Alaska Legislature: Senate Resources, 4/15/26, 3:30pm

I call Senate Resources Committee meeting to order. Today is Wednesday, April 15th, 2026. I'm glad I have an extension on my IRS payment, uh, and the time is 3:30 PM. Please turn off your cell phones. Committee members present today: Senator Rauscher, Senator Kawasaki, Senator Dunbar, Senator Myers, Vice Chair Senator Wielechowski, and myself, Senator Giesel.

I expect Senator Clayman along shortly. We have a quorum to conduct business. Thank you to Heather and Chloe for helping us out with the audio and the record keeping. Today we have on the agenda Senate Bill 275 and Senate Bill 280. We are going to start out, first of all, with a presentation from Gaffney Klein.

Public testimony was noticed for today's meeting, and we will take that up probably around 4:30-ish. So anyone who might be on the line or here in the room wishing to testify, we're going to hear from Gaffney Klein first. So to hear from Gaffney Klein, I will welcome Nick Fulford. He is the senior director of LNG and energy transition with Gaffney Klein. Mr. Fulford, thank you for joining us today.

I know you were listening in yesterday as well, and hoping you have some comments to share with us about yesterday as well. So welcome. Thank you, Chair Giesel. Just doing a quick sound check. Do you can hear me okay?

Yes, we can hear you great. Excellent. So for the record, my name is Nicholas Fulford with Gaffney Klein.

So just really to start off today's dialogue, I would just draw those viewing at home, draw their attention to the basis of opinion, which is on the front page. I'll leave you to read that at your leisure. But in terms of today's discussion, turning to slide 3, the agenda page, really today's discussion is formulated in 3 parts. The first main area deals with how the— what I would describe as the fiscal framework around an LNG project typically evolves and the pros and cons of making decisions around that while the project is still in a formative stage. Secondly, I wanted to talk about some of the mechanisms that have been used elsewhere to recognize the, the impact of LNG projects on communities and their infrastructure.

For that, I'll recap briefly on Texas and Louisiana, which we've spoken about before. But I also wanted to highlight how the approach differs when the impact of the project is, is arguably that bit more. Finally, really picking up the tail end of today— of yesterday's committee hearing, I also wanted to talk about the economics and the impact of the Sixth Sense and how it fits in more broadly with, with other features. So before continuing, I just also wanted to highlight, particularly for, for those viewing at home, I know Jag Easle and I think Senator Wielechowski, you'll be very well aware of the work that was done under Governor Parnell and then under Governor Walker on the Municipal Advisory Gas Project Review Board. Back in 2014.

So it's a good reminder that the question of property tax and its structure has been under review for quite some time. Several revenue commissioners have dealt with this in different ways, and certainly from my perspective, back in 2014, I worked with quite a number of the boroughs and those affected, so I do have a sense of how important these property taxes are for the local communities. So with that, maybe we can move ahead to slide 5, which is really the start of the content.

So I think to frame today's discussion, it might be useful to think about SB 280 really in two ways. Is the way in which the alternative volumetric tax works compared with the existing law. And the second is to then consider the level of tax, the 6 cents. But the first question is much more strategic. It concerns the basic fiscal architecture of the project, which, you know, developers, buyers, lenders typically like to see in a reasonable level of detail before progressing the project towards FEED.

So what is fiscal architecture? I would describe that as the main interfaces with the host government and the way in which taxes and so forth is organized. So examples of fiscal architecture really are shown on the left of the slide, starting with upstream taxes. Obviously Alaska has decades of experience in determining a framework for resource development. It's based on a combination of royalty and tax, and it's something which, you know, is reviewed from time to time and indeed may be reviewed in the context of this project, but the basic framework is there and well understood.

I'd also include corporate income tax with that heading. This is both federal and state. Again, there's an existing framework, albeit with some changes under discussion, but these features are well understood and the different scenarios can be modeled effectively.

So next we have the question of federal support and really for the LNG project what we're talking about here is whether or not loan guarantees are offered. It's, it's a key feature of the project economics. It's potentially worth about half the property tax question that's under discussion today. If you look at Mr. Stickell's presentation, page 36, you'll see that, that the, the change in project economics with a move from 5 to 7% cost of debt, which is roughly the order of magnitude involved, the impact is also fairly significant. So there's an interesting question right there in terms of how property tax and federal loan guarantees impact on each other.

In one scenario, both a change to property tax and federal loan guarantees might be needed to get the project over the line. But, you know, a question for the legislature may be how those two features interact with one another.

So moving on, we've talked before in this committee about fiscal stability and the fact that some LNG developers enter into a contractual commitment with host governments. For Alaska, that's unlikely to be the case, so an investor would look instead at the decades of governance and resource management that really has been experienced over the years. And also interesting to note that the very bill that we're debating today would be seen as an important step, I think, towards establishing the fiscal stability that developers and other stakeholders would want to see. Next, we have the important question of in-state supply. For the most part, the regulatory controls that would apply to tariff setting and so forth are in place, some conceivably under FERC, others under the RCA.

And even if changes are needed, the basic premise is set out there for people to see.

So that leaves us with property tax. You've heard other testimony on what is effectively a lack of compatibility between the structure and the framing of the existing legislation in the context of what is an exceptionally large capital-intensive project, which is also very highly exposed to front-end costs. So this is one— the one element really of the fiscal architecture that that really remains to be resolved. It will be a concern to buyers, project developers, lenders, etc. And as I mentioned, this has been under discussion for quite a few decades.

So with that, I'll move to slide 6. Unless there are any questions. Before you move on, Mr. Fulford, I'm just going to comment on your second to the last bullet. I appreciate the last one you had, of course. The RCA, the Regulatory Commission of Alaska, does have some um, interest in the regulatory process, which may not be as clear-cut as you may assume.

And so they will be presenting to us next week. And of course, I have mentioned to the committee previously that the Alaska Oil and Gas Conservation Commission, uh, has a process for gas offtake authorization. So that also is a topic that, uh, will be pertinent here. Thank you. I'll let you go on now to slide, I guess it's 6.

Madam Chair? Yes, Senator Myers. Senator Myers has a question. Thank you, Madam Chair. So, Mr. Fulford, I just kind of want to revisit the fiscal stability bullet that you've got on there.

And I recognize that we've been doing this for 50-odd years or so, and so we've got some experience in it, but I still wonder if we're as stable as other places or as stable as we could be. You mentioned, you know, some places do this contractually. We can't because of our Constitution, Article 9, Section 1. You know, we've changed our tax structure around. You know, we've got some possibility— you know, we've talked about some changes on both the upstream and the corporate tax side this year.

I believe a few meetings ago, the Chair mentioned, We did some tax breaks for Cook Inlet a dozen or so years ago, and then we turned around and changed and rescinded some of those. So I'm really wondering if, you know, kind of compared to the global benchmark, if we really have the fiscal stability that we need for a project of this size.

Thank you, Senator Meese. Through the chair, clearly this is a topic that frequently comes up in the context of Alaska, so I'll keep my comments short. But I think in testimony provided by myself, my colleagues, and other individuals, investors don't like change, particularly on the tax front. And, you know, you can kind of divide those changes into fundamental structural changes and then changes to rates.

With a resource-rich economy like Alaska's, it's not unusual to see changes in tax. Interestingly, the— I was doing some research on this the other day— the UK is actually the least stable oil and gas regime at the moment because of the significant changes that have been undergone there. Norway, you know, I know you've looked at that in this committee, is one of the most stable. It's a very high taxation regime, but it's been like that for many, many years. So it's a major topic and indeed one I'm sure which we'll return to, but I'll leave my comments at that.

Okay. Thank you. Senator Rauscher. Thank you, Madam Chair, and this, this question is for you. Um, he's got the last one here, property tax community impacts, and I know we heard from the mayors in the past, and I'm wondering, have we gotten anything written from each one of the mayors on how it was going to impact their communities for us to review from time to time, or have we not?

I just was wondering. You're asking me, I believe, Senator Rauscher? No, I have nothing in writing. Okay, well, thank you very much. They will be testifying again.

Okay, well, thank you. All right, Mr. Fulford, I see no further questions. I'll let you go on now to number 6. Okay, thank you, Chair Giesel. Um, so just as a reminder, there are about 130 LNG export terminals around the world today.

Uh, they're in 22 countries. And, um, you know, each of these projects has gone on a very similar journey to the one we're talking about here, here in Alaska. Each has lessons and experience from which to draw. But fundamentally how these projects come together depends a great deal on the specific, unique features of the project and the host government. But if you like, one of the most encouraging features of all this is that whilst the projects are complex and challenging, they've all managed to kind of navigate their way through some of the complexities and challenges that we've been hearing about over the last couple of days in the hearings.

The other feature I would add from years of experience on many LNG projects is typically they encounter very tough financial hurdles with very thin margins, at least initially. So that's another feature that we're seeing here in Alaska. That's quite common. But then, of course, the real value tends to come in the following decades where they can become a huge contributing element to the economy. So I think, you know, listening to the previous testimonies and the other committee meetings so far on this bill, the intricacies of how it would be applied, they really show quite clearly, I think, that as the project develops New features will emerge that need to be addressed.

And, you know, for example, given the importance of the in-state supply and the potential for equity, that the number of moving parts, if you like, is quite significant, especially at this early stage. So as you think about the approach and the decision-making that goes into this, one characteristic, very common characteristic of all these big projects is that they are kind of iterative in nature as they reach the final stage of FID. So as the various features of the project come together, you know, things start to fall into place. Glenfarm and AGDC, they're also working on the project in this kind of very iterative way. They're securing technical contractual milestones.

While they are working on a complete set of documents. So coming back to my comments on the previous slide, it is really at these earlier stages of the dialogue between the project stakeholders that this kind of basic framework in which the project has to operate needs to have a reasonable degree of definition.

But it isn't typically until the project has been through the FEED process that ultimately precise terms evolve. So by the time the project reaches FYD, you would expect both the fiscal mechanisms and the precise tax rates to be in place, and it would not be unusual to see a number of iterations of these details as the FEED process evolves and the EPC and the construction contracts and so forth are put in place. Market changes, have to be incorporated. So, in fact, even when the project has passed FID and, and it's into its operational phase, sometimes these features have to be adjusted or recalibrated to refine how they work. For example, this is quite frequently done, you know, when an LNG project is expanded, it moves from 3 to 4 trains and so forth.

So there's a little bit of a parallel here in terms of what's happening on the other side of the equation. LNG sale and purchase agreements for the last 10 years or so, they typically come with some kind of re-opener or trigger to examine how things are working. These, just to be clear, these re-openers and triggers, they are within very constrained mechanisms, but nevertheless there is a recognition that sometimes the contract can't foresee or take into account every change that a project has to go through.

Another way to mitigate the risks, if you like, of these early decisions is to include sometimes called conditions precedents. You will see them referred to as CPs. This could include a requirement that certain things happen or certain outcomes are achieved, or it may simply be a time constraint. So these sorts of things are quite common in commercial sales contracts, and ultimately these are mechanisms that are available to the legislature as well. So at the end of the day, the legislature clearly has considerable discretion on the passing and repealing of laws.

And interestingly, you've heard me refer many times to the LNG Canada experience. So, so the BC government, they repealed and replaced LNG-related laws twice and changed the tax allowances for the project before the final package was agreed. So that's a good example there of, of how the tax framework evolved with the project as things became better defined.

So, if there are no questions, I will move to slide 7. I see no questions.

Okay. So, much of the debate, I think, around SB 280 has been, you know, the pros and cons of agreeing what is a fundamental change to tax law in Alaska compared with the benefits of providing greater clarity to the project. So as we sort of look at what some of those could be, first, and I highlighted this a few minutes ago in the context of fiscal stability, Progress on the property tax challenge. It is clear evidence of a working dialogue between the project developer and the state and a shared goal to create a suitable economic framework for the project. So this, this goes further than the property tax question, and it basically adds momentum to the project.

It, it will encourage buyers, it will encourage lenders, and it will demonstrate that there's a collaborative process underway to essentially get the project over the line.

Secondly, it helps obviously to find the economics and the financing features of the project. That helps to progress pricing negotiations with the buyers and dialogue with lenders and finance providers. So in that way, it arguably helps to pave the way as the dialogue with buyers moves from letter of intent to heads of agreement and finally a sale and purchase agreement. And then thirdly, and there's been evidence of this I think in the dialogue around the DOR presentation, it will help the state manage its budget. And, you know, some of the potential challenges and longer-term implications of making a change like this were starting to come out in the dialogue.

And obviously with a decision on moving to an AVT, for example, some of these budget planning features can be addressed in, in more detail. Um, so the, the, the other things I mentioned, as things, you know, come together, that there will be other features of taxation that need to be adjusted or altered in some way. And with the AVT mechanism, that then helps you move to other features like upstream tax or corporate income tax and so forth and establish a basis for those at the same time.

So, in general, it creates a much better planning horizon.

So, if we look at the other side of the equation, what are the some of the challenges? Well, the, the biggest challenge, of course, is that the legislature is being asked to consider this change without a detailed insight into the project, into its economics, how the— both the structural move to the AVT and the level of tax set— how that alters the balance between government take and profits being put into the private sector. Again, this sort of speaks to the heart of the constitutional obligation that you have, and in an environment without that full pricing mechanism, it's hard to take a decision.

I would add, though, that obviously for Glenfarm and AGDC, The same applies— we heard yesterday, I think, that they've yet to get their Class 2 cost estimates for the processing plant and the liquefaction. So, to some extent, they have some exposure too. And they'll be going through a similar process of iteratively trying to put the building blocks in place for the project.

So related to this, you know, loss of option value. Well, any trader or any decision maker, if you like, will always tell you that the best time to make a decision is right at the last minute when you have as much of the information at your disposal.

But again, it's one of those things where the— the decision to move to an AVP can be seen as a positive step towards the broader project. So, but at the end of the day, you know, making a decision early does have risks to it.

The other feature here is clearly everyone is aware on the committee and more widely in the state that property tax is a topic of great interest to a lot of people. It affects the boroughs and many others quite fundamentally. So as the debate continues, it wouldn't be surprising to see continuing pressure to revisit or to look at this again. And that's one of the things I'll come back to later in my presentation where we talk about some of the mechanisms that have been put in place elsewhere.

Interestingly, on incentive misalignment, I spoke on the last slide between the federal government initiatives such as the loan guarantees or grants which may be available, the state decision around property tax.

Those two elements are so separated in terms of policy and decision drivers, it's hard to see one affecting the other. But nevertheless, there are features like that which, you know, where a decision on property tax could affect something else.

The question of revenue distribution and transparency, clearly that has come up a lot. It came up with some of the comments received from the boroughs, and the bill provides considerable discretion for the state to kind of work on how those funds are distributed. But again, I'll come back to that a little bit more later on. So that's really the end of my comments on this slide, I think, and then in the next part of the presentation, we move on to some of the more specifics and the numbers. Great.

If you'd pause there, I wanted to welcome Senator Clayman, who joined us several minutes ago, and Representative Donna Mears joined us also quite some minutes ago. Are there questions on this slide? Seeing none, I'll let you proceed. Okay. Thank you, Chair Giesel.

So I'll move to slide 9.

As you think about the sort of population of LNG projects, they kind of fall into 3 buckets really, and the nature of the dialogue between the developers and the host government and so forth, and indeed communities, it, it, it is quite different depending on where you are in terms of these constraints. So in the simplest examples, you have a host government with a privately funded LNG project and, you know, no particular kind of policy goals which impact how the state enters its dialogue with the developer. So great examples of this would be Texas and Louisiana. A single LNG project makes very little difference to the state economy. It obviously does impact on the communities involved, but typically the dialogue between state and project would be limited to things like property tax changes and so forth.

So then you move to other countries where— or states indeed— where there's a clear constitutional requirement to manage resources in a way which is demonstrably in the interests of the citizens and the ultimate sort of benefit to the state. So immediately there with the constitutional duty, there comes a much higher hurdle in terms of diligence, understanding the economics of the project, being very clear about the division of wealth between the host nation or host state and the project. And I think I've spoken about some of these features previously, but they do— they have a very different characteristic to the much more straightforward discussion in in the first example. Then we move on a step further, which is where there is not only some kind of constitutional obligation on the state to ensure that things are being done appropriately, but the state is acquiring potentially equity in the project. So with that, you move to the kind of due diligence that you would see in a commercial LNG project where, for example, you know, an LNG buyer, for example, a Japanese buyer might be interested in taking equity in an LNG export project and there's a very considerable process of due diligence that goes on behind that.

Same with a lender and any large lender. So, so I want to kind of set the scene with that, with that explanation, because it does explain why the dialogue between the LNG project and the state here in Alaska is, is so different to how it would be characterized in Texas or Louisiana. It's, it's the constitutional element, and it's also the sort of fundamental impact that the project would have on the state and its economy. Madam Chair. Senator Myers has a question.

Thank you, Madam Chair. Mr. Fulford, so you said the rest of the United States and Canada are in the top category there. I think in our other discussions, you know, we've made it pretty clear that most places outside of North America are in the bottom category, the bottom box in your chart here. And Alaska is the one in the middle. Is there anybody else that in the oil and gas field that functions in that middle place besides Alaska?

Well, I'd have to refer— excuse me, through the chair— I'd have to refer back to some of our previous analysis, but maybe I could remind myself of the detail and respond. In writing to that question. I appreciate that. Thank you. Very good.

Senator Wielekowski. Thank you. In, in the other jurisdictions that are similar to Alaska, where there's obligation to develop the resources for the public good, closer collaboration and information sharing with the project developers and other stakeholders is required, is How would you say Alaska compares in this project to those jurisdictions in terms of the information that we're getting, the collaboration that we're having?

Thank you, Senator Wielekowski. Through the chair, the— one of the features that you typically see in some of these other jurisdictions is a state oil and gas company which typically has extremely close eyes into the energy ministry and the functions of government.

In this example, AGDC created through SB 138 and so forth And so they have a role which is akin to a state-owned oil or gas company but is also different. So one of the differences I think would be in the way that AGDC is set up and how that plays into this question of the dialogue between developers and the state. Follow-up, Senator Wilkowski. But do you, do you think the Alaska legislature is getting the appropriate amount of information that we need to make the decisions that we need to make, or do you think we should just be relying on AGDC, or do you think there should be more information that we're getting?

Uh, yes, thank you for the question, Senator Wolekowski, and through the chair, um, one of the features which I've talked about and, and we've discussed is this question of the open book economic model, um, which is typically an Excel-based, um, model of the project which is, is accessible by all the stakeholders including host government, at least, you know, certain individuals within host government. So listening to the testimony over the last couple of days, I noticed that the DOR presentation, the comments that Mr. Stickel made, he referred a number of times there to receiving guidance from AGDC on certain assumptions or how the how his model has been structured. So my sense, without having discussed any of this with the individuals concerned, but my sense is that Mr. Stickel's model, the DOR model, is starting to approach what I would describe as an open book economic model or an OBEM. So as that develops and as the project starts to benefit from better definition around, you know, budget costings and so forth, I would expect potentially that economic model and the discussions around it to form an OBAM-like dialogue, if you want.

So I think it's— in some ways it's not surprising that the detail of the project isn't being fully shared with the legislature, although clearly AGDC have access to some or all of that.

So we're obviously on a journey, and as we go down that road, more and more information will be shared. But, you know, we are still at a relatively early stage of the project, and I think there's a way to go before those details can probably be shared. Senator Wielekowski. Do you think the legislature has the information that it needs in order to make the decisions that we need, or do you think we should wait until the information is more closely defined for whether it's FID or feed. Do you think we should wait until those numbers are fleshed out a little bit more, or do you think we should just go ahead and make, make the decision and just hope we're right?

Thank you, Senator Wielekowski. And obviously there are a whole range of policy implications, you know, involved in a decision by, by the legislature. But as I said at the start of the presentation, I think it might be helpful to look at SB 280, for example, in two different ways. One is a structural change in the property tax mechanism which aligns the mechanism much better with what would be needed for a true economic basis of the project. The second is the question of the tax rate.

The first, I would say, is an imperative for the legislature to resolve because the lack of a resolution on that is, I suspect, potentially holding up the dialogue with interested stakeholders. The second one, the setting of the rate, is a more complex question. And, you know, if you look at other jurisdictions, were you to set a rate now, you may wish to revisit it at the point where FID is approaching. As I mentioned before, there is an iterative process going on here which, you know, where quite significant changes in project economics could could occur, you know, between now and FID. And ultimately, the legislature will want some discretion in terms of setting of the tax rates and so forth, such that it's done appropriately prior to FID when the project is actually launched.

Follow-up.

That is an extremely helpful statement, at least for me. And I'm curious if you— so if I'm here, I just want to restate what you said because I think it's important and I want to make sure I got it right. So you're saying that the discussion about going to an AVT you believe is critical. And correct me if I'm wrong on that. But you're also saying we could set a rate but for maybe set a framework for rate?

What advice would you give us on that? So if you could— two questions there.

Thank you, Senator Wielechowski. And I would agree with the first restatement. A formulation of the property tax mechanism towards an AVT would be really an essential step in creating an economic framework for the project with appropriate fiscal controls. On the second one, my assumption is that in suggesting a 6 cents per MCF AVT, which I understand that number has arisen from the project developers, but correct me if I'm wrong. So in setting that number, there's probably a reasonable expectation on their part that, give or take, that's about the number that the project could sustain.

I don't think they would wish to see material changes in tax rates as the project progresses. So, you know, one way would be to set the tax at 6 cents and provide for a framework for re-examining that if it was required. I think some thought would need to go into what that framework would look like because it wouldn't be in anybody's interest, I think, for it to be essentially just a completely open question. And I, I mentioned, you know, LNG price reopeners, you know, they typically contain certain criteria which have to occur for the reopen to, to be, um, be followed. Um, you know, sometimes there's a time constraint, so maybe some of the lessons from that type of framework could be applied this to provide the state with some flexibility as you go forward and as the economics of the project become more disclosed.

Further questions? I see no more on this slide. I'll let you go on to slide 10.

Okay, thank you, Chair Gizon. So some of these numbers will look familiar.

These are property tax subsidies that I have discussed before. For the benefit of today's discussion, I thought it would be useful to turn it into dollars per MCF, given that we are talking about a dollar per MCF charge. So as you look across here, just to be clear, The number in the right-hand column, it's not a tax that's imposed. It's a tax reduction that's being offered to the project. So, for example, Sabine Pass at the top there, 30 million tonnes per annum.

The property tax holiday that they were offered is worth about 33 cents in MCF. And so forth as you go down. So the other things to recognize here is that the nominal property rate in Louisiana is 100 mils. So it's already half what it would be in Alaska. And it should also be added that the taxable value of the LNG plant is worked out in a different way.

At the bottom I put an example calculation. It is not an accurate reflection of Alaska property tax. It is just an approximation based on a $50 billion initial capital number depreciated over 20 years and taxed at 20 mils. Obviously there are nuances around municipal taxes versus state. But as a kind of a helpful guide, the number's there for illustrative purposes.

So you can see there that the contributions to essentially the property tax subsidies offered to these projects is material, and it compares at least in some way to the discussion here in Alaska.

Slide 11 represents the same analysis for Texas.

The mill rates are a little different in Texas. They, they're made up of county, city, and port authority. In 2022, the potential for LNG projects to benefit from a reduction in property tax for school districts, that, that was taken out. So you can see the last two projects, including the Glen Farms Texas LNG, you can see that the size of the property tax subsidy there was somewhat smaller.

But again, taxable value is typically about 75% of the cost of the terminal. But anyway, these provide a guide as to how property tax has been dealt with in other projects and the extent to which projects have been offered concessions. So if there are no questions on those slides, I will—. There is a question from Senator Dunbar. Thank you, Madam Chair, and thank you, Mr. Fulford.

I'm trying to interpret this information and sort of put it in a way that I can understand, maybe the public can digest as well. So the numbers on the far right, approximate value of the tax holiday per MCF, and that's just property taxes as you indicated. There's also— there are other taxes in these jurisdictions that maybe we don't have, correct? But then beyond that—. Yes.

If you just compare the two, other— these other projects are going forward with 3 cents, 10 cents, 3 cents again. Ours is 78 cents. That seems very much out of step with the other projects. Is that a fair interpretation?

Uh, it is. And, uh, just briefly, uh, through the chair, brief comment while you— and while you pause on the rest of your question there. It's two reasons really. One is the relatively high mill rate and the other is the nature of the tax, which is very much focused on the front end so that the highest tax is at the start of operations. So those are the two reasons why the numbers are different.

Follow-up, Madam Chair. Yeah, and I understand that that issue of having the tax on the front end, and we discussed that yesterday too, and there might be other ways to shift the cost to the pipeline, not just the pipeline, but the project, into out years when they are generating revenue, while simultaneously protecting the state's interests, both in the short run and hopefully over the long run, we can recover some of that value. I guess my question is, for example, if those two numbers were reversed, and it was 0.53 for the first 10 years and 0.78 for the out years. Would that appreciably change things for the project?

Um, uh, thank you, Senator Dunbar, for the question. I think it's worth, um, it's worth, uh, considering how these project investors would typically look at the economics for an LNG project like this.

First of all, they would apply, you know, a fairly significant discount rate to revenues and indeed costs as, as they, as time progresses. So a burden on the project which, or, you know, taxes charged to the project which occur 10 years from now would be very significantly discounted compared to taxes on the project in year 1. And that's one of the main reasons why Texas, Louisiana— we're talking about a 10-year tax holiday because, you know, by the time the taxes do become payable, the value in money of the day terms is significantly less than the project. Equally, you know, debt's been paid down, you know, cash flows have increased, so the ability of the project to support these taxes later in life is much, much higher than in the early days, I would say. Follow-up, Senator Dunbar.

That all makes sense. Of course, what we're asking to do is more than just a tax holiday. It's a tax holiday and then a permanent permanent tax cut. Now, nothing, of course, can be permanent. Other— we can't bind future legislatures, but essentially that's what we'll be asked to do.

But Mr. Fulford, shouldn't we also apply something like that discount rate for the out years? So you saw the graphs yesterday. Um, was it two days ago? I think it was yesterday. We're doing this every day now, so starting to flow together a little bit.

But the— we are asked to actually run our revenue into the negative when it comes to connected oil taxes in the short term on the promise of increased revenues in the out term. But shouldn't we use similar kind of logic that these projects are using and value immediate dollars more than highly discounted future dollars?

Thank you, Senator Dunbar, for the follow-up. There's a third feature which is worth discussing too, and that is revenue stability. So it's not just the amount, it's how stable that revenue is for the state and for municipalities.

So that has value too. To the state and to municipalities.

So there are, if you like, 2 or 3 factors at stake. One is time value of money and how that is used to value the broader tax. The other is how you value a steady income that can be more dependable for schools, health, and so forth. And I didn't put it on the slides today, but in Maryland, the HILT that was agreed for Cove Point, the LNG project there, it was mainly agreed because the, the alternative was creating extremely volatile tax income, property tax income for the local communities. So I would add that And the other feature which is potentially quite a material element of the AVT is that it continues in perpetuity.

And, you know, from a time value of money perspective, you know, $60 million a year in today's money in 20 or 30 or 40 years' time, it has very low value once you discount it. But for the state and for the communities involved, you know, a revenue like that which could continue for many decades, it has some significance compared to a property tax which may be based on a pretty well-written-down asset. Follow-up? I'll just— one last note on that, Madam Chair. I'll just say I think it would hold its value if it was adjusted for inflation, but I don't think we're being asked to do a percentage value.

I think we're asked to be doing a flat— a flat cent value that's going to get progressively less valuable as the years progress. But that's all. Thank you, Madam Chair. Senator Kawasaki. Yeah, I had a question for Nick, thanks for being online.

The question has to do with— I know we're just talking property taxes. This seems to be sweeping larger than just property taxes. It talks about replacing all state municipal property ad valorem and sales and use taxes on qualified property, municipal taxes on gross or net income, license fees, excise taxes, and other charges. Is that typical for most jurisdictions?

Thank you, Senator Kawasaki. Through the Chair, I must admit I've not come across that in any other jurisdictions, although the— in a place like Tanzania or Mozambique, for example, where really you're talking a sort of transformational impact of the LNG project. The dialogue does get right down to quite detailed features of how communities and municipalities and local governments can be assisted. So it can get very detailed, but I haven't— and well, ad valorem, so VAT, value-added tax, That typically is a feature in many countries. It is not quite the same, but that typically gets roped in.

Thank you. Sunder Wolekowski. Thank you. The information in this slide and the previous slide is interesting, but I don't know how to put this in context. I don't know that this helps me, at least me, a whole lot.

It shows me that some communities give a tax holiday of 2 cents 2 cents and some give a tax holiday on the previous slide of 58 cents. And I see what the value of that is, but I don't— I guess fundamentally what I'm trying to get at is we have a constitutional obligation to get the maximum value for the resource. And what that means to me is sort of what Jay Hammond used to say, you extract every penny you can. That's our job. And I don't know that this is helpful to me.

In getting to that answer. What would be helpful to me is, is maybe some information from you or the department saying, well, the internal rate of return for the company needs to be 10%, pick a number. If you tax at 6 cents, they have an 11% rate of return. If you tax at 7 cents, they have a 10.9% rate of return. That just seems to be more where this discussion should be.

Am I wrong in that?

Uh, thank you, Senator Wielechowski. Um, the, the process you described there is very consistent with the type of dialogue that, you know, we've seen in many other jurisdictions, and, and this is where getting down to the nitty-gritty of economics and the economic model with all these factors is ultimately what will drive the equation which will govern the split between a private investor and the host government. Follow-up? So can you get us modeling like that as we move forward in this next few weeks of debate and discussion on this? Because at least to me, that seems to be what has driven our decision on oil taxes in recent years.

Well, in the last 20 years, I should say, where we've had analysis on what various tax rates implications would be on particular oil fields. But in this case, we have one discrete project, and it seems to me you could just simply create an analysis where it would show, well, what the cost of the project is estimated to be, what the total tax the producer has to pay, what the cost of the product is, what the sale of the product is, what the gas treatment costs are, and you could almost create a— I mean, you could create a formula. It seems like it wouldn't be that hard to do. It'd be hard for me. It probably wouldn't be hard for you.

And then you could plug in the numbers, and then you come up and figure out, well, what's a standard rate of return? That seems to me would be a helpful process.

Yes, I agree, Senator Wilkowski, through the Chair. The greatest uncertainty which obviously— well, which obviously we talked about is the capital cost and where that's likely to come out. So the mechanics of the LNG economics are relatively straightforward. You know, it involves a fairly complex Excel model, but The mechanics of it are relatively straightforward. It's the assumptions that obviously will drive the outcome because in a very high capital cost outcome, clearly the potential for government revenues is less and vice versa.

So the modeling per se is— you know, it can be done. It's the assumptions which are key. Key. And while we're on the topic, depending on how the committee wants to progress this type of work, I mentioned that I think the DOR model is potentially moving towards what I would classify as an OBEM, open book economic model, given the guidance that they've had from AGDC. That, that might be the place to start.

And I'd be happy to work with DOR on what that looks like and checking it against other models that we have. Anyway, I'll leave that for you to consider. Further questions on slide 11, 10 and 11? Senator Clayman. Thank you.

One of the challenges that I continue to have with all the discussion is the unknown of whether this project will actually go forward or not go forward. That in the best possible world, we come up with the perfect tax rate, the project goes forward next summer, construction has started. But if we were to try to put some sort of a time period in which, you know, say we come up with a solution for this legislative session, we come with a solution, but we have many uncertainties about that, including whether the project even goes forward. Is there some time period that's reasonable to essentially sunset that proposal so that if it hasn't developed, things aren't going forward, or even if it has, we put ourselves in a position to further examine what's going on and is it really working or not working in that we don't get in a place in which we lock ourselves in on a 20-year picture and 10 years in people are saying, well, you didn't really look at all those things. So if we were to try to put a sunset, what is a— what's a reasonable sunset approach given the uncertainty of whether it even goes forward?

Thank you, Senator Clayman, and through the chair. Obviously, I have no insight into any of the sort of project documentation or contracts, I would assume that some or many of those also have some kind of clause which relates to timeframe.

And in an ideal world, a sort of sunset clause around legislative actions would potentially correspond to some of the key timeframes in those contracts. And that might be a dialogue to have with AGDC.

All right, I see no further questions. I'll let you go on to slide 12, Mr. Fulford. Okay, thank you, Chair Giesel. And, um, so this comes to the ad valorem bed tax and so forth. Now, this came up at yesterday's hearing, and you had some testimony from, I think, DOR— oh no, legal.

In terms of the interpretation of the bill as it stands. This slide simply highlights the likely level of expenditure which could be directed towards some of those other taxes which may or may not be included in the bill. As you can see here, in terms of the workforce, I think Glen Farnham suggested the peak workforce would be about 12,000 people, which most likely would be sort of about two-thirds of the way through the project.

And at a $200 per worker sort of subsistence accommodation cost, you can see that that generates almost $1 billion of expenditure in around the middle part of the project there. So, just simply an illustration that that particular topic around how activities related to the project are taxed, it is a fairly material number.

Very good. I do not see any questions on that.

Okay. Thank you. Moving to slide 13, we talked about jurisdictions with a similar constitutional requirement to monetize resources to the benefit of the citizens. So this is a list of some of those which apply.

In the context of SB 180, It's just interesting to compare Mozambique and Tanzania in the context of Alaska and British Columbia, um, two adjoining jurisdictions, uh, both with similar kind of gas economics and so forth. Uh, what's interesting there is that in 2017, um, Tanzania introduced a bill which really provided such a high degree of control over the project using the sort of constitutional obligation as the sort of rationale that it made it then very difficult for international energy companies and so forth to operate without that concerned that the government were about to potentially change many features.

So in effect what happened is that the capital flowed towards Mozambique, which had equally a pretty demanding framework for the project, for taxes and so forth, but in the context of you know, as I say, Alaska and BC is a really good textbook example of how capital can flow between two countries depending on the perception of risk and control.

The other candidate on here, which I will return to in a few minutes, is Papua New Guinea because they introduced a very comprehensive program for support for communities impacted by the project, which I'll come back to. But on the next slide is some examples of different jurisdictions and how they've imposed the tax. So as you think about the 6 cents per MCF AVT, this next slide sets out some of the comparisons. Senator Myers has a question. Which slide were you speaking to, Senator Myers?

I was looking at 13 still. At 13, okay. Yeah, Mr. Fulford, I can't help but notice that, you know, with all these countries that have, you know, public interest or ownership language, you're— well, to be blunt, you're comparing us to third world countries more or less. And I kind of have to wonder if in your analysis, if some of these requirements for the country to, you know, basically get the maximum revenue have acted in such a way as to help keep those countries poor in some extent.

Thank you, Senator Wyss.

I, I fully, I fully accept your initial comment that the comparisons between Alaska with its developed economy and standard of living is, is very different to some of these countries here. But nevertheless, from an LNG perspective, I think there are some very interesting parallels which, which could be learned, but You know, I would say of these countries, you know, Nigeria has well-known challenges in terms of governance and transparency.

Mozambique's an interesting one. They've been exporting LNG now for probably 2.5 years, and already you can see the differences in terms of stability, foreign exchange, and so forth. So that's maybe an example of where things have turned out well.

But there's the phrase that talks about the— I think it's called the winner's curse. Countries that encounter significant wealth and income, sometimes the outcome isn't what's planned. Okay. Just one, one more follow-up on that. Yes.

With these countries that you listed, when they had their LNG projects going forward, were they also offering tax incentives at the time that those were being created?

Yeah. Thank you, Senator Myers, through the chair.

In some of these countries, it required almost a, you know, complete reinvention of tax and tax mechanisms.

And the formulation of the tax mechanisms and tax rates was almost like a commercial negotiation. It was a kind of a unique set of laws which were specific to the LNG project. And that's another thing which is useful to remember, you know, these projects are so big and so complex, sometimes, you know, they need their own enabling legislation which sets them apart from any other oil or gas activity. Okay. I'll hold off for now.

Thank you. Thank you. Senator Wilkowski. Yeah, I know when we talk about stability, there's a lot of people like to criticize the state we live in and saying we're unstable. But I would just point out that a number of these jurisdictions are, some people might say, are not the most stable in the world.

Papua New Guinea, the United States government urges Americans to reconsider travel there. Nigeria is known for having its pipelines blown up and its workers assassinated. Algeria's border areas where there's, uh, fraught with terrorism. Peru was subject to nationwide strikes recently. Mozambique has Islamic State-linked insurgencies.

So I know people like to beat up on Alaska and say we're not the most stable place, but looking at some of these other jurisdictions around the world, I would say we're a pretty good place to do business. And that's not— that's not even including Venezuela, where Hugo Chávez raised the taxes to 90% and expropriated assets, and Russia, where Vladimir Putin raised the taxes to 90% and expropriated assets, Bolivia, where the president there expropriated assets, Libya, where Muammar Gaddafi— there was a civil war— expropriated assets and raised taxes to 90%. So I would say Alaska is not a terrible place to do business for those who like to beat up on our state. He's nice and caught. Yeah.

Thank you, Senator Murkowski. Um, it's actually a highly relevant comment because, um, given the events of the last couple of months, um, you know, stability and reliability have moved so far up the LNG agenda that, um, you know, as you look at Alaska, it from a stability and dependability point of view, it's kind of very much at the top of the list. As I mentioned before, you know, short hop across the Pacific Ocean, no navigation threats. So, you know, your comments are actually very relevant at the moment.

Are there further questions on slide 13? We're going to spend about 4 more minutes and then we're going to go to public testimony. I have 5 people wishing to to testify. Slide 14. Okay.

Thank you, Cheggis. I'll aim to essentially wrap up with that time because I think we've got a break really coming up at 16:00. Yes. So what I've done here is to look at specific features which have been directed towards, you know, benefit to local communities. What I've tried to to do is to put them in cents per MCF terms so that you can compare it with the 6 cents here.

So for example, there you've got, you know, benefits to the local municipality in Norway, 7 cents. That's probably the closest approximation. LNG Canada, this is for the benefit of one of the local First Nations, is 1 cent there. It's— there's another 1 cent with the wider kind of BC Coastal Fund. And then another Canadian example also directed towards First Nations, that was Four Cents.

So with that, in the time remaining, I might suggest that we move on briefly to slide 15, which does a little bit more of a deep dive into Papua New Guinea.

Alright, we're good. Okay, good. So interesting example there because a lot of time and effort was put into addressing some of the concerns about how the original LNG project would impact on some of the local communities, many of which were sort of relatively isolated and not really accustomed to any kind of industrial activity. So the way they did it was in two halves. One was financial with what was essentially a royalty on the gas based on its value at the wellhead.

And that was split between direct benefit to what they class as clans, might be considered a tribe, for example.

Then to community investments and infrastructure and to a future generations fund. There's also a development levy which is less well defined but is supplied for local infrastructure development. But also with that came an opportunity to invest in equity on the project. So in that case it was 19.4 overall state interest of which 4.27 under what was called the croton equity option. It was an amalgamation of all the local communities impacted.

So they had equity in the project. It wasn't a carried interest as it is sometimes, so they had to fund the original equity, but they were offered assistance to do so. By the state government. And coming back to some of the remarks earlier, I think this is a good example of where even with the best thought and planning, being able to put in place a fair and equitable mechanism to recognize the disruption to local communities is a difficult thing to do. And since it was put in place, there has been quite a lot of dialogue and indeed litigation around it.

But, you know, this was the mechanism they chose to do. But with that, perhaps it's appropriate to wind up and pass back to you, Chair Giselle. Thank you very much, Mr. Fulford. Yes, let's stop here. We are hoping— I am hoping that you're available tomorrow morning at 9:00 a.m. Would you be?

Uh, yes, I can come back at 9 tomorrow. Yeah. All right, that would be great, and we can plan to continue this. At this time, we do have folks signed up for public testimony, so I'm going to start with the folks online. The first person is Brian Kazloff from Fairbanks.

He's with ACPRG, the League Regulatory Analyst. After Mr. Kazloff will be Mike Chenault, Board member, AGDC. Welcome, Mr. Kasloff. I am limiting public testimony to 2 minutes. Please identify yourself for the record first of all and your affiliation, and then give us your testimony.

Welcome. Thank you, Chair Gifford, members of the committee. My name is Brian Kasloff. I'm calling from Fairbanks on behalf of the Alaska Public Interest Research Group. That's probably the statewide nonpartisan federal a 1953 nonprofit with over 50 years of history advocating for public interest in Alaska.

Aakpik strongly supports the transparency and fiscal accountability provisions of SB 275 and appreciates the committee's efforts to address these important questions. Glenn Farnham has refused to share critical information about project governance and economics with legislators. This would be concerning under any circumstance, but is serious alarmings given the following: Glenfarm has no proven track record, having never brought an LNG export project to final investment decision. Glenfarm's assertions that the project might not go ahead without substantial tax breaks raises questions about its competitiveness. Glenfarm proposes to begin construction on Phase 1, an in-state natural gas pipeline, before it completes the final engineering studies for Phase 2, the gas plant and LNG export facility.

Without any guarantee of the viability of Phase 2, there's a very real possibility Laxton's could be left responsible for the full cost of a pipeline. Glenfarm has promised that gas from a standalone Phase 1 pipeline would be competitive with imported LNG, and I've seen cost estimates between $12 to $16 for imported LNG. Uh, but Glenfarm will not share in this the information necessary to verify this, and their calculations assume a volume of gas that is more than twice Korean state use. A 2023 estimate by the Berkeley Research Group, which was hired by NSTAR and other utilities to consider new gas supplies, estimated a far higher price for gas from a privately owned, in-state-only pipeline at about $28 per thousand cubic feet. Uh, all these reasons and others make transparency essential.

We support other aspects of the bill as well. I include those in my written comments, and I will close there. Thank you for your work. Thank you, Mr. Kazoff, for your testimony, and thank you also for bringing up the written testimony, which I will emphasize we accept written testimony. You can email it to Senate Resources—no dots between those words—Senate Resources akleg.gov.

And we're happy to take written testimony. So next up is Mike Chenault, board member, AGDC. Following Mr. Chenault will be Sean McDermott from— he's calling in from Homer with the Fairbanks Climate Action. Mr. Chenault, welcome.

Thank you, Madam Chair and committee members. I have a lot more to say than what I'm allowed in 2 minutes, but I'll try to cut through it. When creating AGDC, the legislature wanted to take the decision-making out of the political arena of the legislature and provide it to a board whose main focus is to assess commercial, fiscal, and legal risk impacts. The sponsor stated that the project is changed since SB 138. The ExxonMobil-led project was originally envisioned as an equity participation project where all the partners would be responsible for bringing their percentage of equity to FID to move the project forward.

At $40 billion, this would have meant that the state would have had to fund $10 billion and accept the risk of scheduling project costs over We heard from Wood Mack that the Exxon project was uneconomical due to the high rate of return that the producers would require to invest their equity. Wood Mack recommended the project move to a project finance model akin to the LNG export projects then under construction on the U.S. Gulf Coast. The project finance The lease model is where the project is financed with a combination of debt and equity, and the debt is underpinned by offtake agreements. The project sponsors are willing to accept a lower rate of return, say 10 to 12%, as compared to the international oil companies who want 18 to 22%. With lower equity and debt costs, the project is more economical.

Uh, I'll skip that and get down to— in 2024, Glenfarm stepped in as a potential lead developer to begin due diligence in earnest, coming to Alaska and meeting with various companies, government officials, utilities, and several legislators. Thank you, Mr. Chenault, for your testimony. As I said before, we'd be happy to accept your testimony in written form. It will be distributed to all the committee members. Next up is Sean McDermott.

He's the energy policy analyst, Fairbanks Climate Action Coalition. Following Mr. McDermott will be Maddy Halloran. Mr. McDermott, welcome. [FOREIGN LANGUAGE] Hi, can you hear me? Yes.

Uh, great. Thank you, Madam Chair and members of the committee. My name is Sean McDermott and I work on climate and energy issues with the Fairbanks Climate Action Coalition. Thank you for the opportunity to comment today and for this committee's diligence on this issue. I'm calling to express our support for the measures outlined in Senate Bill 275.

Without detailed cost estimates from AGDC and Glenfarm, there's no way for legislators Alaskans to know the true cost and impact this project will have on our communities. In response to questions from this committee on March 18th, Mr. Fulford acknowledged that without the Title Financial Guardrails proposed in this legislation, existing Alaska law does not adequately protect Alaskans' interests in this project. This project is also operating on lots of problematic assumptions. The claim for the phased approach to the project was to provide affordable gas to Alaska, but Mr. Kissinger with AGDC has told House Resources that the Phase 1 pipeline wouldn't provide lower-cost gas to Alaskans. The Wood Mackenzie Alaska LNG report that is often cited assumed that 90% of Fairbanks would be connected to natural gas within just a few years.

There's no plan for a spur line to Fairbanks. And as Borough Mayor Hopkins pointed out, even with current property tax rates, Fairbanks doesn't get revenue and doesn't get gas from this project. Continues to say that the project will cost $44-46 billion, but this committee heard Monday that project consultant Mark Beggich recently suggested the cost may be $57 billion. Independent analysis suggests that number is likely to be upwards of $70 billion. Without transparency concerning overall cost estimates, the true impacts of the governor and Glenn Barnes' property tax legislation are also a mystery.

So how can they possibly ask Alaskans to subsidize the project to Property Tax cuts worth billions before the true cost of those cuts are known. Another critical financial piece of this conversation, which I feel has not been addressed, is the need for a clearly defined and funded plan for dismantling, removal, and restoration, like TAPS, which could otherwise cost Alaskans billions in public funds. Thank you for your time and consideration, and I'm happy to answer any questions. Thank you very much for your testimony, Mr. McDermott. Going now to Maddie Halloran.

After Maddie, I'm going to go here into the room to Doug Woodby. Maddie, welcome. Your name, your affiliation, and give us your testimony, please. [Speaker:MADDIE_HALLORAN] Hi. Thank you, Madam Chair.

My name is Maddie Halloran. I'm calling in on behalf of myself from Anchorage. I'm a born and raised Alaskan. I want to start by thanking both you for bringing this really important issue to light with this bill, and also Senator Dunbar, who is a great representative of my neighborhood. Thanks to both of you.

I'm supportive of Senate Bill 275 because I'm just really concerned about this project for a lot of reasons, but the potential impact of moving forward on such a costly project when it appears from all of the Great questions that you were all just asking in that presentation. Uh, legislators even really close to the project don't currently have a full picture of what it will cost our state. Um, as Sean just said, Glenfarm has not provided an updated construction estimate in years, and I'm, I'm worried the current gas crisis in the Rail Belt and the current state fiscal crisis are being leveraged to push this project forward when it won't actually come online in time to help us solve any of those issues. Um, my friend told me yesterday that her heating bill in Fairbanks for an apartment complex is normally $1,200 for the first 3 months of the year, and it's $4,000 because of high prices and the really unusually deep cold in Fairbanks this year. I've heard from lots of neighbors across Alaska, we're all facing really big utility bills that are only going to grow with the current oil— world oil crisis, local gas crisis, and We've all watched there be an insufficient budget to meet state, state needs for year after year now.

So we're basically losing twice by hinging our future on these extraction projects, and this project in particular feels like we're doubling down on a strategy that's not really serving us anymore as a state. I'd love to see the legislature consider an analysis showing how much money we could save Alaskans by mobilizing just a fraction of the cost of this proposal into renewable energy projects and training Alaskans on how to maintain new energy infrastructure. I believe public dollars should be used to serve the public and not subsidize projects that will only make out-of-state millionaires richer.

Thank you very much, Maddie, for your testimony. Um, next up, we're going to go here to the room. Doug Woodby is here present in the room to testify. After Mr. Woodby, Ben Bodger— Bodger— is online to speak to us. Welcome, Mr. Woodby.

Thank you. Thank you, Chair Giesel and members of the committee. My name is Doug Woodby and I live in Juneau and I represent 350 Juneau.

Mostly I want to thank you Senator Giesel, your staff, and others on the committee who have done the hard work to bring this bill forward to increase transparency for the LNG project.

The developer of the project, 8Star, suffers from a transparency gap, especially in regard to project timelines and project costs. Just yesterday morning in this room, you heard that the FEED studies for the gas treatment plant plant and liquefaction plant may not get started until sometime mid-year to— this year. And they are not expected to be completed for a year, which means the FID, the final investment decision, won't happen until sometime next year at the earliest. But we keep seeing glowing press releases from Glenfarm, such as the one that came out on April 2nd, saying that Alaska LNG offtake volumes will be, quote, determined when customer allocations are finalized in the coming weeks, end quote. And our governor and others keep saying we're closer than ever to having a gas line.

It could make a person wonder if we're being taken for a ride. There's a consulting industry built around this pipeline planning process that must be profiting pretty well. And we have Alaskan workers and families looking forward to the promise of good jobs on an economic boom and supposedly cheaper energy costs. But does it pencil out? It's hard to know.

Yes, we need greater transparency. I'm really thankful that you brought this bill forward. That's all I have. Thank you very much, Mr. Woodby. And if you'd like to leave your written testimony with our Senate secretary over there, she'd be happy to accept it.

I'll send it in to your email address you stated. As previously. All right, great. Thank you for your testimony. The last person is on line, Ben Boettcher from Soldotna.

He's with Cook Inlet Keeper. Mr. Boettcher, welcome.

Thank you. I'm Ben Boettcher, Cook Inlet Keeper's energy policy analyst. I thank the committee for bringing forward this much-needed bill. The project's changing fast. And in the numbers and projections that you've seen, it's far from clear that every possible scenario would necessarily bring benefit to Alaskans, either in low energy costs or revenue.

I think it's not even clear that the majority of scenarios or most likely scenarios would bring benefits to Alaskans. And as our representatives, the constitutional mandate to realize the maximum value of Alaska's resources, you have an obligation to be proactive in watching these development and getting all the information you need for sound decision-making. Senate Bill 275 is a strong step and a far smarter approach than the blind trust and wishful thinking that have so far guided Alaska's approach to this gas line project. All week you've been looking at a spread of potential outcomes for the project involving variables of capital costs, domestic gas prices. Another variable in the background is Asian utilities' decisions about continuing to rely on LNG and what prices they'll accept to continue that reliance.

And I hope that seeing these possible scenarios makes it clear to you what Alaska LNG actually is. It's gambling. It's gambling on geopolitical scenarios involving the price of LNG in Asia. It's gambling on the capacity of partners we don't know much about who have yet to actually bring an LNG project, final investment decision, and the legislature has made bad bets in the past. And if you're going to continue rolling dice for Alaska's energy future, you should at least understand the game you're in and who you're playing with.

So I hope you'll pass this bill. Thank you. Thank you very much for your testimony. That concludes the testimony today. I'm going to close public testimony.

We will probably open it again as we have committee substitutes and so forth. And both bills are open— will be open for public testimony. That's Senate Bill 275 and Senate Bill 280. So at this time, we've reached the end of our agenda today. Our next meeting will continue with Gaffney Klein, and following that, we'll hear from Pegasus.

The next meeting will be tomorrow at 9:00 a.m. In this room. So that's Thursday, April 16th. At this time, we will stand adjourned. Let the record reflect the time is 4:59 PM.