Tomorrow the Legislature’s House Resources Committee will hear from Mayor Peter Micciche of the Kenai Peninsula Borough, as well as mayors of the North Slope and Fairbanks North Star boroughs, about how the Alaska LNG megaproject will impact the communities it operates in. You can listen to the live discussion tomorrow at 1 p.m, or find a recording at this link later.
One impact that must be discussed is the proposed cut in property taxes that AK LNG says are crucial for the project’s viability, but which have the potential to severely hit local services funded by those taxes. Governor Mike Dunleavy has talked of introducing legislation that would reduce these taxes by 90%, even as the massive construction efforts of the estimated $44 billion Alaska LNG project would put unprecedented strain on the borough’s roads, emergency services, and chronically underfunded schools. According to the Kenai Peninsula Economic Development District, oil and gas facilities pay 14% of the borough’s property taxes. If AK LNG and its private developer Glenfarne were all-but exempted from paying their share, other taxpayers would need to shoulder the burden they’d place on borough public services.
“Our community cannot subsidize AK LNG,” Micciche told the borough assembly last month. “We have to have our costs covered.”
But without this local subsidy, AK LNG’s “Phase 1” North Slope gasline would struggle to beat the cost of imported LNG, based on its most recent publicly available cost study. The consultancy Wood Mackenzie baked the controversial 90% tax break that Dunleavy is proposing into the default assumptions of its Nov. 2024 cost estimate (see the “Property Tax” assumption on Wood Mackenzie’s slide 13). This — along with the dubious assumption that all of Fairbanks’ heating and energy demand would quickly switch to natural gas, despite excluding the 32-mile lateral to Fairbanks from their modeled capital cost — allowed Wood Mackenzie to conclude that North Slope gas piped to the Railbelt could cost around $12.80 per thousand foot, versus their estimates for imported LNG at $10.21 and $13.72 per thousand cubic feet.
Another consultant — Gaffney Cline, speaking to the Legislative Budget and Audit Committee in November 2025 — estimated that paying full property taxes could increase AKLNG’s delivered gas prices by 9%. This puts AKLNG’s gas at $13.95. If AKLNG relies on a nearly free ride from boroughs to have a chance at beating the high end of the cost range for imported LNG, then Glenfarne’s claim to bring affordable energy to the Railbelt must be taken with a grain of salt — a grain the size of a Nikiski beach boulder. Likewise their claim of the Phase 1 in-state pipeline (the non-export version excluding a Nikiski LNG terminal and Cook Inlet crossing) standing on its own economically. Burying the controversial tax break as a default assumption in the study that supposedly supports this claim is outright dishonest.
Hopefully the borough mayors do better in Wednesday’s presentation. If you have time, we hope you’ll hear what they have to say.