The Alaska House Resources Committee heard testimony Friday on state equity participation in the Alaska LNG project and voted down a series of amendments to a wildlife refuge bill, with most votes splitting 5-4 along party lines.

Nicholas Fulford, senior director of gas and LNG at Gaffney Cline, returned to the committee to address questions from an April 1 hearing about government equity stakes in liquefied natural gas projects. Fulford explained that such arrangements are common internationally, particularly in Asia, and typically involve "carry" structures where project sponsors hold equity that is paid for out of future revenues.

"For the Alaska LNG project, a 25% shareholding, which is what the state is technically entitled to, would be a multi-billion dollar investment," Fulford said. He noted that equity participation brings both potential returns and commercial risks, including capital cost escalation and market disruption.

Fulford cited Papua New Guinea's LNG project as a model, where the state took a 19.4% equity stake, with local communities holding just over 4% of that total. The PNG project also included a 2% wellhead royalty split among direct cash payments to communities, an infrastructure fund, and a future generations fund.

The equity discussion comes as the legislature weighs competing tax proposals for the Alaska LNG project. Governor Mike Dunleavy introduced SB 280 and HB 381 in late April, proposing to replace the current 20-mill property tax on pipeline infrastructure with a volumetric tax of $0.06 per thousand cubic feet of throughput, escalating 1% annually. Under current law, the property tax, equal to 2% of assessed infrastructure value, begins accruing the moment construction starts, even before any gas moves through the system. SB 280 would provide full property tax abatement during construction and a ramp-up period ending when the pipeline reaches 1 billion cubic feet per day or after 10 years, whichever comes first.

The Senate Resources Committee approved a preliminary 5-2 vote on an alternative version that would impose a significantly higher volumetric tax of up to 55 cents per 1,000 cubic feet for export gas, add a $1 million per mile annual construction fee estimated at roughly $800 million total to compensate communities during construction, cap in-state gas prices at $12 per 1,000 cubic feet before the export terminal goes into service and $5 afterward, and require Alaska Gasline Development Corp. to pursue a spur line connecting Fairbanks to the larger pipeline. A separate alternative bill, SB 275, proposes a 15-cents-per-thousand-cubic-feet surcharge on gas processed and liquefied in-state, plus a 9.4% corporate income tax on North Slope gas pipeline entities including S-corps and LLCs.

Representative Dan Saddler asked whether the Department of Revenue had been involved in tax negotiations with the Alaska Gasline Development Corporation. Dan Stickel, chief economist with the Department of Revenue, confirmed that DOR had been "supporting those negotiations every step of the way" and had been modeling scenarios since last year, though he deferred details to AGDC and the governor's office.