Alaska Legislature Approves Pipeline Inducement Act

Friday, May 11th 2007, 5:49 pm

By: News On 6

JUNEAU, Alaska (AP) _ Both houses of the Alaska Legislature on Friday approved a bill establishing a path for a multibillion dollar natural gas project designed to tap a huge heating fuel supply and transport it to the rest of the country.

The bill, called the Alaska Gasline Inducement Act or AGIA, will now go to the Senate Finance Committee to work out slight differences in versions passed by the Senate and House.

Under AGIA, producers and independent pipeline companies can vie for rights to build the pipeline that lawmakers hope will ship trillions of cubic feet of North Slope natural gas to market.

The bill is designed to stimulate competition through inducements, but also has requirements that BP PLC, Exxon Mobil Corp. and ConocoPhillips opposed.

The three major oil companies had warned they would not submit a bid unless such stringent requirements were removed.

Newly elected Republican Gov. Sarah Palin held firm, saying this week if lawmakers watered down her bill, she'd veto it.

``This bill represents the direction the new governor wants to take in moving a natural gas pipeline forward,'' said Rep. Mike Chenault, R-Nikiski, who served as co-chair of the House Finance Committee.

Lawmakers say the next move belongs to oil and pipeline companies.

``There is risk in the project,'' said Sen. Charlie Huggins, R-Wasilla. ``It is a risk worth taking.''

Palin has long warned that the state and the nation can't afford to let the natural gas supplies _ estimated at about 35 trillion cubic feet on the North Slope _ sit untapped any longer.

The bill continues to put distance between Palin's ideas and a failed attempt last year to negotiate a deal with the North Slope producers by former Gov. Frank Murkowski.

Murkowski settled in principle with BP, Exxon Mobil and ConocoPhillips on fiscal terms for producing North Slope gas.

It did not guarantee a pipeline would get built, but the hope was it would enable producers to move forward with a pipeline from the North Slope through Canada and into the Midwest.

The line would ultimately have delivered 4.5 billion cubic feet of natural gas a day, which is about 7 percent of the current U.S. demand.

But state lawmakers felt the deal had too many giveaways for big firms, including locking in tax rates for several decades. The Legislature never voted on the deal.

The multibillion dollar pipeline has implications for North America's long-term energy supply for heating homes and businesses. It also is considered to be a potential boon to the state's economy, not unlike that of Prudhoe Bay's oil production at its peak.