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AGIA opponents say they're not out to kill pipeline project

Posted: Wednesday, February 09, 2011

Sponsors of a bill which would change the terms of the Alaska Gasline Inducement Act's attempt to develop a natural gas pipeline denied they were trying to undermine the state's multi-year, $500 million attempt to get approval for a natural gas pipeline.

They've introduced legislation which could force state officials to declare the state-backed TransCanada Corp. pipeline project "not economically viable," and end state subsidies to the project.

Rep. Mike Hawker, R-Anchorage, denied the bill, House Bill 142, was an attack on AGIA, and said it would instead help the state get a natural gas pipeline.

"It is legislation to create a sense of urgency about moving forward with the AGIA process," he said. Hawker and other Republican supporters of the bill spoke at a press conference Monday at the Capitol. Too little has happened since 2008, when the state awarded TransCanada an exclusive right to $500 million in state backing for its pipeline, he said.

"We've got to get on with moving some dirt in this state," he said.

The bill, he said, could force TransCanada to negotiate harder to get a deal.

Gov. Sean Parnell said he shared Alaskans' hopes for a pipeline as soon as possible, but warned the bill by Hawker, House Speaker Mike Chenault, R-Nikiski, and others could actually threaten the chances of a pipeline.

"Moving the goal posts and changing the game on a process established by law will lead to delays and ultimately end our opportunity to build this pipeline," he said in a statement later Monday.

Parnell echoed comments from Rep. Beth Kerttula, D-Juneau, after the bill was introduced that changing the process after the state's business partner invested more than two years and tens of millions of dollars would send a bad message to those considering investing in Alaska.

"This bill will have a chilling effect on businesses looking to invest in Alaska," he said. "Legislators ought to focus on creating opportunities rather than killing them off."

Hawker and the other sponsors who were in the Legislature when TransCanada won state backing all voted against the company.

He denied the bill would undermine AGIA.

"It is meant to augment, enhance and strengthen the AGIA process," he said.

Chenault said changes in the North American natural gas market may have made opportunities to sell Alaska gas through a multi-billion dollar pipeline no longer viable.

That's something the Legislature and the public need to know now, he said.

"Are we on the economic track to have an economically viable project and not one that we're just spending money on creating more paper?" he asked.

After Alaska joined with TransCanada it sent into play a process to get a Federal Energy Regulatory Commission certificate allowing the pipeline to be built by 2014, and have a pipeline in operation by 2020.

The TransCanada opponents Monday said that process, while on track, isn't fast enough and may not work anyway. The state might need to stop that effort and instead try something else. An in-state pipeline to serve Railbelt needs was one possibility, they said.

Shortly after TransCanada began, another pipeline backed by two oil companies, ConocoPhillips Co. and BP PLC began development, and is following closely behind the Canadian company.

If the TransCanada project were stopped it would give the competing project, called Denali, a lead of two years or more over anything else the state attempted.

Hawker, though, said House Bill 142 had nothing to do with the Denali project.

"We're not committed to paying the Denali partners the $500 million of support which we are under the AGIA process to TransCanada," he said. "Denali chose a route outside the AGIA process, it's really irrelevant to this."

Under the terms of AGIA, TransCanada is committed to continuing with the project even if companies such as ConocoPhillips, BP and ExxonMobil Corp. refuse to sell gas through the pipeline.

House Bill 142 could force the state to declare the project "uneconomic," and possibly cancel it.

Without firm commitments from shippers to move gas through it, the project won't serve Alaska's needs, he said.

"We're looking for firm transportation commitments so we know the people of Alaska have something to take to the bank to start the construction project," he said.



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