Palin's gas line team gets the word out to the public

Posted: Sunday, February 24, 2008

While Gov. Sarah Palin's gas line team is reviewing TransCanada's proposal to build a pipeline to bring the North Slope's vast gas reserves to U.S. markets, top team members have fanned out throughout the state to bring word of the effort to the public.

Commissioner of Revenue Pat Galvin last week took a tour of Southeast Alaska, holding town hall meetings in Ketchikan and Sitka, and Friday evening at Juneau's Centennial Hall.

Galvin said the Palin administration abandoned the stalled effort by former Gov. Frank Murkowski and others to persuade the state's big oil producers, ConocoPhillips, BP and Exxon Mobil Corp. to develop the gas to which they hold leasehold rights.

"We have not seen the producers moving this project ahead," Galvin said.

Galvin said the state's Alaska Gasline Inducement Act, proposed by Palin and ratified by the Legislature last year, has got the pipeline moving.

TransCanada, a Calgary, Canada-based pipeline company with operations throughout North America, emerged as the sole qualified applicant for a license to build the pipeline. Its application is now under review for value to the state and likelihood of success.

At a press conference last week, Palin said AGIA has brought about more progress on developing the gas than had been seen in decades.

At the same time, ConocoPhillips, the state's largest oil company, has put forward its own plan for a pipeline.

That plan had few details or commitments, and state officials said it was largely another request for the state to negotiate tax breaks with ConocoPhillips and others to develop the gas. It was rejected by the state.

Friday, Galvin said Alaska wants a pipeline, but not just any pipeline.

To win the "inducements" offered under AGIA, which include a 10-year tax rate freeze and $500 million to help with development costs, the state wanted several conditions of its own.

Among those were provisions that would enable explorers who find new gas on the North Slope to get access to the pipeline.

"We need to have a gas pipeline that encourages exploration and development," he said.

The reason that's important, Galvin said, is the 35 trillion cubic feet of known gas reserves on the slope are thought to be just the tip of the iceberg and there may be as much as 250 trillion cubic feet of gas there.

"There's a tremendous amount of gas yet to be discovered on the North Slope," he said.

TransCanada fully committed to allowing other companies access to the pipeline, while ConocoPhillips didn't, Galvin said.

A public comment period on the TransCanada plan concludes March 6, and Galvin said he expects to spend from one to three months determining whether TransCanada's proposal is good for the state. If he and Commissioner of Natural Resources Tom Irwin conclude that it is, they'll forward the license application to the Legislature. The Legislature will then have 60 days in which to approve it.

Galvin said he did not know what the next step would be if either the administration or the Legislature rejected TransCanada's plan.

"We'll have to figure that out," he said.

The next step would probably hinge upon the reason for rejection, whether it was some flaw in TransCanada's plan or a state determination that a liquid natural gas export plan was a better deal than TransCanada's pipeline to the U.S. Midwest.

• Contact reporter Pat Forgeyat 586-4816 or patrick.forgey@juneauempire.com.



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