Debate roils over in-state pipeline, bill rewritten

JUNEAU — A bill aimed at keeping the momentum behind an in-state natural gas pipeline has been rewritten, with a goal of providing greater checks and balances without impeding the project.


Critics say the bill still gives too much authority to the Alaska Gasline Development Corp., or AGDC, and they say there are better ways of getting cheap, reliable gas to Alaskans.

HB9, a priority of House Speaker Mike Chenault, is meant to further empower AGDC in its effort to advance a small-diameter pipeline that would run from the North Slope to south-central Alaska. The push to advance an in-state line stems largely from frustration with lack of progress on a major gas pipeline that would carry gas from the North Slope to market but also have off-takes for in-state delivery.

The bill, as amended by the House Finance Committee, creates a new chapter of regulations for an authorized gas line. It states that an in-state line is required by “public convenience and necessity,” and directs the Regulatory Commission of Alaska to determine if AGDC is technically fit, as in, does it have the technical expertise, financing and wherewithal to properly provide the service.

RCA would weigh in on whether contracts are just and reasonable, as evidenced by the parties negotiating fairly. It wouldn’t relate to the terms. Precedent agreements would be submitted to RCA but those not involving public utilities would be sealed.

The commission would not have a say on the terms reached between parties and AGDC, for things like tariffs or rates, terms negotiated between parties. AGDC is supposed to pursue a commercially feasible line at the lowest possible cost, so the expectation is that it would come up with a reasonable rate.

RCA would be able to intervene in contracts disputes between the carrier and public utilities if those cannot otherwise be resolved and if the dispute threatens “the public safety and welfare.”

Chenault, R-Nikiski, who has been pushing the bill with Rep. Mike Hawker, R-Anchorage, said changes were aimed, in part, at addressing concerns about consumer protection. He characterized them as “our best stab for now,” and what they felt they could get agreement on from all involved parties. He said additional changes are possible. 

“We want to make sure that there is consumer protection there but also realizing that in order to get to a project, to get to a successful project, if you put too many hurdles or roadblocks or starts or stops in a project, you indeed can kill the project yourself,” Chenault said.

Rep. Les Gara, D-Anchorage, said Alaska has better options for a gas pipeline than the one that would be advanced by HB9. Gara said the project addressed by HB9 should be Alaska’s “last option of desperation.” He said a major gas pipeline makes more sense.

Gov. Sean Parnell has sought to jumpstart efforts to advance a major line that would carry gas from the North Slope to market. He has called on the North Slope’s major players to get behind a project to tidewater — one that would allow for liquefied natural gas exports to the Pacific Rim — if the market has shifted from the Lower 48, which has been the main focus. 

He wants alignment under the Alaska Gasline Inducement Act, which bars the state from sanctioning a competing project. Those terms limit to 500 million standard cubic feet per day the size of any other gas line project the state can pursue. 

For comparison, TransCanada Corp., which is working to advance a large line under the inducement act, has proposed projects that would carry either 3- or 4.5 billion cubic feet a day. 

Bill Walker, who unsuccessfully sought the GOP nomination for governor in 2010, said Alaska needs to get out of the inducement act. It isn’t working, he said, and instead it is preventing the state from having the best options on the table for moving Alaska gas to market. 

Walker would like to see an “all-Alaska” pipeline project, which would run from the North Slope to Valdez and allow for overseas liquefied natural gas exports. 

AGDC last year proposed a 737-mile, 24-inch mainline with a smaller lateral line meant to serve Fairbanks. The estimated cost was $7.5 billion with an uncertainty range of plus or minus 30 percent that AGDC expects to narrow down as the project progresses. AGDC has said the project could require that the state cover much of if not all the construction costs. 

Consultants have said that an in-state natural gas pipeline would require heavy subsidies to bring energy costs to reasonable levels. 

Gara raised concerns about the price Alaskans would have to pay without major subsidies and fears that the project could stifle efforts to produce gas in Cook Inlet, in south-central Alaska. 

Gara sought unsuccessfully in committee to amend HB9 to require that AGDC not proceed with the project if after “a full and objective study” it deems one or more projects among a slate of possibilities would provide greater benefit than the current project. Chenault said the in-state line will be delayed if HB9 doesn’t pass this session.

The Senate, meanwhile, has a bill that would have AGDC build a line with gas running in the opposite direction, from Cook Inlet, in south-central Alaska, to Fairbanks and communities in-between that don’t have access to a gas pipeline. 


Tue, 06/19/2018 - 12:02

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