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Alaskan Governor confirms acquisition of TransCanada AKLNG shares

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LNG Industry,

Bill Walker, the Governor of Alaska, has announced that the state has successfully acquired TransCanada’s share of the Alaska LNG (AKLNG) project. Mark Myers, the Department of Natural Resources Commissioner, terminated the formal agreement that both established and guided TransCanada Alaska Midstream’s participation in the AKLNG project.

Walker said: “Today is a historic day. As Alaska faces a US$3.5 billion budget deficit, this gas line project is our number-one get-well card.

By gaining an equal seat at the negotiating table, we are taking control of our destiny and making significant progress in our effort to deliver Alaska gas to the global market. I thank the legislature for their actions to enable this transaction, and TransCanada for the professional work they have done on behalf of Alaskans.”

The Department of Natural Resources and TransCanada signed a precedent agreement in June 2014. This enabled TransCanada to pay capital costs upfront, and hold the state’s 25% share of AKLNG midstream components (pipeline and gas treatment facility).

In a recent special session held by the Legislature, the Walker administration suggested the termination of the state’s relationship with TransCanada. This would, the administration claimed, enable it to be directly involved in the AKLNG midstream, enhance economics of the project to the state, and provide the state with greater direct voting rights on certain issues in return for the state’s investment. The Legislature concurred, and allowed the appropriation of approximately CAN$68.5 million in order to allow the state to gain TransCanada’s participation interest in the project.

Commissioner Myers said: “This termination will enable the State to have more direct input to the decision-making process, which will be important as this project is pivotal for the future of the State, both in terms of potential revenue and gas for Alaskans.”

DNR consultants demonstrated that the termination of the relationship would result in state revenue from the project increasing to US$400 million/yr once gas flow is underway. This was based on the Department of Revenue’s prediction that the state is capable of financing its share of the AKLNG midstream costs for a lower cost than TransCanada.

Walker added: “This project is critical to Alaska’s future and I look forward to working with our partners at BP, ConocoPhillips and ExxonMobil to make AKLNG a reality.

“I also appreciate the work being done by the Alaska Gasline Development Corp. (AGDC) to advance AKLNG on the state’s behalf. As Alaska takes on a greater role in these efforts, the AGDC board and staff will be integral in seeing this project to completion.”

The DNR has now paid CAN$64 590 000 for termination, and TransCanada has transferred its participation interests in the project to the AGDC.

Edited from press release by David Rowlands

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