March 06, 2007
Tuesday

ANCHORAGE, Alaska -- Gov. Sarah Palin unveiled her much-anticipated gas pipeline legislation Friday and set the framework for what incentives she would give potential pipeline builders in exchange for their commitment to get Alaska's huge store of natural gas to market.

The bill, dubbed the Alaska Gas Line Inducement Act, or AGIA, offers to give a developer as much as $500 million, which the developer would need to match, as seed money for the multibillion-dollar project.

If the Legislature passes it, AGIA would also provide incentives to North Slope gas producers to put their gas into the pipe. It would offer a tax exemption for those who promise to use the gas line to ship their product to market. The tax exemption would be valid for 10 years and would include any reimbursements to the producers if lawmakers raise taxes.

"We are trying to remove as many risks to the builders as possible, and create stability and predictability," said Marty Rutherford, the deputy commissioner of the Department of Natural Resources and a key member of Palin's gas line advisory team.

Palin's proposal replaces legislation introduced by former Gov. Frank Murkowski. The former administration reached a deal with the three biggest North Slope producers last year on state tax and other terms if they built a pipeline to the Lower 48, a project now estimated to cost roughly $30 billion. Murkowski's contract was widely criticized for being too generous to the producers - BP, Conoco Phillips and Exxon Mobil - and it died when Murkowski lost a re-election bid last August.

During her election campaign, Palin promised to bring more transparency to the state's process of selecting a gas line builder.

According to Palin's advisers, the state will have a strict timeline in which it hopes to move the process from legislative approval of the bill to pipeline fieldwork by the summer of 2008. During that timeline, the public will have a chance to participate in the state's process for selecting the best applicant, since all applications from potential builders will be available to the public.

Palin's proposal also includes creation of a state pipeline coordinator to streamline permitting of the facilities and pipeline. That office will work directly with the federal office created last year by President Bush to oversee approval of the project. As part of the licensing of the pipeline builder, the builder must agree to several terms intended to benefit Alaskans, the Palin administration said.

The builder must give the state at least five places within the state where gas can be taken out for in-state use.

The builder, for example, must actively recruit within the state to hire Alaskans, in addition to having its headquarters in-state. In return, the state will provide training programs to ensure there are qualified technicians ready to work on the project once it starts.

AGIA also focuses on commitments from the builder to examine pipeline expansion and natural gas exploration in the state. The pipeline's capacity might need to be expanded if enough new reserves of natural gas is found on the Slope.

The builder would be required to re-examine pipeline expansion every two years and agree to add pipeline capacity as needed.

SitNews ©2006
Stories In The News
Ketchikan, Alaska