An Alaska House committee has made significant changes to Gov. Mike Dunleavy’s bill for the Alaska LNG megaproject, proposing a smaller tax break designed to generate more revenue for local communities and the state.

The new measure in the House Resources Committee, which passed Monday without objection, comes after the Senate Resources Committee last week adopted its own substitute bill that seeks to raise the most revenue of the three proposals.

Dunleavy introduced his measure in March, seeking to support the project by replacing state and local property taxes with a much smaller “alternative volumetric tax” based on the amount of gas flow.

Resources committees in both chambers have spent weeks studying Dunleavy’s bill before presenting their substitutes, with the idea that a break on property taxes could help quickly bring the project to fruition. Project officials have said they could start laying pipe this year, though there has no been final investment decision approving construction.

Alaska LNG is the latest version of several projects that over the last half-century have tried to tap the state’s vast stores of natural gas on the remote North Slope.

The project’s high cost has always been a barrier. It’s currently estimated at $46 billion, though critics believe it will be far more expensive.

The project proposes shipping natural gas in an 800-mile pipeline for use in Southcentral Alaska starting in 2029.

Project backers say a gas treatment plant and a gas liquefaction plant would be built next so gas can also be exported overseas to big Asian buyers, starting in 2031.

Alaska leaders consider the project important for the state’s future economic growth.

Lawmakers are grappling with finding the right balance to support the project while still ensuring that Alaska communities can earn enough revenue to deal with impacts from the potential influx of thousands of workers.

Jeff Turner, a spokesperson for the governor’s office, said the project could save Alaska households $1,450 per year on energy bills, versus anticipated costs for imported gas. The administration and House Resources are “working productively on streamlining the bill,” he said.

“There are only three weeks left for lawmakers to pass a clean, straightforward LNG volumetric tax bill that incentivizes the project’s finances,” he said. “Weighing the bill down with conditions and additional taxes make the pipeline far less likely to happen. If lawmakers want the project to go forward they need to focus on fixing the state’s existing property tax which has some of the highest rates in the world.”

Larry Persily, an oil and gas analyst and former Alaska deputy commissioner of revenue, said the House and Senate versions are similar enough that even with just three weeks left in the session, lawmakers have time to pass a single version.

“It’s a lot of work, but they are on a similar path in that the governor’s proposal is inadequate in the eyes of the Legislature and the communities,” he said. “But three weeks is an eternity when you want to accomplish something.”

The committee’s co-chair, Rep. Robyn Niayuq Frier, D-Utqiagvik, said during the hearing that the substitute is a “working document” that will receive its next hearing on Wednesday, and possible amendments.

Like the proposal in the Senate, the new House substitute would retain the governor’s proposed volumetric tax.

Dunleavy had proposed taxing the gas flowing through the full project at 6 cents for every 1,000 cubic feet, which would bring in about $75 million annually for state and local revenues. That’s far below the $1 billion annually the project could receive in property taxes under existing state law.

The House substitute proposes taxing gas flowing through the pipe at 5 cents for every 1,000 cubic feet, generating about $65 million a year for local and state revenues.

But separately, it also would tax the gas flow through the gas treatment plant at 5 cents per 1,000 cubic feet, and the liquefied natural gas plant at 10 cents per 1,000 cubic feet, generating more revenue to Alaska communities, according to a summary of the bill.

The House substitute sets a quicker timeline for that revenue to start, compared to the governor’s bill.

The House substitute also gives the North Slope and Kenai Peninsula boroughs the option to replace the volumetric tax with an equity stake in the project.

The North Slope Borough would be home to the gas treatment plant.

The Kenai Peninsula Borough would be home to the large plant that makes liquefied natural gas, or LNG, so the gas could be exported overseas to large Asian buyers.

In addition to those significant additions, both those boroughs would also have a portion of the pipeline in their backyard.

The amount of revenue the substitute might generate for the state and local communities was not presented in the hearing Monday.

Officials with the Alaska Gasline Development Corp., a minority partner in the project alongside 75% owner Glenfarne, said in the hearing that the substitute bill has some positive attributes for the project and represents progress toward a final investment decision.

But they added that it poses some challenges due to its higher take on the project than the governor has proposed.

“It will create more of a challenge in terms of the economics of the project as more taxes are placed on project,” said Frank Richards, head of the Alaska Gasline Development Corp., at the hearing.

Richards also urged the Legislature to act quickly, saying the state faces an energy crisis as locally produced gas from Cook Inlet wanes.

“The timeline is very, very short,” he said.