Feds grim on gas line -
REPORT: Palin rebuts agency's claim that progress has reversed.
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By WESLEY LOY, Anchorage Daily News
Published: February 2, 2007
Last Modified: February 2, 2007 at 03:03 AM
Prospects for an Alaska natural gas pipeline "are more remote than a year ago," and the holdup is political indecision in Alaska, says a new report from federal energy regulators.
"Over the past year, the schedule for an Alaska gas pipeline has slipped considerably," says the report to Congress from the Federal Energy Regulatory Commission.
The seven-page report says the federal government stands ready to move the megaproject forward, but the "main obstacle" is the state's "failure to resolve" tax or other issues that major oil companies have said must be settled before they can commit to building the multibillion-dollar pipeline project.
The report adds that much depends on the new administration of Gov. Sarah Palin, who has vowed to start a new and open process with any company or organization offering proposals for building a pipeline, long an economic development dream for the state.
"The fresh competitive approach announced by the new governor must be successful if Alaska gas is to be part of the nation's energy supply solution anytime in the coming years," the FERC report says.
The FERC is a Washington, D.C., agency that would have a big hand in approving a pipeline, estimated to cost more than $20 billion. Such a pipe would run across Alaska or possibly across much of Western Canada to as far as Chicago.
Palin's predecessor, former Gov. Frank Murkowski, last year touted a draft contract with the state's three main North Slope gas owners -- Exxon Mobil, Conoco Phillips and BP -- setting out tax, ownership and other terms, should they construct a pipeline.
But state lawmakers generally disliked the deal, calling it too generous to the oil companies, and the contract was shelved.
Palin, who has been in office about two months, and her acting natural resources commissioner, Marty Rutherford, on Thursday took issue with the FERC view that the pipeline schedule has slipped.
"We're even beyond where the last administration was," Palin said. Murkowski's contract "ultimately ended in a futile attempt" to persuade state lawmakers it was a good deal, she said.
Rutherford, who was among several state officials who resigned in late 2005 in protest of Murkowski's approach on the gas line contract, said it's "not accurate" that the schedule has slipped.
Because the contract lacked provisions to force a builder to actually make progress toward licensing and building the pipeline, it was "a formula for delay," Rutherford said.
Now Palin cabinet members are drafting a bill to present to the Legislature that will contain a series of requirements, or benchmarks, to steadily ratchet a project forward toward FERC approval and actual construction, Rutherford said.
The bill, called the Alaska Gasline Inducement Act, could be unveiled as soon as two weeks from now, Rutherford said. Palin said she'd like lawmakers to act on the bill before they adjourn this spring.
Federal officials, state government consultants and others have warned that Alaskans and would-be builders don't have forever to sort out the details and start laying pipe to carry the Slope's 35 trillion cubic feet of gas to market.
Getting a gas line up and running likely would take 10 years, the FERC report says.
But Lower 48 consumers aren't waiting that long for new supplies of cleaner-burning gas.
According to a FERC summary, the agency since 2000 has approved more than 9,000 miles of pipelines, and has thousands more pending, to bring big new quantities of natural gas out of the Rockies, Texas and the Gulf of Mexico to the strongest growth markets, including the Midwest and Northeast.
Even more ominous for Alaska pipeline backers is the outbreak of projects to import enormous supplies of liquefied natural gas, or LNG. Since late 2002, the FERC has approved 11 new LNG terminals, plus three terminal expansions. And applications for 19 more terminals are being processed or are "on the horizon," the agency says.
"I believe the governor and her administration have a sense of urgency for getting a project built," Rutherford said. "Alaska gas will be a key element in any kind of a national energy strategy."
The administration isn't sharing drafts of its Alaska Gasline Inducement Act with outsiders, including the oil majors, she said.
The bill will lay out what the state expects of any pipeline builder as well as incentives the state will offer in return, Rutherford said. Expectations include holding to a schedule, hiring Alaska workers, making gas available for local use and expanding the line's capacity for drillers that make new gas discoveries.
One major incentive in Murkowski's contract was for the state to buy a 20 percent stake in the pipeline, a potential investment of $4 billion or more.
The Palin administration isn't looking for the state to own a piece of the pipe, Rutherford said. She declined to disclose the administration's thinking on gas taxation. |
