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Consultant urges AVT to replace property tax; AGDC defends long-term certainty and resists a 10-year sunset
Summary
Gaffney Klein consultant Nick Fulford told the Senate Resources Committee that an alternative volumetric tax is intended to replace property tax and improve project economics; AGDC President Frank Richards said the project’s financing and offtake contracts are structured around long-term certainty rather than a 10-year tax holiday, a position that prompted committee questions about sunsets and renegotiation.
Nick Fulford, a consultant with Gaffney Klein, told the Senate Resources Committee on May 13 that one of SB 28’s central aims is replacing the current property-tax framework with an alternative volumetric tax (AVT) tailored to the Alaska LNG project. Fulford said the AVT is intended to create a tax mechanism fit for the scale and commercial structure of a mega-project and that, depending on the AVT rate and related features (impact payments, taxes layered on midstream vs. upstream), the change can materially affect the project’s breakeven economics.
Fulford walked the committee through recent Department of Revenue matrices showing breakeven price impacts under several tax configurations. He told members that version H of the bill—at the AVT rates the committee had been discussing—improved project economics in the modeling the committee had before it and that other states (Texas and Louisiana) use tax-holiday approaches for large petrochemical and LNG investments, typically with a roughly 10-year holiday or partial holiday.
Committee members asked whether the AVT should include a sunset or a forced renegotiation after a fixed period. Frank Richards, president of the Alaska Gasline Development Corporation (AGDC), said the project and its offtake contracts were structured around long-term (about 30-year) commitments. Richards told the committee AGDC and the developer tied the tax regime to long-duration contracts to provide the certainty needed to attract equity and debt financing; for that reason, AGDC did not propose a 10‑year sunset in the legislation.
Senators pressed on practical consequences: whether offtake contracts and expansion costs would shift burdens onto existing customers, who would bear compression and expansion expenses, and whether spur-line expansions would be priced postage‑stamp style or on a different basis. AGDC described offtake negotiations as distinct from the committee’s drafting work and said details on balancing agreements and tariff design would be settled later in commercial negotiations and regulatory proceedings.
Fulford cautioned the committee that many ‘‘known unknowns’’ remain—capital cost estimates, upstream assumptions for gas/condensate/oil co-dependencies, and the way AVT interacts with corporate taxes—and urged lawmakers to consider the wider economy of the whole project rather than only midstream elements.
Committee members said the testimony clarified international practice and prompted additional follow-ups; the committee indicated it would continue seeking DOR analysis and additional legal drafting to avoid unintended statutory consequences.
(Attributions: consultant and AGDC remarks appear in the committee transcript of May 13, 2026.)
