N. Slope borough backs study of gas line effects

Report to help state, cities while negotiating for contract on payments

Posted: Tuesday, March 30, 2004

The North Slope Borough has agreed to guarantee payment so that a consultant could start work on the study of possible social and economic effects of an Alaska natural gas line project.

The decision will allow work to go forward while the state deliberates over payments for the job.

The state Department of Revenue has been looking for state funding to cover the consultant's contract and other costs related to studying the project's possible effects and how Alaska could best profit from a gas line.

However, lawmakers have been slow to appropriate funding and the borough volunteered to help get the socio-economic contract started.

The report will assist the state and municipalities as they continue negotiating a possible fiscal contract for the proposed gas line project. The intent of such a contract under Alaska's Stranded Gas Development Act is to set up a long-term schedule of payments in lieu of existing state and municipal taxes that would otherwise apply to construction and operation of the line.

The state can require applicants under the Stranded Gas Act to reimburse up to $1.5 million of the state's negotiating costs and contract analysis, but the administration has told lawmakers it will need more than that to get the job done.

In addition to the socio-economic study, the state is contracting with tax law, tariff and other fiscal consultants.

The Senate on March 17 approved $1 million for the state's efforts to study a possible gas line project and negotiate fiscal contracts with the two Stranded Gas Act applicants - a partnership of North Slope producers, and MidAmerican Energy Holdings, which has since pulled out.

The House Finance Committee approved the measure March 23.

The final cost and delivery date for the socio-economic contract will be decided after the Department of Revenue gets funding for the work and signs a contract, said Steve Porter, deputy Revenue commissioner. He estimated the contract at between $50,000 and $200,000.

"The state is going to pay, the borough is just going to guarantee it to get started," said David Harding, government affairs spokesman for the North Slope Borough mayor's office. "The borough was able to do it and wants the process to go ahead."

Information Insights of Fairbanks has started on the study and will take an estimated 45 to 60 days to look at how a multibillion-dollar gas line from the North Slope across Alaska and into Canada might affect communities statewide and especially in its path, Harding said.

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