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Murkowski is smart to review pipeline proposals

Posted: Sunday, January 30, 2005

Vantage Point By Robert Hale, publisher of the Juneau Empire.

Alaska's lawmakers and Gov. Frank Murkowski's administration have some additional food for thought relative to the notion of an all-Alaska gas pipeline now that the Alaska Gasline Port Authority and Sempra Energy are eyeing a partnership for the 800-mile pipeline that would run from the North Slope to Valdez.

The major private gas producers who are in negotiations with the governor's office over their proposals for the pipeline, a $20 billion project that would pipe liquefied natural gas through Canada to the Midwestern United States, say the port authority's pitch for marketing to the West Coast and the Pacific Rim isn't commercially viable on a global scale as is their proposal.

The port authority's proposal has, however, gotten the attention of Alaska legislators because of the annual revenues it could produce for the state and because of the financial good that could come to the state's municipalities.

The authority estimates that yearly revenues from the pipeline to producers could be as much as $1.9 billion, and that the state could benefit from some $627 million in severance taxes and royalties. On a prorated basis, the authority figures, municipalities could gain about $166 million annually.

Sempra Energy, the second-largest energy marketer in North America, and the Gasline Port Authority made their general pitch to the Legislature and to public audiences last week, and many of the key points were discussed, among them a gas conditioning plant on the North Slope; a pipeline to Valdez; a spur line to Palmer that would supply energy to the southcentral part of the state, large industrial plants in Valdez to liquefy natural gas and to remove commercial products such as propane and butane; and storage and docking facilities at Valdez.

Details of the private proposals that are being discussed with the Murkowski administration are confidential under the state's Stranded Gas Act protocol, and likely won't be known for months.

What has legislators' interest in particular is the ability, through an all-Alaska gas pipeline, to generate - and ultimately retain - more money for the state and its municipalities for the long term. An important part of the port authority's proposal involves supplying what is thought to be a lucrative West Coast market, and one for which natural gas byproducts can bring premium prices if they are marketed on the West Coast and in the Pacific Rim, rather than elsewhere.

Gov. Murkowski is doing the smart thing and has proposed additional funding for staff to review each of the gas pipeline proposals. It only makes sense that the right amount of time and effort go into this selection process, for this is one of the most important economic development projects the state is likely to see for many years to come.

• Robert Hale is publisher of the Juneau Empire. He can be reached at robert.hale@juneauempire.com.



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