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My Turn: Natural gas proposals have differences

Posted: Friday, April 26, 2002

The "All-Alaska Gasline Initiative" was certified by Lt. Gov. Fran Ulmer and will be on the Nov. 5, general election ballot. On April 22, the House passed HB302; a bill entitled "An Act establishing the Alaska Gas Corp." A heated discussion is brewing in Juneau as to whether the two pieces of legislation are "substantially similar."

If the Senate passes its version of this bill, some in Juneau are saying HB302 might be "substantially similar" to the initiative. Therefore Ulmer will ultimately have to decide if HB302 and the Gasline Initiative "accomplish [the same] purpose by means or systems which are fairly compatible." I believe she will easily determine they are not at all similar.

HB302 language calls for a "report and feasibility study of a project plan." The Gasline Initiative calls for a "project." The words "feasibility study" and "report" do not even appear once in the Gasline Initiative ballot language or underlying bill. That is the first clue that they are totally different in nature and purpose.

Alaska natural gas reserves have been stranded on the North Slope for over 25 years. Studies have been conducted ad nauseam. The latest one, recently completed at cost of $125 million has not even been released to the legislators as promised by the big three North Slope oil producers. Does the fact that all three producers continue to say that any Canadian Highway project is "uneconomical" at a cost of over $20 billion have anything to do with it?

Now along come the oil producers pushing for HB302 which, yet again, simply calls for another "feasibility study" to find out if the project is viable. Having the state of Alaska pass a law, HB302, mandating yet another "feasibility study" brings with it a price tag of at least the same amount as the just completed producers feasibility study. If the producers can fool the Legislature into passing a bill mandating yet another study, this time at State expense, there is only one outcome for Alaska's natural gas: Another long delay and the gas will remain stranded. Alaska will have no new jobs or much needed new revenue streams. Once again, the window to build a project will close. Welcome to Stranded Gas 101.

HB302 as proposed, under Sec. 41.41.990. Definitions, states in number (3) that "project means the gasline transmission pipeline, together will all related property and facilities, to extend from Prudhoe Bay to interconnect with a gas transmission pipeline in Canada " The All-Alaska Gasline Initiative ballot language says: "The gasline route would be from Prudhoe Bay to tidewater on Prince William Sound and the spur line from Glennallen to the Southcentral gas distribution grid." The Gasline Initiative never uses the word "Canada" even once and HB302 never uses the words "spur line" or "Glennallen."

The All-Alaska Gasline Initiative language in Sec. 41.41.010(a), Establishment of the Authority states the purpose of the initiative is to achieve the following: (1) acquisition and conditioning of North Slope natural gas; (2) the design and construction of the pipeline system; (3) the operation and maintenance of the pipeline system; (4) the design, construction, operation, of other facilities necessary for delivering the gas to market and to Southcentral Alaska; and (5) the acquisition of natural gas market share sufficient to ensure the long-term feasibility of the pipeline system project.

Notice the pro-active words in this section: Acquisition, conditioning, construction, delivery, design, maintenance, and operation. The Gasline Initiative is about action and a real project. Words calling for more "studies" do not appear anywhere in the Gasline Initiative language.

Before any legislative bill involving finances becomes law, a 'fiscal note" must be generated by the Department of Revenue. The same is true with any initiative. The "fiscal note" report by the Department of Revenue issued for the Gasline Initiative projects a cost of $250 million. In the written comments attached to the fiscal note for the initiative, generated by the Department of Revenue, the following appears: "We estimate mobilization and construction would take four years. The estimated cost for acquiring existing permits and engineering, negotiating gas purchase and LNG sales contracts is assumed at $250 million spread over two years."

HB302, which just passed the House, also has a "fiscal note" attached from the Department of Revenue. Total cost: $0.00. Does that sound "substantially similar" to you?

Scott Heyworth of Anchorage is a Democratic candidate for lieutenant governor.



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