Pipeline funding request gets Senate look

Posted: Friday, February 16, 2001

JUNEAU -- Senate Republi-cans grilled Knowles administration officials over urgent budget requests related to a gas pipeline Thursday, questioning whether the money is really needed so soon and challenging the notion that following the Alaska Highway is the best route for the state.

Gov. Tony Knowles supplemental budget includes nearly $2 million related to the gas line, including $961,400 for the Department of Natural Resources, $419,500 for the governor's office, and $141,900 for the Department of Environmental Conservation.

The Senate Finance Committee reserved the most criticism for the governor's office. Nearly all the money would pay for the activities of the Alaska Highway Natural Gas Policy Council -- a panel recently appointed by Knowles. The panel will ''hold statewide meetings to obtain the views of Alaskans on how the state can best promote a gas commercialization project and maximize benefits for Alaskans,'' according to the administration's summary of the budget request.

Lawmakers questioned why Knowles would spend so much seeking public comment when no actual plan for a pipeline has emerged.

''I'm trying to figure out what we're getting for our $400,000,'' said Sen. Gary Wilken, R-Fairbanks. ''I'm not sure we need too much rah-rah until we put a little more flesh on the bones.''

Others pointed out that Knowles has already chosen his preferred route, repeating ''My way is the highway,'' at the slightest opportunity, and questioned why he was seeking public input on a decision already made.

''You've got a council whose very name is biased in favor of a highway project,'' said Finance Committee co-chair Dave Donley, R-Anchorage. ''I really think the governor put the cart before the horse. With a public process, you might find that Alaskans might prefer another route.''

Ken Freeman, the Democratic governor's special assistant for business and gasline development, began sweating visibly as the Republican-dominated committee peppered him with questions about the route. Many lawmakers remain unconvinced that the highway route to energy-hungry markets in the Lower 48 is better for the state than running a line to Valdez or Cook Inlet, where the gas would be liquefied and shipped to markets in Asia.

Freeman said Knowles hasn't ruled anything out and remains open to spur lines to tidewater in Alaska.

''If folks were to come from the Far East with contracts in hand, I don't think anyone would turn them away,'' Freeman said. ''We think this is the best opportunity to tap into a massive domestic demand.''

Lawmakers quizzed other administration officials on why they need the money in the next few months, instead of in the next fiscal year that begins on July 1.

Officials from DEC and Fish and Game said they need money to prepare for field work this summer that will let them issue permits quickly if someone submits an application this summer.

''Don't you already know what's there?'' Donley asked, noting that the route runs along the trans-Alaska oil pipeline and the Alaska Highway.

''There's going to be some changes,'' replied Ken Taylor, director of the Department of Fish and Game's Habitat Division. ''There's a lot of work involved.''

Mark Myers, director of Department of Natural Resources' Division of Oil and Gas, fared better as he sought money to study gas supply, demand and the potential impact of gas development on oil production and state royalty income.

''It's imperative for us to really understand the economics,'' Myers said.

Deputy Revenue Commissioner Larry Persily actually got a laugh with his testimony.

''Our goal is to tax the gas wherever it goes and however it moves,'' Persily said. ''We don't care about the route.''

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