Palin plans to offer $500 million gas-pipeline incentive

Proposal sets aside state funds to help with startup costs

Posted: Thursday, March 01, 2007

Whoever wins the right to build Alaska's multi-billion natural gas pipeline will get as much as a $500 million jump start from state coffers, Gov. Sarah Palin said Wednesday.

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The money will help the successful bidder offset startup costs, such as permitting fees, Palin said during a telephone news conference from Washington, D.C.

This perk will be part of Palin's Alaska Gasline Inducement Act, also known as AGIA, which she plans to introduce Friday to the Alaska Legislature. Palin's bill would set project criteria which energy companies must meet in exchange for inducement incentives from the state to build a pipeline.

On Wednesday, Palin and Department of Natural Resources Deputy Commissioner Marty Rutherford discussed that plan and meetings held this week with federal energy regulators and lawmakers in Washington.

The two said that the half-billion dollar sum illustrates the state's commitment to take on risk associated with a project that could take North Slope natural gas to Midwestern markets in the Lower 48.

"We need to get off high-center," Palin said. "We need to progress this project. There are hungry markets for Alaska's natural gas."

Palin said she has asked federal officials, some of whom have chastised the state for lagging in efforts to get the pipeline built, for no favors. Instead, she and Rutherford have simply presented the state's plan to get a gas line built.

"She explained the state's position; we are behind her and we hope it works," U.S. Sen. Ted Stevens, R-Alaska, told The Associated Press after Palin's news conference. Stevens last week said he also was concerned with the pace of the project.

Palin also met with Federal Energy Regulatory Commission Chairman Joseph T. Kelliher, whose agency also has been critical of the state's progress.

Kelliher, however, said in a statement this week he was pleased with Palin's report.

"We talked about her efforts on the Alaska natural gas pipeline, which I believe represent the best hope for building a pipeline to bring Alaska's vast natural gas resources to the energy-consuming Lower 48 states," Kelliher said

Palin also Wednesday reiterated some of the applicant criteria, including:

• 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 This means gas can be withdrawn from the line to power homes and businesses statewide.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 to a local project headquarters in Alaska. This 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.

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