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In-state gas line powers to House victory

Juneau reps split on bill's merits, costs; Senate challenge ahead

Posted: March 28, 2012 - 11:09pm

What some legislators say has been this year’s toughest battle so far began on the House floor Tuesday, before spilling over into the early morning hours Wednesday, as a divided House passed a bill aimed at creating an in-state natural gas pipeline.

Prime sponsor Rep. Mike Chenault, R-Nikiski, also serves as House speaker. He stepped down Tuesday to lead the fight for House Bill 9 from the floor, where he found spirited opposition.

Chenault promised great things from the small-diameter pipeline he’s backing, and bad things if it wasn’t approved.

“If we continue to not be able to develop our resources — and the only way we are going to develop our resources is through reasonable cost energy — we will continue to die on the vine,” he said.

House Minority Leader Beth Kerttula, D-Juneau, disputed Chenault’s “reasonable cost” claim and said his line wouldn’t provide what Alaskans need, and could commit consumers to high-price gas for decades, even if lower priced gas was available.

Worse, she said, it could threaten gas exploration and development in Cook Inlet, where recent drilling encouraged by the state has shown great promise.

“This puts us way too far out on a limb for Alaska’s good,” she said.

Chenault’s bill calls for a 24-inch pipeline running from the North Slope to Southcentral, providing cheaper energy to the Interior and stable energy to Southcentral. It has a subsidiary of the Alaska Housing Finance Corp. taking the lead in developing the $7-8 billion project, at an initial cost to the state of more than $400 million for preliminary work.

The debate Tuesday began just after 6 p.m., and ended with a vote in favor of HB 9 just after 1 a.m.

The 27-12 vote was largely along caucus lines, as Republican Chenault won almost 100 percent from those who had elected him Speaker.

It wasn’t easy, he said.

“In my 12 years I’ve spent here I haven’t been privy to a piece of legislation that’s been as tough as this to push,” Chenault said.

While Chenault has been driving HB 9 forward, other natural gas options are also advancing, including new Cook Inlet exploration, a small-diameter line to bring Cook Inlet gas to Fairbanks, and big, 48-inch pipeline that would bring far cheaper gas and revenue for the state as well.

Alaska began trying to develop a large line, to either Alberta and the Lower 48 gas markets or to Valdez for export under the Alaska Gasline Inducement Act during the administration of former Gov. Sarah Palin.

Gov. Sean Parnell is now urging the state’s oil companies to unite behind a big AGIA line to Valdez, but HB 9 supporters said they doubted it would ever happen.

Rep. Charisse Millett, R-Anchorage, said she doubted either Cook Inlet or the big AGIA line would be a solution.

“We can’t confuse exploration with production,” she said.

“We don’t have a lot of faith in the big pipe,” she said.

Millett acknowledged HB 9 wouldn’t produce cheap gas, but said there was no more cheap gas available.

“Granted, it might be a little higher than we are used to, but you know we have been frankly spoiled with cheap gas in Cook Inlet and it is dwindling away,” she said.

Fellow Anchorage Rep. Les Gara, a Democrat, saw things differently. Only the long-sought big line, he said, could provide the benefits the state needs, including lower-cost gas for consumers, business development and exports of surplus gas to provide revenue to the state.

“I can’t believe we’re throwing that dream away,” Gara said. House Bill 9 would provide “some of the most expensive gas in the United States.”

Rep. Cathy Muñoz, R-Juneau, said everyone wants to bring gas to Alaskans, but the big line doesn’t seem likely

“I think we’ve heard that the economics of a big line are questionable, especially a big line going through Canada,” she said.

If a Valdez export line does come about, Chenault’s proposal could be used to link to it, she said.

“Ultimately House Bill 9 is moving us closer to an in-state line,” Muñoz said.

Rep. Kurt Olson, R-Soldotna, like Chenault from the Kenai Peninsula, said Palin also backed the Alaska’s Clear and Equitable Share Act oil tax plan the industry dislikes.

“She gave the state ACES and AGIA and left town and left us picking up the pieces of two more things that have failed,” Olson said.

House Bill 9 now goes to the Senate with a little more than two weeks before the end of the legislative session.

Chenault’s chances of seeing his bill pass became more difficult Wednesday, when Senate President Gary Stevens, R-Kodiak, referred it to three committees, which must all act on it in the time remaining.

Five Republican senators signed on as co-sponsors of HB 9 Wednesday.

• Contact reporter Pat Forgey at 523-2250 or at patrick.forgey@juneauempire.com.

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