Governor to introduce gas line bill March 2

Legislation would be first step in delivering natural gas to market

Posted: Monday, February 19, 2007

JUNEAU - Gov. Sarah Palin plans to introduce her natural gas pipeline legislation to the Legislature on March 2, the first step in ultimately delivering trillions of cubic feet of North Slope reserves to market.

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Palin's bill would set project criteria which energy companies must meet in exchange for inducement incentives from the state to build a pipeline.

"We spell out how Alaska's goals will be achieved," she said in prepared remarks.

In her weekly update of the project, Palin said her gas line team was putting the finishing touches on the document for the March introduction of the Alaska Gasline Inducement Act, or AGIA.

Her bill would replace the Stranded Gas Act, which was the basis for former Gov. Frank Murkowski's failed pipeline plan last year with BP PLC, ConocoPhillips and ExxonMobil Corp. Palin has reopened negotiations with groups and companies interested in building the pipeline from the North Slope.

Some of the criteria that applicants must meet include:

• Providing for a minimum of five off-take points in Alaska. This means gas can be withdrawn from the line to power homes and businesses statewide.

• Committing a local project headquarters in Alaska. The means establishing hiring halls across the state, to give Alaskans access to the thousands of new pipeline jobs.

• Pledging to expand the pipeline project when new gas is available. This can accommodate untapped fields; for now there are about 35 trillion cubic feet of proven natural gas reserves.

"These are our requirements, and they strike a purposeful balance," Palin said. "They not only serve our state's and nation's long-term interests, but are designed to be reasonable from the perspective of applicants who are serious about working together to get North Slope gas to market."

Palin said the state would consider any project in the application process.

"Applications must provide a detailed description of any proposed project, including route, size, design capacity, timeline and budget. This requirement holds applicants to a sensible plan and timeline," she said.

Any application must be filed within six months after the state puts out requests. "This may sound lengthy, but we want to encourage alliances among companies to jointly apply," she said.

Lawmakers are hoping for a statewide gas line to be a potential boon for the state's economy, somewhat akin to that of Prudhoe Bay's oil production at its peak.

In calling for lawmakers to consider her legislation, Palin is asking them to revisit one of the most contentious issues left over from Murkowski's administration.

Murkowski agreed with the three oil producing giants on terms to build a $25 billion North Slope natural gas pipeline.

But lawmakers felt the deal gave too many considerations to the big firms, including locking in tax rates for several decades, and never voted on the contract.

The pipeline project is seen as of national importance as the country works to lessen its dependency on foreign energy supplies.

The pipeline's progress is monitored by federal officials, and the state received its periodic review by federal energy regulators earlier this month.

It wasn't a good report card for the state, however.

The Federal Energy Regulatory Commission offered this assessment to Congress:

"The federal government is ready to act. However, no pipeline application has been developed, and the prospects of an application are more remote than a year ago. Over the past year, the schedule for an Alaska gas pipeline has slipped considerably."

Palin last week, however, told The Associated Press the state is not behind the curve. Rather, it is making progress.

"We are further along today with that project than Murkowski was," she said. "That proposed plan was never going to get us a gas pipeline."

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