Legislators report from D.C.

Energy Council attendees say state is in good shape, natural gas surplus may threaten pipeline

Posted: Sunday, March 06, 2011

Alaska legislators in Washington, D.C. to attend Energy Council meetings say they’re finding both good and bad news for the future of energy development in Alaska.

Chris Miller / Chris Miller
Chris Miller / Chris Miller

Among the good news is the financial shape in which Alaska finds itself, said Senate Pres. Gary Stevens, R-Kodiak.

“We are certainly envied by other states because of our condition, we don’t have high unemployment and we don’t have the deficits they have,” he said.

And no other oil producing states seem to be looking to cut taxes in hopes it will spur production, Stevens said.

“Some of the ones that are here can’t balance their budgets with the taxes they have,” he said.

With much of Alaska’s Legislature in Washington, most activity in the Capitol ground to a halt last week, but Sen. Charlie Huggins, R-Wasilla, said the Energy Council meetings were too important to Alaska to be missed.

The briefings are so informative, he said, “I’d recommend that attendance of new members be mandatory.”

Stevens, Minority Leader Huggins, and other legislators spoke with reporters in Alaska by teleconference Friday.

Some of what they learned was troubling for Alaska’s natural gas development hopes, however.

New discoveries of shale gas deposits in the continental U.S. are continuing to hold prices down.

“It looks as if there’s going to be cheap gas in the Lower 48 for the foreseeable future,” said Sen. Tom Wagoner, R-Kenai, co-chairman of the Senate Resources Committee.

That may be bad news for hopes that it will be economical to develop Alaska’s huge natural gas reserves with a big, 48-inch pipeline to the Lower 48, senators said.

If oil prices remain high and gas prices stay low it might be time to again consider a gas-to-liquids plan on the North Slope or in Fairbanks to commercially develop the resource, said Wagoner, who had backed the state’s Alaska Gasline Inducement Act to push development of Alaska’s gas.

“There comes a time when it would be economically feasible to take the gas and turn it into liquid and ship it in batches down the pipeline,” he said.

One AGIA opponent, Sen. Bert Stedman, R-Sitka, said he’s not ready to give up on AGIA when the Legislature still hasn’t heard the results of the TransCanada or the competing BP-ConocoPhillips open seasons yet.

“I think its prudent to give it a little more time,” he said.

Federal Gasline Coordinator Larry Persily has had some positive comments about the big pipeline and the AGIA pipeline is still on schedule, he said.

“It’s a little premature for the Legislature to step in and drop the hammer,” Stedman said.

Legislators also worked to lobby officials on other crucial Alaska issues, such as Shell Oil’s stalled plans for offshore drilling in the Arctic, ConocoPhillips’ blocked plans for a bridge across the Colville River to drill in the National Petroleum Reserve-Alaska, and the long-held hopes of drilling in the Arctic National Wildlife Refuge.

Huggins said the he was increasingly hopeful after talking with officials Shell would get its permits in the next year.

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

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