Palin pushes in-state gas line

Lawmaker: Move may help curb opposition to TransCanada plan

Posted: Tuesday, July 08, 2008

Gov. Sarah Palin announced the state would be backing ENSTAR Natural Gas Co.'s plans to build a pipeline to bring natural gas to its hundreds of thousands of customers in Southcentral Alaska.

For too long, Palin said in an Anchorage press conference, Alaska's resources have not been available for Alaskans.

"The tide is turning in Alaska," she said. "This project is really going to propel this state forward."

The joint venture with ENSTAR - the state's biggest utility - the state of Alaska and the voter-created Alaska Natural Gas Development Authority would build a "bullet" line, a smaller diameter gas pipeline. The line could bring gas to market as soon as 2013, well before estimates of 2020 for larger pipeline proposals to bring North Slope gas to Midwest markets.

The bullet line would bring Cook Inlet gas that's now heating and powering Anchorage to Fairbanks, and also be able to bring Foothills or North Slope gas to the Anchorage area.

The as-yet-unnamed joint venture may have another benefit, said Rep. Beth Kerttula, D-Juneau.

It will make moot arguments from opponents of awarding a gas pipeline license to TransCanada under the Alaska Gasline Inducement Act, she said.

"Of course, I think AGIA was going to pass anyway," Kerttula said.

The Legislature is holding a public hearing today in Ketchikan on AGIA and will resume meeting in Juneau on Wednesday.

Few legislators have publicly opposed the TransCanada pipeline. Those who have, such as Rep. Jay Ramras, R-Fairbanks, have said providing gas to Alaska residents is a higher priority than selling gas out of state.

Kerttula said the Interior has legitimate concerns about energy costs, and even in Southcentral there are concerns the amount of gas available isn't enough.

"They are having energy trouble, no doubt about it," she said.

Harold Heinze, chief executive officer of ANGDA, said the effort announced Monday would meet those needs.

"This is the biggest, boldest, most positive thing that's ever been done to get us in-state gas," he said.

U.S. Sen. Ted Stevens, R-Alaska, issued a statement Monday promising to "actively support" the proposal.

It is not yet clear what state or federal legislative action may be needed, but Palin staff said they expected it to be considered by the Legislature next year.

Palin said the venture would be similar to what ENSTAR has already proposed, but the line would take a different route to link up with natural gas fields in the Copper River and Cook Inlet Basins.

The line proposed by ENSTAR was estimated by company officials to cost $3.3 billion, said Marty Rutherford, deputy commissioner of the Department of Natural Resources. The new route would be between 80 and 100 miles longer, but no further cost estimates have been developed, she said.

While the term "in-state" gas has frequently been used to mean "cheap" gas, the joint venture partners made no promises as to rates Monday. That's likely to hinge upon the tariff for shipping gas through the pipeline because smaller diameter pipelines are not as cost effective as larger ones.

The involvement of ANGDA and the state in the deal is likely to make financing available more cheaply than it would be available to the privately owned ENSTAR. The state also may be asked to subsidize some of the costs to keep the tariff down.

The AGIA license TransCanada is seeking bars the state from supporting a competing pipeline. But the "in-state" project falls below the volume of gas that would be considered to be in competition with TransCanada, state officials said.

• Contact reporter Pat Forgey at 523-2250 or patrick.forgey@juneauempire.com.



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