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Begich urges state to consider loan guarantee for pipeline

Becky Bohrer

JUNEAU -- U.S. Sen. Mark Begich has urged the state to consider a loan guarantee that would help with financing for a major Alaska natural gas pipeline.

In a letter to Gov. Sean Parnell released Tuesday, Begich said it would be very difficult for the state's congressional delegation to get an increase in the federal loan guarantee anytime soon. Begich cited the recent push in Washington to cut federal spending, as well as increased scrutiny on loan guarantees for energy projects.

Federal loan guarantees for the pipeline currently stand at about $21 billion. Project costs released by TransCanada Corp. have ranged from $20 billion to $41 billion, depending on the pipeline's route. The longer route, running from Alaska's North Slope to Alberta, Canada, where gas could then be moved to North American markets, would cost from $32 billion to $41 billion.

TransCanada is working under an exclusive license with the state to advance a pipeline project. The company began negotiations with potential gas shippers more than a year ago but has yet to announce agreements with any of them.

Debt financing must meet 70 percent of the project cost, under terms of the Alaska Gasline Inducement Act, and that could end up at around $30 billion, Begich said. That would mean the state would have to consider a loan guarantee of about $9 billion to make up the difference.

Parnell spokeswoman Sharon Leighow said the state is the only public entity now paying for development of a line. TransCanada can receive up to $500 million in reimbursable costs under the inducement act, and Alaska has also put money toward pursuing a smaller, in-state gas pipeline to help meet the energy needs of state residents.

The Associated Press