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Alaska lawmakers set to take up natural gas pipeline bills

Posted: March 19, 2012 - 12:02am

JUNEAU — Alaska lawmakers are set to take up competing in-state natural gas pipeline bills this week.

The House Finance Committee is scheduled to continue work on HB9, a bill pushed by Reps. Mike Chenault and Mike Hawker as a way to keep the momentum behind a small-diameter pipeline that would run from the North Slope to south-central Alaska.

Chenault and Hawker say the bill would further empower the Alaska Gasline Development Corp., or AGDC, which is leading the effort to advance an in-state line. Critics of the bill say HB9 would give AGDC too much authority.

The Senate Resources Committee, meanwhile, plans to take up SB215, which would have AGDC build a line with gas running in the opposite direction, from Cook Inlet, in south-central Alaska, to Fairbanks and communities in-between that don’t have access to a gas pipeline.

Sens. Joe Thomas and Joe Paskvan, Democrats from Fairbanks and sponsors of SB215, said this might be the easier, cheaper way to go.

Paskvan told reporters last week that it’s important not to potentially destroy the incentive for companies to explore in Cook Inlet. He said that’s a concern with the AGDC plan to bring gas from the North Slope.

Chenault, the House speaker, said a line from Cook Inlet north, given the known gas quantities in Cook Inlet now, doesn’t make sense. He said it could make sense in the future, with some “rather large finds” and plans for developing those finds.

There were reports last year of a large gas find on the inlet. But Chenault said there have been similar reports previously, which fell flat or were never developed.

Joe Dubler, a vice president and chief financial officer for AGDC, said his group hasn’t studied the option proposed in the state Senate, but could if it’s directed to by lawmakers.

“However, the result of changing the project in any meaningful way at this time, because of the progress we have made on permitting and leases, is to delay it by at least 18-24 months,” he said in an email.

AGDC last year proposed a 737-mile, 24-inch mainline with a smaller lateral line meant to serve Fairbanks. The estimated cost was $7.5 billion with an uncertainty range of plus or minus 30 percent that AGDC expects to narrow down as the project progresses.

Chenault, R-Nikiski, has said HB9 would not sanction a project but would allow AGDC to get to the sanctioning stage, the point at which the legislature would say build it, or don’t build it.

Dan Fauske, AGDC president, has said he hopes for sanctioning by 2015. His group is aiming for an open season — or period of courting gas producers, seeking commitments — beginning in January. On this timeline, assuming the project is green-lit, the goal is for first gas is fall of 2018.

The bill is a top priority for Chenault, the House speaker, who is among the lawmakers frustrated with the lack of progress on a larger gas pipeline. It’s not on the priority list for the Senate’s bipartisan majority.

Senate President Gary Stevens said the Senate will look at what the House sends over but questioned whether there’s enough time left in the session to move a bill forward.

The Legislature is scheduled to adjourn April 15.

Also this week: the first appearance this session of a bill that would increase the bonding authority for the Knik Arm Bridge and Toll Authority and create a reserve fund for the proposed Knik Arm crossing. The bridge would connect Anchorage to land near Point MacKenzie, which is home to a soon-to-open prison.

Project supporters have said a bridge would create new opportunities for economic development. Critics see it as another so-called “Bridge to Nowhere,” and funding has been an issue.

Shannon McCarthy, a spokeswoman for the authority, said that without additional state aid, the authority would have to redo its financing plan.

Earlier this year, the Legislative Budget and Audit Committee requested an audit that would bring lawmakers up to date about such things as funding and parameters for moving the project forward. That audit is not expected to be completed this session.

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