PUBLISHER'S NOTEBOOK: The Mat-Su Borough goes to China

Sometimes in order to have a seat at the table you have to build your own chair, throw a few elbows and muscle your way in. That’s what the Mat-Su Borough did in order to make the latest Governor’s trip to China. “This is the fourth trip for the Governor. So, (Borough Manager) John (Moosey) and I were talking and we decided we wanted to go so we called the Governor and he said okay.” Mayor Vern Halter recalled.

On the 13-hour flight, which included an hour-and-a-half layover in Seattle were Halter, Moosey and Assemblyman Randall Kowalke. A direct flight, which is on the Governor’s and the Chinese government's’ radar in these talks, would have been only about seven hours.

Port Mac

The Alaska Gasline Development Corp (AGDC) and its President Keith Meyer, has pushed Port Nikiski from the outset of the LNG Alaska Gasline project. The Mat-Su Borough has taken exception to the notion that Port Nikiski is the best option. It certainly isn’t the most inexpensive as far as construction costs, according to the borough. Mayor Halter estimated a savings of $4 billion to $6 billion to build to Port MacKenzie rather than Port Nikiski.

Kowalke added, “The cost to build the project is $27-$28 billion with $9 billion in contingencies and other buckets of money. If we can save out of the… whatever the savings is, it is equity that Alaska residents get to keep, and that’s why it’s good for Alaskans that the pipeline is built to Port MacKenzie. It’s just the right answer. The people we met with said it was like, why would you drive past a grocery store to shop at a 7-Eleven?”

For Mayor Halter, staying home and doing nothing was not an option for the Borough. Meyer has publicly stated the he believes the project coming to fruition is in the 90 percent likelihood.

“In the Governor’s limousine, I was really on him (Keith Meyer) about misrepresenting our location. We had some lively discussions…” “Lively?!” Kowalke interjected. “How he could, with good integrity, sit there and talk about Nikiski when he didn’t even present us.” Halter stated, visibly frustrated.

It’s not over until FERC says it’s over

Port Nikiski has been the choice from the outset, but the evaluation process was tainted when aerial photos showed that Point MacKenzie was evaluated as opposed to Port MacKenzie. This gave the Mat-Su Borough the opportunity to file for intervener status with the Federal Energy Regulatory Commission (FERC). The status was granted. “We get to be interveners for anything that goes to FERC from the AK LNG folks. We get to review. We get to comment on and we get to ask questions. We have the right to question any inaccuracies.” said Moosey. The borough staff and the AGDC staff met recently to review a report due to FERC in mid-June. They will have the ability to submit questions and report inaccuracies to FERC after its submission.

Why then is Port Nikiski the Port of preference for AGDC?

Halter surmised that Meyer is taking marching orders, that AGDC took over for the oil companies and they didn’t want it so they picked the toughest way to build.

“Nikiski got in early, it was kind of a political decision,” Halter added.

Moosey went on to say, “Right or wrong, when they went in with Nikiski and they are trying to convince investors…. I don’t think it’s good for them to start changing course. They really need to look like they have their act together so that makes sense for them.”

Meyer is on record that the reason Port MacKenzie was not chosen is its close proximity to the Port of Anchorage and its designation as a multi-use facility in the borough’s master plan.

“You can’t really put an LNG Terminal in the middle of a multi-use port,” Meyer said in an interview with the Alaska Journal of Commerce. The borough contends they are a viable and less expensive alternative and their battle is now with FERC. FERC has to make the final decision and the borough is hoping that they see that Port MacKenzie not only lessens the cost but also the environmental impacts. The deep draft dock can accommodate the largest of vessels with 60 feet of water at low tide. The borough contends that Port Nikiski would have to be dredged. Roads would have to be built but with the Parks Highway the infrastructure is pretty much in place for Port MacKenzie. “And they are aware of that at the upper levels of at least the Bank of China. We met with the Chief Lending Officer out of New York at a trade conference and one of his concerns was getting the price of this project down,” Kowalke said.

“There was 40-45 people on this trip with representatives from Nana, Bering Straits Native Corp. and others. And by the time our trip ended they were wondering why Port MacKenzie wasn’t the choice,” stated Halter. “We would go into those meetings and you have the Governor there and Keith Meyers, and they are meeting with Bank of China and Sinopec, their largest oil company and their top officials. It’s tough for us to be standing up there and waving a Port MacKenzie flag. You know there is a time and place. Because this project is already in progress with FERC the opportunity was to show investors in China that Port MacKenzie was not only the better option but the more inexpensive option for construction.”

What if Nikiski is the choice?

Even if Port Nikiski is the final choice the trip offered an opportunity to meet with other partners. Energy in China is heavily reliant on coal and the smog is thick. The Chinese people are sick of it. They want cleaner fuel. “The Chinese said they will take all the natural gas we can supply. We heard it time and time again. So maybe there could be a secondary LNG plant. But that’s going to take a lot of negotiation,” Halter said.

Moosey then added, “We met an investor and company that does international projects and a company that does work in Canada who is very interested in talking to us about Port Mac but we’ll continue to do our due diligence and background checks. We went there and there was a hunger to meet with us. There is not a lot happening at Port MacKenzie and we get push back from competition in the State but we go over there and it’s a different story. We were really surprised by that. In fact, we had to calm ourselves down because at first they came on so strong.”

Alaskans a priority?

One concern with the LNG pipeline is the fear that the Chinese would bring in their own workers.

“We wanted to know that local hires would be doing this. They (China) don’t have the expertise to build in frost areas and, Keith Meyer said, ‘Well Alaskans have that experience so that’s no problem.’ The issue is going to be that the scope and size of this project is so big that we may not have enough workers. Alaska may have to import workers from preferably the lower 48.” The trio also pointed out that Sinopec, the largest oil company in China, has 20 percent more employees than Alaska has residents. Everyone from the National level, Governor’s office and on down are emphasizing that the hiring of Alaskan and American companies and people are a priority for this project.

Also on the trip, Halter and Kowalke met with TPT, the new Zealand company that is working with Denali Timber for transporting Chujuk logs to China. The duo visited the Port of Taicang directly north of Shanghai and at the mouth of the Yangtze River. They toured the unloading docks, the marking and layout yard plus the sawmills producing rough to final products. The Port director told the group that TPT has a great reputation at the Port.

Direct Flights could be coming

Tourism to the Mat-Su Valley was also on the agenda. The borough supports the Governor and the tourism industry on seeking direct flights to China. There is a growing class of Chinese that are at an income level that travel is becoming a want. The Northern lights is a draw for them. Winter and Summer tourism could be a boon for Alaska. There is pressure from inside of China as well for direct flights to Anchorage.

Waving the Port Mac Flag

But the main goal of the trip for the Borough was to promote Port MacKenzie.

“With the disingenuous way that our port has been presented to people. Beijing, Tokyo and London didn’t think they could even bring pipe to this port. That was another reason we had to get the flag out is because in their minds we were just mudflats on Native land,” Kowalke stated.

“You can’t hit a home run if you never go to the plate.” Moosey added.