“Well, that escalated quickly.” Those are the words of the stately gentleman Ron Burgundy from “The Anchorman” but also certainly apply to the debate/circus currently taking place in Juneau around the Alaska gasline project.

From what I can gather, they are either ready to turn dirt tomorrow, after a minor “$1 billion annual property tax concession” from the state, or it’s a $75+ billion wildly uneconomic project that some of the largest and most knowledgeable builders of such projects walked away from a decade ago when it was “only” $44 billion. What should we believe?

The bottom line is this – Governor Mike Dunleavy (R – Alaska)/Glenfarne/the Alaska Gasline Development Corporation (AGDC) is demanding the Legislature agree to a massive revenue give-away without providing any information to justify such a decision. “We’re not going to tell you how much it will cost or how much revenue we expect to generate but our first request of Alaskans and the Legislature is for you to give up $1 billion in annual revenue.” Trust us…we’re the government…we’re only here to help.

I was somewhat shocked to see a headline to an op-ed several weeks ago from Governor Dunleavy and Mark Begich stating, “Let’s Finish the Pipeline.” Seriously? This deceitful headline is what leads Alaskans (who are not up to speed on this project) to actually believe we truly are “ready to turn dirt” tomorrow.

Now if only that pesky Legislature would stop asking questions and just get out of the way. We don’t even know how much it will cost and apparently, we will not be told the revised amount. Why is the Governor/Glenfarne/AGDC trying to hide this critical information from the decision makers in Juneau and all Alaskans? Is this standard operating procedure for projects like this?

We don’t have to speculate on this basic but critical question on how these projects are actually built by real companies. Alaska has been in this position before. In fact, the now decade plus old cost estimate of $44 billion that the current group refuses to update publicly, was produced and made public by a very similar public/private partnership as we have now.

The state owned 25% of the project back in the 2014-2016 timeframe and the other 75% was owned by the private sector consisting of Conoco, BP, and Exxon. Unlike Glenfarne, those three companies have actually designed, built and operated massive gas projects all around the world and were more than willing to provide Alaskans the basic cost estimate of $44 billion. They understood that as equal partners, we had the right to know the challenging economics the project faced. After all, we were going to have to make a final invest decision (FID) just like our three partners were preparing to do.

So why the secrecy from the Governor/Glenfarne/AGDC on this iteration? Today, the exact same structure is in place. AGDC still owns 25% and the other 75% is owned by the private company Glenfarne. So why were three of the largest and most successful gas project designers/builders/operators in the world willing to provide Alaskans with a cost estimate yet this new entity refuses to do so?

Let’s be honest, this new group is not even close to being on the same financial or technical level as our previous partners, yet they refuse to provide the Legislature and Alaskans the basic cost estimate so that we can do our own due diligence on behalf of Alaskans. I’m pretty confident there would have been a massive revolt if our previous three partners took the same approach.

Apparently Conoco/BP/Exxon thought it was critical for Alaskans to understand the entire economic package yet now the Governor/Glenfarne/AGDC’s position is “Alaskans are on a need to know basis…and you don’t need to know!” This difference in how real gas experts conduct business verses a company such as Glenfarne wouldn’t be as big of an issue for me had their first request of Alaskans not been to cough up our rights to the annual property tax revenue stream.

Why is this such a big issue? Because the Governor/Glenfarne/AGDC are now demanding that the state and more importantly, the communities most impacted by the project, sacrifice over 95% of their rightful property tax revenues. We understand the challenges of such a costly gas project but they have provided little to no useful information in order to make such decisions while at the same time are demanding we “sign here and don’t ask questions” on this massive giveaway.

Agree or not with the process the House and Senate Resources Committees are currently undertaking, it is their responsibility to do their due diligence on behalf of all Alaskans to make sure we are getting the best deal for this and future generations. I keep reading in op-eds and hearing on the radio ridiculous statements that the Legislature is purposely trying to sabotage this project. I guess these gasline keyboard warrior experts would rather we just sign the state’s rights away without even seeing the details.

I happen to appreciate how the Legislature is conducting their business and that they are asking the tough questions to make these massive decisions which will affect the state’s revenue streams for decades and generations to come. The gasline experts on the radio probably also believe the property tax giveaway will be the only sacrifice the Governor/Glenfarne/AGDC will demand before making a FID. Hold on to your pantaloons folks! This was just the first demand.

The mayors of the boroughs this project will impact have a responsibility to their constituents as well. The most impacted community from a “green field” construction perspective will be the Kenai Peninsula Borough (KPB). I say this because the North Slope Borough (NSB) has many large projects already in place and this new facility will blend right in. It will be expensive and cover a large footprint, but the NSB has been through this before so the actual impact is a known issue. The 800-mile pipeline will be largely buried so it will have minimal impact once completed.

The impact on KPB, however, will be massive and impact all their basic infrastructure, especially in the first several years. Hundreds of pieces of massive construction equipment running up and down their roads will have huge impacts and will no doubt require regular, very expensive resurfacing upkeep. New housing, grocery stores, schools, fire departments and other basic services will be needed. Are these great problems to solve? Isn’t this the reason for the property taxes in those early years of development? Does the Governor/Glenfarne/AGDC just expect the Kenai Borough to “eat it”? Apparently so.

I’m confident KPB Mayor Peter Micciche is looking forward to solving these problems on behalf of his constituents. But the property taxes are what is needed to help address these issues as the project is being built. Another red flag went up when the Governor/Glenfarne/AGDC refused to provide Mayor Micciche basic cost estimates of the portion impacting his community while at the same time telling him he must sacrifice 95% of the revenues meant to address these problems.

Speaking of revenue streams, all Alaskans need the Governor/Glenfarne/AGDC to not only divulge the cost estimate just like Conoco/BP/Exxon/AGDC did a decade ago, but also give us the complete picture on just how much revenue this project will actually produce. The state only has four revenue streams when it comes to resource development: property taxes, production taxes, corporate income taxes, and royalties.

This is a simple no-brainer request and should have been addressed long before they came to the Legislature and affected boroughs asking them to sacrifice nearly $1 billion in annual revenue! If they do not provide the entire picture BEFORE the Legislature is forced to sign on the dotted line, I guarantee the next demands will be about production tax holidays (10 or 20 years ought to do it), corporate income tax treatment for Glenfarne (how’s that debate going on regarding Hilcorp?), and long term royalty relief.

One major issue I have not seen any analysis on is also a major concern the Legislature should be drilling down on. AGDC gave away 75% of the project just to get Glenfarne to the table. Does that mean Alaskans will only receive 25% of the revenue streams? Their first request was to basically eliminate property taxes. How much can the state even expect to receive through production taxes, corporate income taxes and royalties if we only own 25% of the project?

It’s quite stunning to me that so many in Juneau are ready to sign on the dotted line after receiving nearly zero information! Is that what we as Alaskans expect from our representatives? These are all critical questions every reporter covering the gasline debate should be asking daily.

We have now seen the Governor/Glenfarne/AGDC’s playbook: agree to our terms or we will blame you for scuttling the entire project. Let’s now take a look at their approach to actually building this project. For some reason the Governor/Glenfarne/AGDC has proposed to build it in two phases starting with the part that generates zero revenue and will have the most opportunity for cost overruns.

The cost estimate on the pipeline portion was nearly $15 billion a decade ago. Unless they have solved that pesky inflation issue regarding 800 miles of steel and the massive labor lift to install it, I’m pretty sure that cost has doubled at a minimum.

However, I will be generous and only put an updated cost estimate of $25 billion on Phase 1. The cost is daunting, but the real issue is that it will provide ZERO revenue back to pay any debt service. Why is this? Because Phase 1 is just the 800-mile pipeline and unless the 400,000 Alaskans living along the Railbelt are willing to pony up a significant amount through increased energy bills to help cover the cost, there is no revenue stream on Phase 1. Unfortunately, I’m also reading in the op-eds and hearing on the radio that Alaskans are being led to believe they will be held harmless at worst and will more likely see their energy bills go down. That’s not how math works and they are in for a very rude awakening.

Maybe the so-called partners lining up to pay for all of this (Japan, South Korea, Taiwan, etc.) will happily fork over the $25 billion out of the goodness of their hearts to help keep Alaskans warm. Then keep their fingers crossed that a decade later they will have the opportunity to pay another $50+ billion for Phase 2 – which is when they will finally start seeing exports to their countries. What a great deal for Alaska… and a deal no entity with any common or fiscal sense would ever sign up for.

It has become obvious that the Governor/Glenfarne/AGDC are banking on a giant no-strings-attached check from the federal government to fund Phase 1, which is certainly possible. But with the federal tariff threat in limbo and the November elections fast approaching, that check better show up quickly. This is why you see the Governor/Glenfarne/AGDC putting the screws to the Legislature.

This is also why they refuse to share the revised cost estimate with Alaskans. Why admit it will be $75 billion minimum when the feds are going to declare it a national energy emergency and pay for it anyway. Cost is not a concern to the Governor/Glenfarne/AGDC under that scenario.

Every single person in Alaska talking about the gasline starts their comments with “I want this project to happen as much as anyone.” It must be state law to include that comment so I will as well. But it should never be followed up with “and at any cost”. That is what the Governor/Glenfarne/AGDC is asking us to believe. They are also demanding the Legislature rubber stamp his gasline bill, which would be a horrible dereliction of duties by the Legislature.

What are the facts in front of Alaskans and the Legislature? The Governor/Glenfarne/AGDC has provided zero information on project costs, have not explained in detail the revenue streams we will realize (if any) as a mere 25% owner of the project, and have demanded the state and affected boroughs relinquish $1 billion annually in property taxes. I give them credit for their bold, yet foolish approach on the Governor’s gas bill – “sign here, don’t read it, and definitely don’t ask questions.”

Threats to those that do not comply by saying they’ll be blamed for the project not moving forward must be swatted down as well. This project was “wildly uneconomic” at $44 billion a decade ago and asking responsible questions on behalf of Alaskans won’t make it any more economic at $75 billion.

I couldn’t find much on any of the massive projects Glenfarne has designed/built/operated over the past couple decades, and my intention is not to belittle their lack of experience. However, our previous partners Conoco/BP/Exxon have a combined market cap approaching $1 trillion and have actually built such projects around the world.

They also made the economic decision that the gasline project was not economic at $44 billion. Does this mean we should just give up hope on ever building the gasline? Not necessarily, but we should at a minimum hold the unproven group of Glenfarne to the same standard as Conoco/BP/Exxon and insist they make things such as cost estimates and overall project economics public before they insist we just sacrifice things such as property taxes.

Alaskans have been through this process too many times to be fooled or threatened. It’s long past time for the Governor/Glenfarne/AGDC to produce the details of their project just like Conoco/BP/Exxon did over a decade ago so the Legislature and Alaskans can see if this project truly is economic. If they can do this and show us their math, then maybe we can all go get our shovels from the shed and start turning dirt.

Bruce Tangeman has served in a variety of leadership positions in state government and the private sector, including as Governor Dunleavy’s first Revenue commissioner. He has also served as vice president and CFO of the Alaska Gasline Development Corp (AGDC), deputy commissioner for Department of Revenue, CFO of Doyon Utilities, budget officer for the Alaska Railroad and as a fiscal and budget officer for legislative and executive branch departments.