Lawmakers weigh Alaska gov's gas pipeline plan
The clock starts ticking for Gov. Sarah Palin on Tuesday.
She'll have 60 days to convince the Legislature that TransCanada Corp deserves a license to build a pipeline that would ship North Slope natural gas to power homes and businesses in US markets, AP reported.
Last year, the Legislature passed the Alaska Gasline Inducement Act, calling for bidders to guarantee progress toward pipeline construction and be friendly toward new exploration.
TransCanada emerged as Palin's choice, but oil companies BP PLC and ConocoPhillips have said they are moving forward with their own joint project outside of the state's bid requirements.
Palin's administrators have submitted more than 2,000 pages supporting TransCanada's proposal, a plan which will undergo detailed scrutiny from some skeptical lawmakers these next few months.
"I'm fine with that," Palin said. "I welcome the scrutiny. But if any lawmakers have intentions of trying to shoot down AGIA for any illegitimate or political reason, they are not doing their job as a legislator.
"If any lawmakers are intent to not listening to the information that is provided to them - information which they asked for - and they are not abiding by the law they passed, they are not doing their job."
Sen. Hollis French, an Anchorage Democrat and Senate Judiciary Committee chairman, said he likes what he sees so far, but approval is far from a slam dunk.
"For us to do our job, we have to truth-test every single word in these 2,000 pages," French said. "We can't go to the Alaska public 10 years from now if this deal goes sideways and say we voted for this because Sarah Palin said so."
Many lawmakers heard a pitch from Palin's gas line team and outside consultants last week in Anchorage, but the formal work begins when lawmakers gavel in late Tuesday afternoon.
Forty-seven lawmakers spent some time at the three-day presentations, talking to the administration as well as consultants flown in from New York, Washington and Seattle.
"I think the governor really did her homework on this one," said House Rules Chairman John Coghill, R-North Pole.
"I think some people thought it wouldn't be as weighty as it has been," he said. "I'm greatly encouraged, but there is still another side of the story we need to hear."
Starting Wednesday, lawmakers will hold seven straight days of testimony in Juneau, then hold hearings throughout the state, making stops in Fairbanks, Anchorage, Kenai, Barrow, and Ketchikan.
Several details are expected to be thoroughly dissected, including:
- The state's promise of giving the winning bidder $500 million in seed money. Some lawmakers wonder if the state should be staking any company $500 million if the project truly has long-term economic viability.
- Does TransCanada really have the financial wherewithal to move forward on a project estimated to cost between $26 billion and $30 billion?
- Should the Legislature take a closer look at the joint proposal from BP and ConocoPhillips, which lacks the project detail found in TransCanada's offering?
Two years ago, former Gov. Frank Murkowski settled in principle with the two oil companies, plus Exxon Mobil Corp, on fiscal terms - taxes and royalties - for producing the North Slope gas.
The deal would have frozen oil taxes for 30 years and gas taxes for up to 45 years for the three major oil companies, but it did not guarantee a pipeline would get built.
The hope was it would enable producers to move forward with a pipeline. This prompted Palin to chart a different course, one she deemed more inclusive and competitive.
Dan Dickinson, a consultant hired by a legislative oversight committee, said keeping the prospects of a gas line competitive calls for a careful balance.
"There is no question a competition can be good," Dickinson said. "To the degree that the state has two viable competitors, that's good.
"What I'm concerned about is if you treat the awarding of the license as though the competition is over, as if we are crowning a winner, that's not good."
Palin's gas line team received five applications under the new gas pipeline law, plus one from ConocoPhillips which didn't conform to the state's criteria. ConocoPhillips later joined up with BP on the alternative proposal, deemed Denali: The Alaska Gas Pipeline.
Before the joint venture was announced, Palin told ConocoPhillips she saw no advantage to setting aside the new parameters and begin negotiating with the Houston company.
So she turned her attention to TransCanada's proposal, which says it can move the North Slope's natural gas to North American markets.
TransCanada proposes a line that would travel 1,715 miles from the North Slop southeast to a pipeline hub in Calgary, Alberta, that connects to all the major markets on the continent.
About 35 trillion cubic feet of proved natural gas reserves are believed to lie beneath the North Slope permafrost, and energy analysts believe that figure will rise in the future.
No matter who builds the pipeline, it could become the largest, most expensive energy facility ever constructed, or simply the largest private-sector project ever undertaken, in North America.
TransCanada owns one of the largest natural gas pipeline networks in the world, tallying 36,500 miles of pipe that ferries nearly 30 billion cubic feet of gas each day. The company has long had an interest constructing an Alaska gas line.