Gas line loan guarantee likely wouldn't apply to LNG plan

Becky BohrerAssociated Press

JUNEAU -- An Alaska natural gas pipeline project that would serve overseas markets seemingly wouldn't qualify for a loan guarantee under federal law.

The Alaska Natural Gas Pipeline Act contains incentives aimed at speeding a project, including authorization for a federal loan guarantee. But Larry Persily, federal coordinator for Alaska natural gas transportation projects, notes that a qualified project under the law is one that would bring gas from Alaska's North Slope to the contiguous 48 states.

Changes in the years since the 2004 law's passage, including the rise of shale gas, have given rise to concerns that there will be little demand for Alaska gas in the Lower 48. Gov. Sean Parnell has asked the Slope's major players -- Exxon Mobil Corp., BP and Conoco Phillips -- to unite behind a project that would allow for liquefied natural gas exports to the Pacific Rim if the market has truly shifted.

Persily said Wednesday that such a project could still qualify for the loan guarantee if, say, a tanker brought liquefied natural gas to the Lower 48. But he said that doesn't appear to be what people are talking about. Federal loan guarantees for the pipeline are currently estimated at about $21 billion.

Robert Dillon, a spokesman for Sen. Lisa Murkowski, R-Alaska, said Murkowski's office would look at changing the loan guarantee language to help the project, as appropriate.

Associated Press