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Feds rally for Alaska gasline

Patti Epler
Aaron Jansen illustration

With some lawmakers and even the public starting to lose their enthusiasm for state subsidies of a large natural gas pipeline from the North Slope to the Lower 48, the federal official in charge of helping get the line built thinks it's time to talk about the economic benefits of the project.

Larry Persily, the federal coordinator for Alaska Natural Gas Transportation Projects, has invited three of the state's leading economists to join him for a panel discussion on the state's economic future -- with and without a big gas line.

The forum is slated for 7 p.m. to 8:30 p.m. May 10 at the University of Alaska Anchorage Fine Arts Building Recital Hall. Scheduled to join Persily are UAA economist Scott Goldsmith, Brian Rogers, chancellor of the University of Alaska Fairbanks, and Bill Van Dyke, a former state official and petroleum engineer with Petrotechnical Resources Alaska.

Since 2007 when the Alaska Gasline Inducement Act was passed, the state has been working with TransCanada Corp. and Exxon Mobil Corp. on the Alaska Pipeline Project, a proposed pipeline that would run from the North Slope to Canada or Valdez or possibly both. The state committed to reimbursing TransCanada up to $500 million in pre-construction costs

A separate pipeline project, the Denali -- Alaska Gas Pipeline Project, a joint venture of BP and ConocoPhillips, is also still in the works but without state help.

Both projects held open seasons last year to solicit bids from potential gas shippers that would indicate whether there was enough interest in the line to make it economically viable. But neither project has revealed the results of the bidding and, with much in the news about the glut of natural gas available in the Lower 48, the lack of information is not sitting well with some lawmakers.

Legislature weary of dumping cash into AGIA

Earlier this year during the legislative session, House GOP leaders and some senators made it clear they are tiring of spending the state's money on a project that may never go anywhere -- or at least may not go anywhere for awhile. The House considered legislation that would require the state administration to determine by July 15 whether the gas line was economically viable. If it's not, lawmakers would have a legal basis for abandoning the agreement with TransCanada, they believe. That bill was left on the table when the regular session ended April 17. The capital budget, which still hasn't passed but is a hot topic of the ongoing special session, reduces Gov. Sean Parnell's request for $160 million for TransCanada reimbursement to $60 million.

Now, talk is turning more to spending state money on a small in-state gas line -- the so-called bullet line -- that would carry North Slope gas to Fairbanks and then down to Southcentral. That project awaits a July 1 report from the Alaska Gasline Development Corp. which is spearheading the project, and House Speaker Mike Chenault sponsored several bills this session -- also lost in the abrupt end of the session -- that would help push an in-state line.

Persily says the upcoming gas line forum is an effort to continue the discussion on the benefits of a large-diameter pipeline that go beyond taxes and royalties on natural gas production. His office hosted a similar forum in January with national experts that focused on the market for gas, supply and demand and the ramifications for Alaska.

This panel was envisioned to cut through some of the debate over whether a small in-state gas line would be a better way to go and what a big line would bring that a small line would not. Persily said the panel was scheduled for after the Legislature adjourned so his agency -- and panelists -- weren't injected into the immediate debate in Juneau over gas line politics.

"Little did we know they might still be in session," he added.

Still, he said, if the state is considering spending billions of dollars to subsidize a small gas line, the public should be able to know how that compares to a large line, which would bring more economic benefits including jobs.

Persily's office earlier this year released a report by petroleum economist Roger Marks that concluded the state would be better of subsidizing a big North Slope pipeline then a smaller bullet line because the cost of the small line is too high. That would mean gas customers would have to pay much higher prices for heat and electricity unless the state pumped significant cash into it. And the smaller line wouldn't prompt other benefits like production taxes and royalties or encourage more North Slope development, the study found.

"Alaskans are starting to get more impatient than they were last year or even last month," Persily said.

The forum gives people the opportunity to ask questions as well as listen to what experts have to say as the gas line project moves forward, even slowly, Persily said.

The forum is scheduled to be streamed live on the web at the federal coordinator's website, www.arcticgas.gov. Seating at the university is limited though overflow space will be available. Sites also will be set up in Fairbanks, Juneau, the Matanuska Valley and the Kenai Peninsula for the public to go and watch the forum. Check the website for details.

360 North, the Alaska statewide public TV channel that also carries Gavel-to-Gavel coverage of the Legislature, is scheduled to rebroadcast the forum at 8 p.m. and 11 p.m. Friday, May 13; 1 p.m. Sunday, May 15; and 11 a.m. and 5 p.m. Monday, May 16.

Contact Patti Epler at patti(at)alaskadispatch.com