Lawmakers propose measure to advance in-state gas line

Becky BohrerAssociated Press

JUNEAU -- Two Alaska House leaders on Tuesday proposed legislation intended to advance an in-state natural gas pipeline project.

House Speaker Mike Chenault and Rep. Mike Hawker see the bill as empowering the Alaska Gasline Development Corp., or AGDC, which is leading the effort to advance an in-state line. The measure, among other things, would incorporate three existing bills, including one establishing a fund for pipeline work.

Chenault and Hawker have supported an in-state line as a way to help meet energy needs in Alaska's most populous region. Chenault, R-Nikiski, said this bill, HB9, would not sanction a project, but rather would allow AGDC to get to the sanctioning stage, the point at which the Legislature would say build it, or don't.

Dan Fauske, AGDC president, said he's hoping for sanctioning by 2015. The group is aiming for a year-long open season, or period of courting gas producers, seeking commitments, beginning next January. On this timeline, and assuming the project gets the go-ahead, the goal is for first gas in the fall of 2018.

This comes as Gov. Sean Parnell seeks to jump-start efforts to advance a major line that would carry gas from the North Slope to market. He has called on the Slope's major players to get behind a project to tidewater -- one that would allow for liquefied natural gas exports to the Pacific Rim -- if the market has shifted from the Lower 48, which has been the main focus.

He wants alignment under the Alaska Gasline Inducement Act, which bars the state from sanctioning a competing project. Those terms limit to 500 million standard cubic feet per day the size of any other gas line project the state can pursue. For comparison, TransCanada Corp., which is working to advance a large line under the inducement act, has proposed projects that would carry either 3- or 4.5 billion cubic feet a day.

Chenault and Hawker, R-Anchorage, said they are hopeful there will be alignment among the players behind a larger pipeline capable of export and that the in-state line could be incorporated into that.

Chenault, in a recent op-ed, said he would support it, if there was such alignment this year. "If not," he wrote, "we are resolved to carry on with AGDC's core mission, an instate line that stands on its own."

He told reporters Tuesday that this isn't about "picking a winner" but instead getting gas to Alaskans.

Fauske estimated it would cost $400 million to get the project to the point of sanctioning. The state has already promised TransCanada up to $500 million in reimbursable costs for its work.

AGDC, in a report released last summer, said the in-state project could cost $7.5 billion, a figure with an uncertainty range of plus or minus 30 percent, and require that the state cover much of if not all the construction costs.

Those estimates are expected to be sharpened, and issues of financing decided at a later date.

Merrick Peirce, with the Alaska Gasline Port Authority, said the proposed legislation upends a 2002 citizen initiative that created the Alaska Natural Gas Development Authority. The group's mission was to build a gas pipeline from the North Slope to Valdez and a spur line to the gas distribution grid in Southcentral Alaska.

The bill would bring the authority under common management with AGDC. Chenault, in the op-ed, said it would make the authority a "partner to centralize and strengthen the state's efforts." And Fauske on Tuesday said it would allow the authority to function as a gas marketing or gas buying entity.

Peirce said the Legislature never "properly funded" the authority.

The bill would replace an earlier version of HB9, introduced last session. Reps. Steve Thompson, R-Fairbanks, and Charisse Millett, R-Anchorage, had also signed on to that measure.

Associated Press