House speaker plans in-state gas line legislation

LONG-HELD DREAM: Lawmaker wants to maintain momentum.

The Associated PressNovember 5, 2011 

JUNEAU -- Alaska House Speaker Mike Chenault on Friday said he plans to introduce legislation aimed at sustaining momentum behind an in-state natural gas pipeline project.

Chenault said the legislation, which hasn't been finalized, would not sanction the project or provide the go-ahead to build it; instead, he said it would allow for work on the proposal to continue moving ahead. He said he's tired of the state and Legislature trying to decide which projects go first, and that it's imperative that Alaskans have a guaranteed energy supply.

He said it's a "travesty" that there are people in Fairbanks, Alaska's second largest city, whose monthly energy costs exceed their house payments.

"The state has invested a considerable amount of money over the years in pursuit of our dream of gas," he told a news conference in Anchorage, where he was joined by a number of House and Senate lawmakers. "But we've been constantly held back by various roadblocks, and those being internal, external, commercial and unfortunately political. And I want to clear those for this project."

There are several bills related to the in-state gas line currently pending in the Legislature that Chenault also plans to push, including one that would establish a project fund. Lawmakers set aside $200 million but did not establish a fund. The Legislature is scheduled to reconvene in January.

Chenault, R-Nikiski, said he believes the state is "closer than ever" to realizing its long-held dream of a gas pipeline and no other pending proposal has the momentum that the in-state line has.

A proposal for a major pipeline that would be capable of exporting gas appears stuck; TransCanada Corp., which has been working to advance the project with Exxon Mobil Corp., has yet to announce deals with shippers for the project more than a year after ending its open season. (An open season is a period of courting gas shippers in hopes of securing commitments.)

Gov. Sean Parnell last week called on the big North Slope players -- Exxon Mobil, Conoco Phillips and BP -- to get behind a project that would run to tidewater, not into Canada as the current plan would, if the gas market has truly shifted from the Lower 48 to the Pacific Rim. The idea with a line to tidewater would be to allow for overseas exports of liquefied natural gas. He called on the Alaska Gasline Development Corp., the group behind the in-state line, to be a part of any commercial alignment of interests. Chenault said he doesn't see room for two projects.

There may be ways for in-state gas needs to be met through off-takes of a major line. There is a liquefied natural gas facility at tidewater, at Nikiski. This year, Conoco Phillips and its then-partner in the facility announced plans to shutter the plant, citing market changes. A ConocoPhillips spokeswoman said recently the facility would be mothballed this fall, and officials would revisit their options next spring.

TransCanada proposed a shorter option that would run from the North Slope to Valdez and allow for liquefied natural gas exports; another entity would have to build the gas facility. While TransCanada has focused its attention on a line that would serve North America markets, its president and chief executive said this is a market-driven project, "and we'll move the gas to wherever the market decides it wants to move the gas to."

Larry Persily, federal coordinator of Alaska natural gas transportation projects, said it's up to the state whether it wants to fund two projects moving on parallel paths -- one, as a backup to the other.

Chenault, who has been an outspoken advocate for an in-state line as a way to ensure reliable energy to Alaskans, wouldn't call the in-state line a backup plan, saying in the end it may be the only viable option that Alaska has. Whichever project ultimately gets financing and gas committed to it, he said, will be the one to advance.

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