Amendment for natural gas project tucked into pending bill

Posted: Thursday, December 04, 2003

ANCHORAGE - A project to liquefy North Slope natural gas for shipment on tankers would qualify for the same federal loan guarantee proposed for building a natural gas pipeline along the Alaska Highway route.

The legislation, added to a massive budget bill, is pending before Congress, U.S. Sen. Lisa Murkowski said Tuesday.

Murkowski and Sen. Ted Stevens, chairman of the Appropriations Committee, added the amendment to make the LNG project eligible for the $18 billion loan guarantee. The Alaska Republicans earlier had failed to get the provision into the energy bill also still pending before Congress.

Under the amendment, the secretary of energy would decide which pipeline project would get the loan guarantee. Only one can receive it.

News of the amendment excited two organizations now working to build an 800-mile natural gas pipeline to Valdez, where the gas would be converted to a liquid and shipped to markets on the West Coast or in Asia.

"This is the most significant step forward for Alaska's financial future in a long, long time," said Bill Walker, an attorney representing the Alaska Gasline Port Authority. The organization is a coalition formed by the city of Valdez, the Fairbanks North Star Borough and the North Slope Borough to promote an LNG project.

The major oil companies holding the North Slope's estimated 35 trillion cubic feet of gas reserves have said they prefer the highway pipeline across Canada to the Midwest, an option also touted by former Alaska Gov. Tony Knowles, who is expected to challenge for Murkowski's Senate seat next year.

Harold Heinze, chief executive of the Alaska Natural Gas Development Authority, also hailed the Murkowski amendment as an important recognition of the LNG idea, which has been overshadowed by the highway option.

The authority is a state corporation formed this year after Alaska voters passed a ballot measure encouraging direct state involvement in building a gas line.

"This is the recognition we've kind of been lacking," Heinze said. "The increase in stature is really helpful to us. We think we are a very competitive project."

Murkowski said in a press release that she only wanted to give an equal chance to the various proposals for moving the immense North Slope gas reserves to market. It's a megaproject many Alaskans have dreamed of for some 30 years, but one frustrated by the high costs of building the pipeline.

"All this guarantee does is provide a reasonable financial guarantee to either of the possible means of getting Alaska gas to market in America," Murkowski said.

But Rep. Ed Markey, a Massachusetts Democrat, said the amendment was a "secret subsidy" spirited into the pending omnibus budget bill, which Congress could pass this month.

He called it a bad idea that "has now resurfaced as a rider to the final appropriations bill, ensuring that ExxonMobil, Conoco Phillips and BP get the taxpayers to subsidize LNG facilities and tankers in Alaska."

Murkowski said the federal loan guarantee likely would never be tapped. Rather, it would only help pipeline builders get better financing, she said.

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