Lawmakers await pipeline open seasons

Whether anything will be settled at the end of bidding is unclear

Posted: Wednesday, March 17, 2010

An Alaska lawmaker said Tuesday that upcoming open seasons for proposed gas pipeline projects could lead to a shift in the state's approach to oil and gas development.

Senate President Gary Stevens told reporters, however, that he's not sure legislators should make a change before knowing the outcome of the open seasons, when gas producers can commit to reserving space in a line. Back-to-back open seasons are expected for the two competing projects, with the first set to begin in May.

Whether anything will be settled at the end of those this year is unclear; it's widely anticipated the state will be asked to negotiate with companies stepping forward on tax and royalty terms, and there's no guarantee there will be any bidders in these initial open season periods.

As it stands, it could be 2020 at least before one of the major lines proposed - pushed by TransCanada Corp. and Exxon Mobil Corp. - begins carrying gas. Those companies have estimated the project cost at $20 billion to $41 billion, depending on the route. And already, just a few years into the process, some lawmakers, notably in the House, are raising questions about its prospects and urging the state to not forsake or ignore other energy options as North Slope oil production - Alaska's bread and butter - is projected to continue to decline.

There are proposals aimed at spurring development of a smaller, in-state gas pipeline. One aims to have construction begin next year, though state officials are still probably months away from releasing cost and other estimates that would speak to the viability or potential of such a project.

"Let me just say one more time: In-state gas is inevitable in this state in the near-term," Sen. Charlie Huggins said. "And it will not allow itself to be delayed by other long-term visions because the people of Alaska will be demanding that."

Stevens, R-Kodiak, answered "possibly" when asked if issues he'd raised - the potential for shale gas development in other parts of North America and basic supply and demand looking out - could lead to a policy shift for oil and gas development in Alaska. But in a state that relies heavily on its natural resources to run and for years has banked on a major gas line as job creator and source of reliable, cheaper energy, where does that lead?

The House is expected today to pass an energy policy - a mission statement for where the state wants to go, in terms of renewables and other initiatives - that looks out years. Both houses are also working on omnibus energy packages though the prospects for their passing in whole, as opposed to having a few certain projects broken out from them, is unclear.

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