Anchorage Daily News

JUNEAU -- Alaska legislators on Wednesday hit the court to start reviewing Gov. Sarah Palin's plan for a natural gas pipeline.

Because the state Capitol has no meeting hall big enough to accommodate all 60 lawmakers, they convened in the gymnasium of a former school nearby. A scoreboard still occupies one corner of the gym.

Consultants the Legislature hired spent nearly six hours briefing legislators on Palin's recommendation that TransCanada Corp. be awarded an exclusive license and a $500 million subsidy toward a 1,715-mile pipeline down the Alaska Highway from the North Slope gas fields to Alberta.

It's a dream project, one the state's elected officials have chased for some 30 years. But it's an enormous -- and hugely risky -- undertaking estimated to cost $30 billion or more.

Last week consultants for the Palin administration held a three-day forum in Anchorage and touted TransCanada, a Calgary-based energy firm, as a powerhouse company well able to pull off a project that the major North Slope oil and gas companies have failed to mount.

Now, meeting in a special legislative session Palin called, lawmakers and their own experts are reviewing whether they should follow the governor's lead.

Waiting in the wings, meanwhile, are oil companies Conoco Phillips and BP, which have announced their own plan to build a similar pipeline without the need for the state seed money.

Those companies as well as Exxon Mobil -- which together control most of the Slope's huge gas reserves -- had representatives on the hardwood Wednesday.

Economic and energy industry consultants, as well as former state tax director Dan Dickinson, briefed lawmakers on TransCanada's business and pipeline plan, with lawmakers interrupting them frequently to ask questions.

Some big issues on their minds:

• Does the state really need to hand $500 million to TransCanada?

• If the company does build a pipeline, would Alaska gas actually make it to Lower 48 consumers or would it be burned in Canada?

• And who will pay for any expansion of the pipeline in case drillers find a whole bunch more gas on the North Slope?

The whole business is super complex, and the densely technical presentations certainly had a lot of people running out of the gym for coffee. But some lawmakers said they need all the counsel they can get on the pipeline, seen as vital for the state's economic wellbeing.

"It's the single most important thing in all our careers," said Rep. Berta Gardner, D-Anchorage.

After the day's briefing, Palin invited the lawmakers over to the governor's mansion, a short walk away, for a reception featuring salmon, sliced watermelon and wine.

Some powerful majority lawmakers who didn't show up for Palin's Anchorage forum were seen at the reception including Senate President Lyda Green and Sen. Charlie Huggins, both Republicans from Palin's hometown of Wasilla.

Palin, carrying her newborn, Trig Paxson Van Palin, said she's confident lawmakers will go along with her recommendation on the TransCanada license.

"We will hear challenging questions. We invite that," Palin said.

Huggins, a key figure in the pipeline debate as chairman of the Senate Resources Committee, said he's uncomfortable with what Palin has handed the Legislature.

He said in the hearing Wednesday he'd prefer the license be underpinned with a contract spelling out exactly what the state and TransCanada will do for one another. The proposal as it stands now is too ambiguous on some points, he said.

Rep. Jay Ramras, R-Fairbanks, said he can't see the need for awarding the $500 million subsidy, and that he'll probably vote no on awarding the license under the Alaska Gasline Inducement Act, or AGIA, which the Legislature passed last year at the popular governor's request.

"I get tired of hearing that AGIA is this wondrous thing," Ramras said. The real authority, he said, is the Federal Energy Regulatory Commission, from which TransCanada or any other builder must get permission for a pipeline.

After lawmakers wrap up hearings early next week in Juneau, they plan to go on a "road show" around the state to listen to Alaskans on the TransCanada proposal.

House Speaker John Harris, R-Valdez, said he expects lawmakers will vote on the TransCanada license in early to mid-July.

The biggest question for many legislators, he said, is whether they can trust the oil companies to build a pipeline if TransCanada doesn't win the license.

Conoco and BP representatives have said awarding the AGIA license is irrelevant, that they intend to press on with what they've dubbed the Denali Project.

Some lawmakers, including Sen. Con Bunde, R-Anchorage, question the need for the road show.

He said many lawmakers have signed up for the stop in Barrow, the state's northernmost village. He suggested a teleconference might work just as well.

"Would you say sending 40 lawmakers to Barrow would be a good investment for the state?" he said. "It costs more to fly to Barrow than it does to Hawaii."

The state license is not a contract to actually construct a pipeline. Rather, it would obligate TransCanada only to seek federal permission to build it. A key challenge is whether the company could persuade Conoco, BP and Exxon to sign on as customers.

The gas producers, who ultimately would be on the hook for paying for the pipe through user fees, have said they're reluctant to commit before first knowing how the state would tax the gas as it comes out of the ground.

Find Wesley Loy online at adn.com/contact/wloy or call 257-4590.

"It's the single most important thing in all our careers."

-- Rep. Berta Gardner, D-Anchorage

"I get tired of hearing that AGIA is this wondrous thing."

-- Rep. Jay Ramras, R-Fairbanks

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