Alaska leader pleased by Democratic gas proposal
Date: 01-Mar-02
Country: USA
Author: Yereth Rosen
Gov. Tony Knowles and Lt. Gov. Fran Ulmer, both Democrats, said they were pleased with a decision by Senate Majority Leader Tom Daschle, announced earlier in the day, to add state-endorsed incentives for the gas project to federal energy legislation pending in the Senate.
"This is, I think, a significant step forward for the project," said Knowles at a news conference held in Juneau and Anchorage. "We're very thankful that this is now on the agenda."
In a statement, Daschle said an amendment to the legislation will specify the pipeline follow the route of the Alaska Highway through Canada, that there be guarantees of access to gas and pipeline capacity for Alaska users and future gas producers, and that tax incentives establish a floor gas price to reduce financial risk for the pipeline's owners.
Oil fields on Alaska's North Slope hold about 35 trillion known cubic feet of natural gas, the nation's biggest supply of known but untapped gas reserves.
Because of distance from markets and the high cost of building a pipeline system to deliver it, the natural gas has been stranded on the North Slope, even though oil has been pumped from there since 1977.
A pipeline to deliver North Slope natural gas to the Lower 48 states would cost $15 billion to $20 billion, according to state officials. So far, Alaska's major oil producers - Phillips Petroleum , BP and Exxon Mobil - have declared the project uneconomic.
Knowles said a system of tax credits establishing a price floor for natural gas would be probably the most significant financial incentive for the project.
"It will provide the stability that is necessary to attract investment for a project of this size dealing with a commodity that we all know has had such a wide (price) fluctuation," he said.
Under the system envisioned by the state and by Daschle, credits would be rebated if prices rise above a predetermined level, he said.
Unlike oil development in the Arctic National Wildlife Refuge, which the Knowles administration backs but environmentalists and most Congressional Democrats oppose, the gas pipeline appears to enjoy wide popularity, Ulmer said.
"When it came to the natural gas pipeline, I found an amazing amount of support," said Ulmer, who returned recently from a lobbying trip in Washington.
In his statement, Daschle agreed with that assessment.
"Energy for America, jobs and opportunities for Alaskans, and no damage to sensitive environmental areas - this is the type of pro-development, pro-jobs energy project that Congress should be encouraging," Daschle said.