Gas pipeline bill remains iffy despite passing House

Level of concern by opponents perplexes House Speaker.

Anchorage Daily NewsMarch 28, 2012 

A bill to develop a natural gas pipeline from the North Slope to Southcentral Alaska that passed the state House early Wednesday may have problems getting through the Senate before the Legislature's scheduled adjournment in less than three weeks.

House Democrats, saying they fear it would lead to high natural gas prices, tried to kill or revamp the measure but were shot down by the GOP-led House majority.

"My sense is that it's got a lot of issues that are being seriously looked into by members of the Senate, not just in the Resources Committee. It will get its due diligence," said Sen. Joe Paskvan, D-Fairbanks and a Resources co-chairman. He wouldn't predict whether it would clear the Senate.

House Speaker Mike Chenault, R-Nikiski, is the prime sponsor of House Bill 9, which gives a subsidiary of the Alaska Housing Finance Corp. the power to get a $7.5 billion pipeline built or become a partner in a bigger line or a spur.

The Alaska Gasline Development Corp. would run the project. It could take on private partners, negotiate agreements for shipping gas and take on unlimited debt. Much of its work would be confidential.

The measure was heard at least five times in the House Resources Committee and just as many in House Finance. While what one chamber does not necessarily predict how the other responds, especially toward the close of session when time can speed up for bills that leaders want or slow down for those they don't, the weeks that the speaker's bill was studied in the House does suggest the bill's complexity.

The House vote, at 1:05 a.m. Wednesday after more than six hours of debate, was 27-12, largely along party lines.

Chenault said he was surprised at the depth of the concerns with a bill that backers see as a way to get natural gas to Alaskans at a reasonable price.

"In my 12 years that I've spent here, I haven't been privy to a piece of legislation that has been as tough as this to push," Chenault said late Tuesday night during the floor debate. "Is it perfect? Nah, we can always improve. Does (the pipeline) go to the right place? I can't tell you that. Is it the right size? I can't even tell you that."

Still, all but one member of the House majority backed the bill, saying they are frustrated with stalled efforts to secure a bigger pipeline and are willing to commit to Chenault's vision for getting natural gas off the North Slope to market.

House Democrats said they want a pipeline too, but believe the state should continue to pursue a big pipeline, not switch gears to a loosely defined project.

Democrats and other critics say the project could lead to far more expensive natural gas than a big pipeline to the Lower 48 or Valdez. New natural gas exploration in Cook Inlet has lessened the pressure to bring North Slope gas south. The project has too many unknowns and lacks the usual checks and balances, they say.

"You know this bill may remove roadblocks. But it also removes public process. And there's a reason for the public process," House minority leader Beth Kerttula, D-Juneau, said during the debate.

Democrats tried to strengthen oversight by the Regulatory Commission of Alaska. They asked for the project to come back to the Legislature for an up or down vote before construction began. Republicans and Bush Democrats aligned with them rejected all those ideas and more.

Some of the debate centered on Fairbanks, where heating costs are extraordinarily high. No natural gas is piped there, though some liquefied natural gas is trucked in. Democrats proposed several changes to bring natural gas to Fairbanks more quickly and cheaply. None were incorporated, but Fairbanks will get its natural gas if the pipeline is built, Chenault said.

Rep. Mike Hawker, R-Anchorage and a co-sponsor of House Bill 9, assured members that if the gas line corporation wants state funding for pipeline construction, the project must come back before the Legislature. The legislation allows the corporation to move on whatever project or projects are best, Hawker said.

The House bill approved Wednesday directs the gas line corporation to move ahead on a 24-inch line carrying a maximum of 500 million cubic feet of natural gas a day, much smaller than a pipeline project being pursued by TransCanada and Exxon Mobil through an exclusive license with the state. TransCanada is working toward a 48-inch pipeline that could deliver 4.5 billion cubic feet of gas a day.

Gov. Sean Parnell has said he backs the direction of House Bill 9 even though he is optimistic that Alaska's three major oil producers will come to agreement soon and work together on TransCanada's big pipeline. His informal deadline is Saturday. If both projects move ahead, the governor has said he expects them to merge.

Under a 2007 law, the state can't put money into a competing big pipeline because of its commitments to TransCanada. That limits the size of the pipeline under House Bill 9 unless something changes.

Already $200 million in state money has been set aside for the smaller pipeline. In all, backers expect the state to spend an estimated $440 million for the engineering, permits, design work and financial negotiations needed to get the project ready to build. So far, $31 million has been spent.


Reporter Richard Mauer contributed to this story. Lisa Demer can be reached at ldemer@adn.com or 257-4390.

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