Parnell says gas line timeline was born out of frustration

Parnell, in his first news conference of the legislative session, told reporters the timeline he set out in Wednesday evening's State of the State address was borne of frustration. He said that he -- and Alaskans -- are tired of waiting for a gas project.

In October, Parnell called on the big three -- Exxon Mobil Corp., BP and Conoco Phillips -- to unite behind a project that allows for liquefied natural gas exports to the Pacific Rim if the market has shifted from the Lower 48.

TransCanada Corp., which holds an exclusive license with the state to advance the line and is working with Exxon Mobil, has been focusing mainly on a line that would serve North America markets. But TransCanada has yet to announce agreements with producers, and changes in the past several years, including the rise of shale gas, have led to concerns that there will be little demand for Alaska gas in the Lower 48 anyway.

In his address to lawmakers Wednesday, Parnell set a March 30 deadline for alignment under the Alaska Gasline Inducement Act, or AGIA, the law passed under then-Gov. Sarah Palin in an effort to jumpstart a line.

He said this alignment must include work on a line to tidewater that would allow for overseas exports. But he noted Thursday that the Lower 48 option could remain on the table, allowing the companies to compare the economics of it against those of a liquefied natural gas option.

He said that if the companies don't meet his expectations, they should expect a "change in direction" and for the state to pursue other gas line options.

"I think I have the people of Alaska with me," he said.

That first deadline will come near the end of the 90-day session. Parnell said the companies have been working and that he's optimistic there will be alignment.

Sen. Joe Thomas, D-Fairbanks, said late Wednesday in reaction to Parnell's speech that the timeline is aggressive and potentially realistic but nothing binds the companies to it. He said the real question surrounds the market potential for Alaska gas. A rival project to TransCanada's that would have served North America markets, a joint effort of BP and Conoco Phillips, folded last year.

Leaders of BP and Conoco Phillips balked at provisions of AGIA, giving rise to the rival project. They have since expressed interest in exploring a liquefied natural gas option.

Parnell's first deadline looms: he wants resolution of litigation over disputed leases in the Point Thomson gas fields by Feb. 8. If there is none, he said the state would fight for its interests at a court hearing that day.

The leases are seen as key to a major gas line project.