1977 also hold vast quantities of natural gas, as is common in petroleum basins. Known natural gas reserves on the North Slope, mostly at Prudhoe, total about 35 trillion cubic feet, and experts say there is certainly more natural gas to be discovered.
So far that gas has been considered “stranded” — too isolated to be marketable. Instead of being sold to utilities or other users, the gas that is brought to the surface with oil produced on the North Slope is reinjected into the reservoirs, where it helps build pressure that will enable more oil recovery. Each day, about 8 billion cubic feet of natural gas has to be reinjected, an amount equivalent to the daily natural gas consumption in Japan in 2024.
A map shows various Alaska natural gas pipeline routes proposed as of 2011. (Map from the Congressional Research Service publication, “The Alaska Natural Gas Pipeline: Background, Status, and Issues for Congress,” by Paul W. Parfomak, Specialist in Energy and Infrastructure Policy, June 9, 2011)
The prospect of selling that gas tantalized Alaskans and the energy industry and inspired a wide range of proposals that have come and gone over the past decades.
Some proposals were for overland pipelines through Canada, as the Carter-approved plan proposed. The main alternatives to the Canada route have been plans for an “all-Alaskan” line taking gas from Prudhoe to Valdez, the site of the trans-Alaska oil pipeline marine terminal, or to Cook Inlet for processing into liquefied natural gas to be transported by tanker vessel. Other plans proposed shorter lines delivering to in-state markets and an over-the-top route that would skim the Arctic coast before connecting with a Mackenzie Delta pipeline in the Northwest and Yukon Territories — a Canadian project that, like Alaska gasline, never materialized.
There have been plans for projects that would skip the pipeline construction altogether. In the early 2000s, BP experimented with a gas-to-liquids technology that might produce synthetic oil that could be shipped down the existing trans-Alaska pipeline. BP set up a facility in Nikiski for the project but closed it in 2009. Two pending proposals, one from a company called Qilak and another from a company called Polar LNG, call for natural gas deliveries directly from the North Slope by icebreaker. Even those are not new; the icebreaker idea was considered in the 1980s by Arco Alaska.
Gas pipeline records filing shelves in the Alaska Resources Library and Information Services, seen on June 8, 2026, inlude the multi-volume draft environmental impact statement and final environmental impact statement on the Alaska Stand Alone Gas Pipeline, known as ASAP. (Photo by Yereth Rosen/Alaska Beacon)
Also dating back to the mid-20th century are various task forces, commissions, coordinating offices, approved state and federal legislation, enthusiastic support from presidents, completed environmental impact statements and completed permits. There were various tentative agreements with oil producers, major corporations and Asian governments for participation the project. There were numerous special sessions of the Alaska Legislature — and, at the urging of project sponsors, financial inducements assembled by the state and federal governments.
A list of projects that surfaced through 2021 is available from the Alaska State Library, though it comes with a caveat: “It does not purport to be complete.”
Not one foot of gas pipeline has been laid, but plenty of space is taken up on Alaska library shelves by rows and rows of studies and reports produced since the 1970s.
Records from 1975 Federal Power Commission proceedings on the porposed El Paso Alaska Company natural gas pipeline project fill several shelves in the Alaska Resources Library nad Information Services at the University of Alaska Anchorage campus. Even before the trans-Alaska oil pipeline was completed, El Paso was seeking to build a parallel pipeline to carry North Slope natural gas to a liquefaction facility at tidewater. President Jimmy Carter chose an overland pipeline plan to run through Canada instead of El Paso’s LNG project. (Photo by Yereth Rosen/Alaska Beacon)
Dunleavy insists that the Glenfarne project is different, though he conceded in a May 21 presentation that “people have heard about this project forever.”
In a presentation at the Sustainable Energy Conference in Anchorage, Dunelavy cited numerous factors that he said made the current plan different from past failed plans.
He listed energy disruptions caused by the war in Iran and Russia’s invasion of Ukraine, the rise of technologies that have dramatically increased the need for energy, the impending shortage of Cook Inlet natural gas that has long fueled Southcentral Alaska, the permits that the Alaska Gasline Development Authority already secured — plus the ardent support of President Donald Trump, who has pushed for aggressive resource development in Alaska since he returned to the White House in January of 2025.
“When you get all the geopolitical stuff that’s changed the world and then you get Trump 2.0 in here and data farms and cryptocurrency and electrification, it’s a different project,” Dunleavy said at the conference.
But Larry Persily, a veteran Alaska journalist and past head of the federal gas pipeline coordinating office that was originally established by President George W. Bush in 2004, sees a lot of wishful thinking surrounding the Glenfarne plan.
“We want to think it’s different. We want the pipeline. We want the revenues. We want the jobs. And we want the promise of affordable energy,” Persily said.
He cited ongoing “pep rallies” to help convince people that things are different this time, like the June 2 event hosted by the Greater Fairbanks Chamber of Commerce.
“We have a sales job, and it’s ginned up a lot of enthusiasm — misplaced, I believe,” he said.
Past optimism
A folding map that was part of a Yukon Pacific promotional flier shows the planned route for a pipeline from Prudhoe Bay to Valdez, where natural gas was to be liquefied. The map was published in the 1990s. (Photo by Yereth Rosen/Alaska Beacon)
Of the past plans, Persily said, the most similar to Glenfarne’s proposal was the Yukon Pacific plan for a LNG project, which emerged in the 1980s.
Yukon Pacific’s Trans-Alaska Gas System, also referred to as TAGS, envisioned a gas pipeline paralleling the trans-Alaska oil pipeline to a liquefaction plant in Valdez, from where tanker vessels would take LNG to Asian markets. The estimated price tag was $12 billion.
The Yukon Pacific plan was vetted through two environmental impact statements, one for the pipeline and one for the terminal. The company had permits in hand, including long-term federal and state right of way authorizations.
It had backing of the Bush and Clinton administrations. It had popular support, including from two-time Gov. and former U.S. Interior Secretary Wally Hickel, who founded Yukon Pacific in 1981 but relinquished his shares in the company to avoid any conflict of interest. It had some major corporate backing; in 1988, Yukon Pacific became a subsidiary of the CSX Corp., a major railway, transportation and real estate owner and operator.
What it lacked was economics to justify construction. The project was never built.
‘My way is the highway’
In the late 1990s and early 2000s, the spotlight shifted from the LNG option back to the overland route through Canada.
Democrat Tony Knowles, elected in 1994 and reelected in 1998, concluded that the route through Canada was the most likely. He used a catchy phrase to describe his choice: “My way is the highway.”
Gov. Tony Knowles, a Democrat, served from 1994 to 2002. Knowles concluded that an overland pipeline through Canada to deliver North Slope natural gas to the Lower 48 states was the most viable gasline option. (Photo provided by the Alaska State Library)
He championed legislation and issued executive orders to encourage development. He proposed using $17 billion in railroad bonds for the project. And, like others before, he spoke confidently about the prospects for bringing the pipeline to reality.
“I believe Alaskans can be on the working end of a shovel building a natural gas pipeline within two years. After two decades of false starts and broken dreams, the economic and political stars are finally aligned in our favor. Natural gas is the fuel of the 21st century,” Knowles said in his Jan. 10, 2001, state of the state address.
Industry officials made similarly optimistic statements.
A month prior to Knowles’ state of the state speech, Dick Olver, then chief executive of BP Exploration and Production, predicted gas deliveries within seven years.
“It is no longer a question of ‘if’ North Slope gas will be commercialized, but ‘when’ and ‘how,’” Olver said in a Dec. 5, 2000, speech to the Alaska Support Industry Alliance, a trade group for oilfield service companies. “We believe ‘when’ will be no later than 2007, and there are three exciting options for bringing North Slope gas to market at the present time,” he said, going on to summarize the overland pipeline, LNG concept and gas-to-liquids options being considered by BP at the time.
Frank Murkowski, who served for 22 years in the U.S. Senate before becoming the governor who succeeded Knowles, exuded similar optimism.
“This administration has brought the long-held dream of construction of an Alaska natural gas pipeline to the threshold of reality,” Murkowski said in a Jan. 20, 2006, speech to the Alaska Support Industry Association’s Meet Alliance conference.
Gov. Frank Murkowski, a Republican who served from 2002 to 2006 after a long career in the U.S. Senate, pushed for a deal with the North Slope oil producers that would keep oil taxes unchanged for decades. He said that was to provide “fiscal certainty” needed to make the gas pipeline a reality. (Photo provided by the Alaska State Library Historical Collection)
Murkowski’s efforts focused on a deal with the three North Slope producers — BP, ConocoPhillips and Exxon Mobil — for what was then a $20 billion project. Murkowski said the producers needed “fiscal certainty,” not just on natural gas taxes but on oil taxes.
Like Dunleavy, Murkowski called the legislature into special session to approve tax concessions he said were urgently needed to make the gas pipeline a reality. “We have been waiting 30 years,” he said in a speech at the start of what turned out to be two special sessions on the topic.
The idea of locked-in oil taxes was not popular and, according to several legislators, contrary to the Alaska constitution.
Sarah Palin, elected governor later that year, took a different approach, a state license for which companies would compete. She sponsored a bill called the Alaska Gasoline Inducement Act, or AGIA, which lawmakers approved in 2007. Lawmakers meeting in a special session the following year approved the Palin administration’s proposal to award the license — which came with a pledge of up to $500 million in state cost reimbursement — to TransCanada. Palin signed the bill on Aug. 27, 2008, officially granting the license.
The following week, after she was selected as the vice presidential candidate on the national Republican ticket, Palin portrayed the gas pipeline as a fait accompli.
“I fought to bring about the largest private-sector infrastructure project in North American history. And when that deal was struck, we began a nearly $40 billion natural gas pipeline to help lead America to energy independence,” Palin said at her Sept. 3, 2008, acceptance speech at the Republican National Convention in Minneapolis. “That pipeline, when the last section is laid and its valves are opened, will lead America one step farther away from dependence on dangerous foreign powers that do not have our interests at heart.”
Gov. Sarah Palin delivers her acceptance speech on Sept. 3, 2008, at the Republican National Convention at the Xcel Energy Center om Minneapolis. In her speech, she said the Alaska natural gas pipeline project was underway. (Photo by Toni L. Sandys/The The Washington Post via Getty Images)
TransCanada’s AGIA plan fizzled, as did a competing plan pursued by ConocoPhillips and BP called Denali.
The fracking resolution that flooded the Lower 48 with cheap natural gas made an overland route through Canada less attractive than an LNG project delivering to Asian markets.
The iterations that rose from the ashes of AGIA, pursued through the administrations of Gov. Sean Parnell and Gov. Bill Walker, were new versions of the previously proposed LNG plans, including some attempts involving TransCanada and the major oil producers. The idea of keeping the project entirely in Alaska had some popular appeal in the state, as encapsulated in a bumper sticker seen in the early 2000s that proclaimed “CANADA my ass/it’s ALASKA’s GAS.”
Leadership of the project ultimately fell to the Alaska Gasline Development Corp., a state entity created by the legislature in 2010 in response to concerns about dwindling Cook Inlet gas supplies. AGDC’s takeover came in spite of a 2002 Department of Revenue report concluding that state ownership “would not likely improve the feasibility of the project or be valued by private sector project sponsors.”
AGDC in 2020 won authorizations from the Federal Energy Regulatory Commission to build and operate the LNG project, the same approval that Yukon Pacific received decades earlier.
State concessions demanded
As with Glenfarne, past project sponsors have argued that tax or other financial concessions are needed to make massive investment in a gasline worthwhile.
Those arguments date back to the 1970s, when the Northwest Alaska Pipeline Co., the main sponsor of the Carter administration-approved overland gas pipeline through Canada, requested that the state issue $1 billion in bonds to pay for the project.
John McMillan, the company’s chief executive, was dissatisfied at the time with the administration of then-Gov. Jay Hammond.
Glenfarne CEO Brendan Duval speaks on May 21, 2026, at the Alaska Sustainable Energy Conference in Anchorage, while Gov. Mike Dunleavy listens. (Photo by Yereth Rosen/Alaska Beacon)
“Regarding the State of Alaska, we must confess to a sense of frustration. While the State is the principal beneficiary of this project and will realize more direct and indirect benefits from its construction and the sale of the Prudhoe Bay gas than anyone else, we have been unable to develop any positive progress with the State which would materially assist in the development of a financial plan to move the project forward,” McMillan said in prepared statements delivered on Oct. 15, 1979, to a U.S. Congressional committee.
While lawmakers in the Frank Murkowski era rejected the governor’s idea of linking oil taxes to the long-desired gas pipeline, their changes to the oil tax system led to federal bribery and political corruption convictions and jail time for several lawmakers and others, including Bill Allen, the chief executive of what was at the time the state’s largest oilfield service company.
BP, a party to the Murkowski negotiations and, later, a partner with ConocoPhillips in the Denali gas pipeline proposal, left the state in 2020 after selling off all its Alaska assets to Hilcorp.
Matt Kissinger and Frank Richards of the Alaska Gasline Develoment Corp. prepare to testify to the House FInance Committee on May 27, 2026, in Anchorage. Richards is AGDC’s president and Kissinger is AGDC’s venture develoment manager. The hearing was conducted as part of a special session called by Gov. Mike Dunleavy. Kissinger and Richards tesified in favor of property-tax concessions sought by Glenfarne, now the majority partner in the Alaska natural gas pipeline project. Dunleavy has argued that the tax concessions are the needed to make the pipeline project viable. (Photo by Yereth Rosen/Alaska Beacon)
Because of the AGIA provisions, the state wound up reimbursing TransCanada about $327 million from 2010 to 2015, accoring to one legislative tally. The state paid out another $65 million in late 2015 to acquire the company’s remaining share in the project. The buyout gave the Alaska Gasline Development Corp. access to the Canadian company’s engineering studies and other documents.
Altogether, Persily said, the state has spent more than $1 billion in the past 25 years on the yet-to-be-built gas pipeline.
That does not include items like the cost of the current special legislative session or the $500,000 that the just-passed state budget for the next fiscal year appropriated to the Department of Revenue to adjust the tax system to accommodate Glenfarne’s desired near-elimination of property taxes.
Sen. Bill Wielechowski, D-Anchorage, is among the lawmakers considering whether additional financial concessions that Glenfarne is seeking are justified. The deliberations follow a long history of unfulfilled gasline promises, he noted.
“I don’t think anyone’s opposed to giving them the tax break as long as they need it,” Wielechowski said of Glenfarne’s plan. “We’re just struggling with the lack of information and the feeling that we’ve been burned in the past.”
James Brooks contributed to this story.
The sun sets at Prudhoe Bay on March 23, 2018. The North Slope holds vast amounts of known natural gas reserves that have inspired numerous plans for natural gas megaprojects over the decades. (Photo provided by the U.S. Bureau of Land Management)
Rep. Ted Eischeid, D-Anchorage, talks with Rep. Carolyn Hall, D-Anchorage, as Rep. Bill Elam, R-Kenai, looks on Friday June 12, 2026, at the Alaska State Capitol in Juneau. (James Brooks photo/Alaska Beacon)
By: James Brooks, Alaska Beacon
Rep. Ted Eischeid, D-Anchorage, talks with Rep. Carolyn Hall, D-Anchorage, as Rep. Bill Elam, R-Kenai, looks on Friday June 12, 2026, at the Alaska State Capitol in Juneau. (James Brooks photo/Alaska Beacon)
The Alaska House of Representatives has voted to advance a multibillion-dollar tax break for the proposed trans-Alaska natural gas pipeline project.
The House’s 34-5 action sends the tax break to the state Senate, which is expected to take up the issue next week. Legislators are in a 30-day special session devoted to the issue, and the session ends June 19.
House Bill 381, containing the tax break, doesn’t guarantee pipeline construction, but project skeptics and advocates alike say that without the change, the pipeline is uneconomic.
“I’m very proud of us getting this bill to where we are today and giving this project a fighting chance,” said Rep. Calvin Schrage, I-Anchorage, “so that Alaskans and hopefully the world can benefit from the gas reserves that we have here in the state.”
If enacted, the bill would replace the state’s 2% petroleum property tax with a tax on gas shipped through the pipeline.
Proceeds from the petroleum property tax are split between boroughs and the state. If the pipeline is built, those governments would collectively forego about $800 million per year, said Rep. Andy Josephson, D-Anchorage.
The state would still collect royalties, corporate income taxes, production taxes and other fees, said Rep. Chuck Kopp, R-Anchorage. Those are expected to net the state between $600 million and $700 million in new revenue per year.
HB 381 also contains a rate cap to mandate that pipeline developers provide natural gas to Southcentral Alaska residents at a price that’s lower than the predicted price of imported gas.
Currently, Southcentral Alaska relies on natural gas from fields beneath Cook Inlet. Available supplies are running low.
“I think everyone’s been asking: What is the benefit to Alaska?” said Rep. Sarah Vance, R-Homer. “The benefit, if you could summarize it into one thing, and that’s reliable energy.”
Other parts of the bill mandate an impact fund to compensate local governments for the effects of construction, and send money to a rural power fund to pay for energy projects away from the pipeline.
“Every region of Alaska will get a share of this project one way or the other, and there’s real protections for Alaska ratepayers,” Kopp said.
Gov. Mike Dunleavy and Glenfarne, the multinational firm developing the pipeline, issued written statements after the vote, praising lawmakers’ action.
“This project has the potential to transform Alaska’s economy for decades,” the governor said in part. “I look forward to working with the Senate to get this important legislation across the finish line.”
As currently planned, the Alaska LNG project would be built in two phases. The first phase would include a pipeline from the North Slope to Cook Inlet, with limited processing plants needed to deliver gas to Southcentral Alaska for domestic use.
Glenfarne expects to begin operating the first phase by 2029.
The second phase would involve building a large facility on the North Slope and another on the Kenai Peninsula, allowing the pipeline to ship larger volumes of gas for export overseas.
Glenfarne expects the second phase of construction to be done in 2033 and that both phases will cost between $44.5 billion and $54.5 billion altogether.
Exports would subsidize the cost of gas for in-state use, with Glenfarne projections suggesting that if the pipeline reaches full capacity, the cost of gas in Southcentral could be half of what it is today.
That’s still hypothetical. Estimates from the Alaska Department of Revenue suggest the pipeline project’s economics are marginal. Even if the tax break is adopted, the cost of exported gas may not be competitive on global markets with gas from other sources around the world.
“We cannot control global economics, and the passage of this bill does not guarantee a pipeline will be built. I think that’s important to recognize,” said Rep. Zack Fields, D-Anchorage. “This bill absolutely increases the likelihood that the project can progress.”
Under the terms of HB 381, pipeline developers would pay no gas tax for the first five years of the project, or until gas volume reaches a certain, export-level threshold.
After that point, the new tax would kick in.
Because boroughs are forgoing so much revenue, HB 381 requires the pipeline developer to pay $80 million into an impact fund that would be distributed to boroughs — including Anchorage — along the route.
That money might be used to pay for extra street repairs, additional police or other services needed to address the needs of thousands of extra workers who would be building the pipeline.
Rep. Dan Saddler, R-Eagle River, said he’s heard from Alaskans who think HB 381 is a giveaway and that the state could pull in hundreds of millions more if it simply left the property tax alone.
“I shake my head and tsk just a little bit,” he said, “because a high tax on no pipeline gets you no money; a lower tax on a real pipeline gets you money.”
Rep. Robyn Frier, D-Utqiagvik, speaks Friday, June 12, 2026, on the floor of the Alaska House of Representatives. (James Brooks photo/Alaska Beacon)
Rep. Robin Frier, D-Utqiagvik, opposed the final version of HB 381. She represents the North Slope Borough, which relies heavily on the petroleum property tax for local needs. The borough would forego hundreds of millions of dollars in prospective revenue under a switch to a gas tax.
Before Friday’s final vote, she offered a pair of amendments that would have reduced the impact on the North Slope. Both were defeated by wide margins.
Rep. Donna Mears, D-Anchorage, was excused absent from Friday’s vote because of travel problems that kept her from reaching Juneau.
By text message, she said that had she been present, she would have voted against the bill.
“This legislation will push costs down onto communities and lock us into tax breaks we won’t be able to re-evaluate for decades,” she said.
Rep. Sara Hannan, D-Juneau, also voted against the bill, saying her constituents raised climate change concerns. Burning natural gas releases greenhouse gases, which contributes to climate change.
Rep. Jeremy Bynum, R-Ketchikan, offered a different perspective, saying that he believes cheap natural gas will displace diesel fuel, thus leading to an overall reduction in greenhouse gas emissions because gas is cleaner burning than fuel oil.
Fairbanks Democratic Rep. Ashley Carrick borrowed a term from public health and said that natural gas is an issue of “harm reduction.” In her district, many people heat their homes with fuel oil at $6 per gallon. When oil isn’t available — or is unaffordable — people burn wood.
“Fairbanks has some of the worst air quality in the nation, in the world, because of those fuel sources. Natural gas is harm reduction. I believe in that, and while I do share the frustration and concern from many, I believe this is a step in the right direction towards more sustainable energy, available energy and affordable energy for our communities,” she said.
Saddler, who is retiring from the Legislature this year, said he hopes lawmakers “can bring an end to that old joke that a natural gas pipeline is Alaska’s future and it always will be. I hope you never hear that joke again.”
Members of the Senate Finance Committee convene on the first day of a special legislative session on the proposed LNG gas line project on May 27, 2026. (Photo by Corinne Smith/Alaska Beacon)
The firm developing the proposed trans-Alaska natural gas pipeline has proposed limiting the price for natural gas sold through the pipeline to Alaskans.
If accepted by legislators, the limit would prevent the cost of gas from rising if the pipeline costs more than expected.
The new proposal from pipeline developer Glenfarne comes as the Alaska Legislature continues meeting in a 30-day special session, considering a major tax break to support the AKLNG pipeline project. That project aims to build an 807-mile pipeline to bring natural gas from the North Slope to Cook Inlet for export and in-state use.
A price cap could resolve one sticking point in negotiations over the proposed tax break, but with half of the special session gone, a variety of other issues remain unresolved.
Those include basic elements about the tax break, including its size and length, as well as how municipal governments will be compensated for the impacts of construction, which is expected to bring as many as 12,000 new workers to the state temporarily.
The House Finance Committee is expected to begin voting on possible solutions to those issues next week.
Natural gas is the primary fuel for home heating and electricity in Southcentral Alaska, but officials estimate that by the end of the decade, local production from gas fields beneath Cook Inlet will be insufficient to meet demand.
Prices are already rising, and several gas-import projects have been proposed. The AKLNG pipeline is another possible solution, but because the pipeline and supporting infrastructure are so large, the project would need to also sell gas overseas in order to offset costs.
If the pipeline is built but no exports take place — something that could happen if the pipeline costs more to build than expected — the Alaska Department of Revenue has estimated that AKLNG gas would be much more expensive than imported gas.
In legislative hearings, that risk has caused some lawmakers to question the project.
Speaking to the Senate Finance Committee on Wednesday, Glenfarne Alaska LNG president Adam Prestidge said the company is on the verge of finalizing a firm, 30-year contract with Enstar, the largest natural gas utility in Southcentral Alaska.
That fixed-price arrangement would guarantee natural gas at no more than $16 per MMBtu, a measurement of heat capacity.
If the pipeline costs more than expected, cost overruns would not be passed on to consumers, said John Sims, Enstar’s president, when speaking to the House Finance Committee on Monday.
“Enstar’s agreement has a fixed price, and Enstar does not care if the project goes over cost. It does not impact in any way, shape, or form the price that we would be charging customers as a fixed price,” he said.
Rep. Alyse Galvin, I-Anchorage, immediately responded to Sims’ comment.
“A lot of us are very excited to say, yes, I 1,000% support this, because I want to keep low prices,” she said.
Capped price would be cheaper than imported gas
The figure given by Prestidge is equivalent to about $16.59 per thousand cubic feet of natural gas, using a standard conversion. That is cheaper than the forecast price of imports.
Dan Stickel, chief economist for the Alaska Department of Revenue, told legislators in late May that the department’s estimate for the cost of imported gas in 2033 — AKLNG’s planned completion date — “came to about $17 per thousand cubic feet price range.”
Sims told legislators on Monday that Enstar currently expects a “total, all-in cost between $16-22” per thousand cubic feet for imported gas.
Enstar’s current cost of gas is $10.80 per thousand cubic feet, but that will rise in coming years as production declines in Cook Inlet.
The $16 per MMBtu figure is a maximum, Prestidge said. If the pipeline is developed according to plan, exports would subsidize the cost of in-state gas, dropping it as low as $5 per MMBtu, he said.
Glenfarne’s $16 figure could rise with inflation, Prestidge said, but it wouldn’t be affected by cost overruns on building the pipeline.
Prestidge told the Senate Finance Committee that Glenfarne is open to applying a price cap on gas sold to other utilities and industries that might use natural gas.
“Glenfarne is supportive of language being added to any property tax bill that prohibits cost overruns on the project from being borne by either the state or the regulated ratepayers who are buying gas off the pipeline,” he said.
While a final deal between AKLNG and utilities is subject to approval by regulators, a price cap would directly address legislators’ concerns about affordability.
“I think putting that (cap) in a bill would provide a ton of reassurance, because it substantially mitigates your risk in a low-volume scenario,” said Rep. Zack Fields, D-Anchorage.
Sen. Kelly Merrick, R-Eagle River, listened in person to Prestidge on Wednesday.
“I don’t know if $16 is the perfect cap, but it’s addressing a significant concern and protecting Alaska ratepayers,” she said.
Long-awaited pipeline cost estimate met with mixed reaction
On the same day that Prestidge discussed the price cap, he also disclosed updated cost estimates for the pipeline project, saying the first phase of the project is now expected to cost between $13.2 billion and $16.9 billion.
Building facilities needed for gas exports would raise the cost to between $44.5 billion and $54.5 billion, Glenfarne estimates.
Legislators have previously criticized a lack of updated cost estimates, saying their absence is hampering their ability to work on a tax break.
Sen. James Kaufman, R-Anchorage, said the new data and the proposed cost cap “was kind of a tipping point” in discussions.
“I think it gives us more information to do our due diligence,” said Sen. Lyman Hoffman, D-Bethel and co-chair of the Senate Finance Committee.
Alaska currently levies a 2% tax on oil and gas property. Cities and boroughs are permitted to claim some or all of that tax on property within their boundaries.
To incentivize AKLNG investors, Dunleavy proposed replacing the property tax with an “alternative volumetric tax” of 6 cents per thousand cubic feet of gas shipped through the pipeline. The change would effectively result in a 90% tax break, and there would be no tax during construction, because gas isn’t yet being shipped.
The impact of the switch would be heaviest on municipalities. They would have to deal with the consequences caused by having thousands of extra people living nearby, but they would have little (or no) new tax revenue to cover the resulting costs.
The North Slope Borough funds most of its services through the petroleum property tax and has opposed Dunleavy’s proposed change.
Rep. Robyn Niayuq Frier, D-Utqiagvik, represents the North Slope. She has deep concerns about the switch to a volume-based tax and thinks Glenfarne’s new cost estimates are still too low.
“I think there are a lot of people who are having these conversations who think that there’s no way this is actually going to happen, that this is a pipe dream,” she said of the pipeline project.
That would reduce the size of the break that Dunleavy requested and increase the amount the state and boroughs would collect in revenue.
Dunleavy has suggested that the new tax should last the life of the project. Other legislators, including Frier and Sen. Bert Stedman, R-Sitka, are suggesting shorter terms.
Lawmakers are also debating the size of a proposed “impact fund” that Glenfarne would provide to cover the costs that cities and boroughs would incur as thousands of workers gather to build the pipeline.
Legislators also haven’t decided what communities would be eligible for the fund or how the money would be distributed.
The House Finance Committee is scheduled to begin debating the unresolved issues on Monday and could advance a bill to the House floor as soon as the second half of next week.
The Senate could take up that measure on the week of the 15th, but with the special session ending on June 19, there’s a real risk that legislators will run out of time before they decide the multibillion-dollar issues at stake.
“We have to find a product that meets the polar opposite forces that are out there,” said Speaker of the House Bryce Edgmon, I-Dillingham.
“The needle’s not been threaded yet, and if we don’t get the needle threaded … I think ultimately, then the 30 day special session is — I don’t know what’s going to happen. I just, quite frankly, don’t know.”
The Alaska State Capitol in downtown Juneau.
(Photo by Greg Knight/News of the North)
The Alaska State Capitol in downtown Juneau. (Photo by Greg Knight/News of the North)
NOTN- Alaska lawmakers are in a 30-day special session to weigh a sweeping tax break for the proposed North Slope natural gas pipeline.
Juneau Sen. Jesse Kiehl, said the governor’s bill would shift the project away from the current 20-mill petroleum property tax structure and toward a volume-based tax on gas flowing through the line. He said the proposal amounts to roughly a 90% tax cut that would last as long as the pipeline operates.
“That’s one of the things we’re working on.” He said, “The governor’s proposal is about a 90% tax cut, and the governor’s proposal lasts as long as the pipeline lasts. They will not need that, right? They will not need that, past, heaven knows, past year 20 when you got almost all your debt paid off.”
Kiehl said some early tax relief is reasonable for a multibillion-dollar project that will not generate revenue immediately, but he questioned the size and duration of the proposed break.
“During the regular session, we couldn’t seem to get as many numbers, real numbers, as we needed, so we’re working on that.” He said, “A big gas line could be a huge project for the state, big for the state’s economy, a lot of jobs when it gets built. The other thing we have to make sure of is that we also protect the treasury, because the risk with these things is cost overruns, right? The oil pipeline cost could be more than double what they planned on.”
Lawmakers are seeking more complete data from project backers to determine how large a tax incentive is necessary and how long it should last.
While the gas line would not deliver gas to Southeast Alaska, Kiehl said the region’s benefit would come from new state revenues that fund public services, including schools and state troopers.
“The benefit we get from Alaska gas going to market is some money in the treasury to pay for public services, all the things we need. So, we’ve got to make sure that we watch those risks.” He said.
Kiehl also added that if the state grants a substantial property tax break, it will also need to ensure money flows to local governments along the route, such as Anchorage, Kenai and Fairbanks. Those communities would face increased demand for schools, law enforcement, road work and other services during construction.
The governor’s bill was introduced midway through the regular session and has already been vetted by House and Senate resources committees. The measure is now before the finance committees, which Kiehl said will use the full 30 day special session to scrutinize the fiscal impacts and negotiate possible changes.
If project backers do not provide the information lawmakers are seeking, he said, the Legislature could choose to “cut our losses and expenses and gavel out,” ending the special session without approving the package.
At left, House Majority Leader Chuck Kopp, R-Anchorage, talks with experts on the proposed trans-Alaska natural gas pipeline during a break in debates Monday, May 18, 2026. To Kopp's immediate right is Joelle Hall of the Alaska AFL-CIO. At center, gesturing, is former U.S. Sen. Mark Begich, now an adviser to Gov. Mike Dunleavy. (James Brooks photo/Alaska Beacon)
By: James Brooks, Alaska Beacon
At left, House Majority Leader Chuck Kopp, R-Anchorage, talks with experts on the proposed trans-Alaska natural gas pipeline during a break in debates Monday, May 18, 2026. To Kopp’s immediate right is Joelle Hall of the Alaska AFL-CIO. At center, gesturing, is former U.S. Sen. Mark Begich, now an adviser to Gov. Mike Dunleavy. (James Brooks photo/Alaska Beacon)
A high-stakes quid pro quo deal fell apart in the Alaska Capitol on Monday as legislators failed to approve a tax break for the proposed trans-Alaska natural gas pipeline and Gov. Mike Dunleavy vetoed a bill that would have restored public pensions in the state.
The failure leaves public employees with a 401(k)-like retirement system and legislators likely to head into a special session for further work on a gas pipeline bill.
Rep. Chuck Kopp, R-Anchorage and the Legislature’s lead negotiator on the planned deal, said on Monday night that “the pension was a good vehicle to help get people there and be more conciliatory towards this gasline legislation than they otherwise would have been. Now that the governor has vetoed the pension, I expect the conciliatory attitudes will suffer.”
Monday was the deadline for Dunleavy to enact or veto House Bill 78, which would have created a new pension plan for Alaska’s public employees. Alaska has not offered a pension since 2006, when lawmakers closed the pension plan to new employees after an actuarial error led to significant underfunding.
Days ahead of Monday’s veto deadline, Dunleavy offered a deal to legislators — pass a tax break for the proposed gas pipeline, and he would allow the pension bill to become law.
“We said we wanted the gasline bill passed in an acceptable form to the governor’s desk before the deadline on the (defined benefit) bill,” said Jeff Turner, the governor’s communications director. “At that point, he could allow a (defined benefit) bill to go into law.”
Dunleavy told reporters at a news conference earlier this month that the gas pipeline bill should be the Legislature’s top priority.
In March, he introduced two identical bills, one in the House and one in the Senate, with his ideas. Legislators have since held dozens of hearings on those ideas.
If enacted, the governor’s proposal would largely exempt the gas pipeline and supporting infrastructure from state and local property taxes levied on petroleum property. In place of the property tax, the state would levy a tax on gas transported by the pipeline.
The pipeline’s lead developer, multinational firm Glenfarne, has said the change is necessary for it to successfully obtain financing needed to build the pipeline project.
Alaska LNG, as it is known, would ship gas through an 800-mile pipeline, from the North Slope to Southcentral Alaska. As currently planned, the first phase of the project would deliver gas to Alaskans in 2029 and the second phase would allow foreign exports by 2031.
While state legislators generally support the idea of a pipeline, they have balked at the governor’s planned tax breaks, particularly because Glenfarne has thus far declined to provide new estimates for the cost of construction or its expected cost of gas when the pipeline is complete.
That has made it impossible for them to determine whether the proposed tax break is too large, too small, or just right.
Rep. Chuck Kopp, R-Anchorage, speaks Monday, May 18, 2026, on the floor of the Alaska House of Representatives. (James Brooks photo/Alaska Beacon)
House and Senate each took the governor’s ideas and amended them. Both increased the proposed gas tax — formally known as an “alternative volumetric tax” — mandated construction of a spur line to Fairbanks and required Glenfarne provide early payments to communities affected by pipeline construction.
Senators went further, proposing price controls on gas shipped through the pipeline to Alaskans, an end to a tax exemption that would benefit Glenfarne, and small increases to the state’s oil taxes.
With both bills far from completion, Kopp began negotiating with the governor’s office on a possible compromise.
Kopp has been supporting a pension revival for a decade, and sought a deal that would accomplish two personal goals that also are among the legislative majorities’ top priorities.
On Monday, after days of work, he introduced a compromise gas pipeline proposal as an amendment to Senate Bill 180. That bill was originally written as a one-sentence change to state law pertaining to liquefied natural gas import terminals.
Kopp’s amendment, 22 pages long, was adopted, and House lawmakers began debating, one after another, hours of amendments to Kopp’s amendment.
In the back of the House chambers, advisers to the governor — who have been working closely with Glenfarne — provided feedback on whether each amendment was acceptable.
From left to right, Reps. Jeremy Bynum, R-Ketchikan, Neal Foster, D-Nome, and Robyn Niayuq Frier, D-Utqiagvik, talk about an amendment to the gas pipeline bill on Monday, May 18, 2026. (James Brooks photo/Alaska Beacon)
One amendment from Rep. Robyn Niayuq Frier, D-Utqiagvik, derailed that process. Adopted on a 21-19 vote by the House, it would allow the North Slope Borough to negotiate directly with Glenfarne on taxes.
Frier represents the North Slope Borough, and because the project’s large gas treatment plant would be located there, the borough would lose a disproportionate amount of tax revenue with a switch from property taxes to the alternative volumetric tax.
“The amendment was completely necessary,” Frier said afterward, explaining that the borough had been asking for it.
The Kenai Peninsula Borough, planned site of the export terminal, accepted the alternative tax, and lawmakers from that region did not propose amendments similar to Frier’s.
Frier said North Slope officials talked with all of the stakeholders, with the governor’s office and Glenfarne.
“We always knew this was going to be an issue, and I don’t understand why this is such a big deal. They could have been negotiating. They should have been negotiating,” she said.
Frier said that rather than try to push through a major bill in a single day, she would like to see lawmakers focus on House Bill 381, the House’s gasline bill, in a 30-day special session.
“We need to do the proper vetting, we need the modeling, we need it to go through the Department of Revenue. … We need people to weigh in, not trying to shove this in at the last minute. This is not good process,” she said.
Lawmakers in favor of Kopp’s compromise were unable to quickly reverse Frier’s amendment, and the Senate adjourned shortly after 10 p.m., leaving no avenue for Kopp’s amendment to pass through the Capitol on Monday.
Kopp said afterward that he had negotiated a deal to sidestep Frier’s amendment, but with the Senate adjourned until after the window to veto the pension bill, he said the governor was uninterested.
“He feels like the outcome has to be 100% controlled. … The House was in position to send over a good gasline bill. The governor simply did not care, because he had to have it in the bag. To me, that’s disappointing, and to me that was very shortsighted,” Kopp said.
With the deal dead, the House adjourned for the day just after 10:30 p.m. The governor’s veto message arrived in the House clerk’s office shortly afterward, at 10:39 p.m.
Alaska Gov. Mike Dunleavy’s legislative director, Jordan Shilling (left) and his deputy legislative director, Forrest Wolfe, watch as assistant legislative director Victoria Schoenheit delivers the veto message for House Bill 78 to the House clerk on Monday, May 18, 2026. (James Brooks photo/Alaska Beacon)
“I share the Legislature’s goal of strengthening recruitment and retention for Alaska’s public workforce,” the governor said in his veto message. “However, House Bill 78 contains unresolved legal, tax, administrative, and fiscal issues that create uncertainty for the State, employers, employees, and the retirement systems themselves.”
Kopp, visibly frustrated, sat in his office after the House’s adjournment.
“He has no allies in the Senate that can help him on the gasline. I was his No. 1 ally in the entire Legislature,” Kopp said, “and he killed the pension bill that I carried. That was his thank you to me. So, I’ll remember that.”
Gov. Mike Dunleavy speaks about at a May 4, 2026, news conference about his property tax bill intended to help draw investment in a massive natural gas pipeline. The news conference was held in his Anchorage office. (Photo by Yereth Rosen/Alaska Beacon)
Alaska Gov. Mike Dunleavy is urging state lawmakers to act on his proposal to cut state taxes by $7.2 billion over the next 36 years to subsidize construction of the proposed trans-Alaska natural gas pipeline.
Failing to act, he said, could keep the pipeline from being built at all.
“This bill is too important. This concept is too important,” Dunleavy said. “This is not setting up a tax for the lemonade stand down here in the corner by the hot dog stand. This is the biggest (natural gas) project on the planet.”
But some state lawmakers are skeptical about the size of the governor’s proposed subsidy. Two alternatives — one in the House and the other in the Senate — are advancing through committees in the final weeks of the session.
Other legislators believe the pipeline already makes financial sense and no change is needed.
As a result, four different paths await state legislators in their last weeks, and it isn’t clear which one they’ll take — or whether the governor will call legislators into special session on the issue.
There’s also been no agreement with cities and boroughs affected by the proposed tax cut. There’s also no public agreement with North Slope gas producers or the state’s labor unions.
At the core of the problem facing lawmakers is how much — if any — subsidy is needed in order to attract investors who would pay for building the pipeline project in two stages.
The first stage would involve a pipeline from the North Slope to Cook Inlet for in-state use. The second stage would construct processing plants at the north and south ends of the pipeline, allowing larger volumes of gas to be exported overseas.
If both phases of the project are built, Department of Revenue economist Dan Stickel told legislators on Tuesday, the result would be cheaper natural gas than currently available from Cook Inlet.
“If the full project goes forward, it’s a significant reduction in cost to Alaskans,” he said.
Rep. Zack Fields, D-Anchorage, noted that Alaskans could be locked into high natural gas prices if the second phase is never built or if both phases are built but no exports take place.
For a hearing last week, the Department of Revenue estimated that under that scenario, prices in Anchorage would exceed $27 per thousand cubic feet by 2033, more than double current prices.
It’s unclear how likely that worst-case scenario is.
The larger the subsidy, the greater the chance that the project is built in full and the lower the price of gas for Alaskans, project proponents say.
“Our objective is to have the lowest cost gas for Alaskans and have certainty on the project,” said Adam Prestidge, president of Glenfarne Alaska, the project’s developer.
A problem, some legislators say, is that they’re working without information. Glenfarne, an international firm that last year bought 75% of the project and became its developer, has not shared its latest estimate for how much the pipeline will cost.
“I think it’s important for us to have starting points on what the actual numbers are, because if it needs tax relief, let’s figure out what the relief is,” said Sen. Bill Wielechowski, D-Anchorage.
Legislators also don’t know how much North Slope gas producers will charge for the gas, or what international buyers will pay for it.
Some of that information is impossible to know — legislators are trying to anticipate the price of natural gas in 2033 and beyond, once the pipeline is up and running.
Other information is being kept confidential until a final investment decision or when proposed prices are submitted to state regulators, something that’s months away at the earliest.
Legislators are being asked to take action within weeks.
“We’re not really competitive in the global market if the (cost) overrun is 40%,” said Rep. Julie Coulombe, R-Anchorage, on Tuesday.
The gas pipeline’s publicly stated cost on Tuesday was $46 billion, but most legislators believe the true figure is higher.
“I think it’s really $57 billion … if not higher,” said Sen. Bill Wielechowski, D-Anchorage, relying on a prior statement from former U.S. Sen. Mark Begich.
Begich, a Democrat, lost to Gov. Mike Dunleavy in the 2018 governor’s election. Now, Begich is a paid adviser, hired by Dunleavy’s administration on a $100,000 contract.
In a Tuesday hearing, Begich said lower taxes would not increase profits for investors or developers and would simply lower the end cost of gas for consumers.
“If you lower the tax, it does not go to the return or the profit or anything of this project,” he said.
“I am just telling you right now, every dollar you save consumers is a dollar in their pocket in an economy that is struggling,” Begich said.
Under his calculations, Wielechowski said, the average Southcentral Alaska family would save $55 per year if the pipeline is built and produces gas according to the latest available cost analysis from the Department of Revenue.
The subsidy needed to create that savings amounts to a loss of $500 per Alaskan per year, he said, money that could be used for the Permanent Fund dividend or state services.
“That’s not a good deal,” he said of the exchange.
The latest available version of the Senate proposal shows an increase in revenue to the state, rather than a subsidy. Instead of earning $27.9 billion through 2062, the state would earn $42.1 billion.
“I would describe that as very burdensome for the project and potentially prohibitively so,” Prestidge said.
“I will characterize that tax at that level as something that would require some real reconsideration of the drawing board of how the project is structured and taken forward,” he said.
In the House, discussions have been less acrimonious. The House Resources Committee on Tuesday morning discussed a proposed a subsidy of less than $5.9 billion, smaller than the governor’s concept but similar in other regards.
“It would be a tax reduction but a smaller tax reduction than proposed by the governor,” Stickel said of the House proposal.
On Tuesday afternoon, the committee worked methodically through a long series of amendments to its plan, frequently consulting Prestidge and Begich about how each might affect financial negotiations.
The House and Senate bills are each in an early stage of development. If passed by the resources committees, each would have to pass through their respective finance committee before advancing to a floor vote and on to the other half of the Legislature.
