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Pipeline talks nearly done

Gov. Murkowski expects proposals soon for a gas pipeline from the North Slope

Posted: Thursday, April 28, 2005

Gov. Frank Murkowski on Wednesday told lawmakers they may soon have a gas pipeline proposal to consider, and it may take a special session to approve it.

The governor did not give any dates for when negotiators would finalize their three proposals. But he said results will be ready for public review and lawmakers' consideration of contracts during a possible special session.

"We stand on the brink of making the most important decision in our state's history," Murkowski told a joint meeting of the House and Senate resources committees.

The proposals to build a North Slope gas delivery system are from a consortium of oil producers, Conoco/Phillips, ExxonMobil and BP, one from TransCanada Pipeline Co. and one from the Alaska Port Authority.

The $20 billion project aims to build an underground pipeline to send natural gas from the North Slope through Canada and into the Midwestern states. The Alaska Port Authority wants to build two pipelines to reach a refinery in Valdez to liquefy the gas and ship it to markets in Asia and along the West Coast.

Because of confidentiality agreements, the governor could not reveal many details.

Rep. Nancy Dahlstrom, R-Anchorage, cautioned the administration about involving the state in ownership of the pipeline. If gas prices were to drop below the cost of shipping, the state would be liable.

"The risk in this is ... you're not going to generate any revenue until somewhere in the area of 2012 or 2014 when the gas is going to flow," Murkowski said.

The administration and producers hope prices in the future will be around $6 to $7 per cubic feet. But if the rate is $2, it could make the project "the worst investment in history of Alaska," Murkowski said.

A pipeline would be cheaper than moving the gas by ship or train, the governor said.

Producers discovered 35 trillion cubic feet of natural gas in the North Slope while searching for oil. They suspect another 250 trillion has not been discovered.

Legislators wanted the administration to ensure Alaskans would benefit from the building of the pipeline. Tom Irwin, commissioner of the Department of Natural Resources, said 10,000 short-term local jobs would be created but many may require significant training.

House Minority Leader Rep. Ethan Berkowitz of Anchorage thought it was unwise to let Mid America Pipeline Co. out of the negotiations.

"We currently have no negations with Mid America. Mid America sent us a letter indicating they were not going to pursue the follow-up that they initiated (with TransCanada)," Murkowski said.

"The governor fumbled his first, best opportunity to get the gas line up to point. Mid America indicated they would be ready to have gas moving by 2010," Berkowitz said.

When the proposals are completed, the public will have a minimum of 30 days to comment on the drafts and then the Alaska Legislature will meet in a special session, possibly this summer, to add their statements.

The administration takes the comments in consideration and returns to the negotiating table to pen the last draft. Then the Legislature can vote only "yes" or "no."



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