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Alaska House votes for in-state gas pipeline

Pat Forgey

Fears of running out of natural gas trumped fears of high costs as a divided Alaska House voted late Monday to move forward with a state-backed, small-diameter pipeline running from the North Slope to somewhere in Southcentral Alaska.

Supporters have urged the state to push for a pipeline they've dubbed "ASAP" to bring 500 million cubic feet per day of natural gas to the state's urban centers. From Fairbanks to Anchorage, concerns of rising energy costs and low supplies have lawmakers scrambling for solutions. The in-state gas pipeline is one possible answer.

"The ASAP line would get gas to Alaskans faster than any project being talked about today, and it hasn't even reached the go or no-go stage yet," said House Speaker Mike Chenault, R-Nikiski, the project's prime sponsor along with Rep. Mike Hawker, R-Anchorage.

Their House Bill 4 passed 30-9, with the legislative session rapidly approaching its scheduled April 18 adjournment.

Chenault and Hawker have led the way during past legislative sessions for the development of the small-diameter line, with funding to create the Alaska Gasline Development Corp. to get the project going with studies.

Legislative critics Monday evening made a number of attempts at amendments, mostly with support only from Democratic members of the minority caucus, aimed at highlighting what they saw as weaknesses in the bill.

Others critics include the City of Valdez, which prefers a large-diameter running from the North Slope to Valdez that would enable exports of liquified natural gas to markets such as Asia. Valdez officials have accused Chenault and Hawker of having already decided on an Anchorage-area terminus for the pipeline, possibly at the mothballed LNG export plant in Nikiski, owned by ConocoPhillips.

But Chenault and Hawker say the market, and only the market, will determine the eventual terminus. Still, in defending another part of their bill, which limits judicial review, Hawker said the ability to appeal to courts wasn't needed because "AGDC already has its rights of way."

The big pipeline Valdez supports is being considered for development by pipeline-builder TransCanada Corp., under a state-backed process -- the Alaska Gasline Inducement Act (AGIA) -- started under Gov. Sarah Palin. The Calgary-based pipeline company has since been joined by Exxon Mobil Corp., ConocoPhillips and BP -- the companies that hold most of the rights to develop the North Slope's massive gas reserves -- in the AGIA effort. Last fall, the partners said their pipeline and LNG project would cost more than $65 billion.

Hawker, who has long been critical of AGIA, said that if TransCanada and its partners decide to build the big pipeline, his ASAP line could run to that line instead. He stressed that the two proposed pipelines aren't in competition.

But critics dismiss his claim, fearing ASAP may undermine the AGIA pipleine, which is already backed by up to $500 million in state subsidies.

"We are being told that House Bill 4 will work in conjunction with AGIA," said Lisa Von Bargen, with the City of Valdez. "Why should the public have any confidence that this will work in conjunction with AGIA given the aggressive and public discrediting of that process by the same people pushing ASAP?"

Rep. Bill Stotze, R-Chugiak, said he had to be persuaded that the ASAP line was worth state support, but he now thinks that it may help move AGIA along.

"The impetus of another line may have the ability to spur that, and that's certainly our fervent hope," he said.

House Bill 4 would appropriate another $225 million towards the project that some Democrats said could cost as much as $400 million in studies, before the $8 billion project even begins.

Hawker said the goal is to turn the project over to private industry, which can develop such projects better than government can.

"I do not want big government running this," he said.

But House Democratic Leader Beth Kerttula, D-Juneau, cautioned about the cost estimates. Small pipelines don't provide the same economies of scale as big pipelines do, she said. "Is anyone really going to be able to afford this gas by the time people get it," Kerttula asked.

Chenault dismissed the big pipeline Kerttula wanted as unrealistic. "When we talk about this big pipeline, we're kidding people, we're kidding Alaskans," he said.

Hawker said the important thing wasn't the revenue, it was the gas. Alaskans don't need to use their oil themselves, but they can sell it. But they do need natural gas to light up their cities and heat their homes.

"Oil is for the treasury, gas is for Alaskans," he said.

Kerttula said House Bill 4 gives up too much to the pipeline developers, including exempting AGDC from the state procurement code, judicial review, Regulatory Commission of Alaska tariff regulation, and Alaska hire requirements.

"Just how much will we give away in the hope that we'll get gas we'll be able to afford," she asked.

Amendments submitted by Kerttula's caucus aimed at correcting those perceived flaws were all voted down by Chenault's caucus, with speakers calling them unnecessary, or sometimes even damaging.

Rep. Chris Tuck, D-Anchorage, said a project labor agreement would have helped ensure Alaska hire for the project.

"It's Alaska's gas, Alaska's gas-line, and it should be Alaska's jobs building it," he said.

Steve Thompson, R-Fairbanks, urged rejection of that amendment, saying that project labor agreements didn't really ensure Alaska hire and just gave unions preference. "All Alaska businesses and residents should have the right to work in the project without being required to affiliate with a labor organization," he said.

Passage of the bill largely followed caucus lines, though some notable crossovers included Rep. Eric Fiege, R-Chickaloon, who represents Valdez and voted against the bill, and Rep. Scott Kawasaki, D-Fairbanks, who voted for it.

The bill now goes to the Senate for consideration.

Contact Pat Forgey at pat(at)alaskadispatch.com