State-owned gas line plan advances

Posted: Friday, April 19, 2002

JUNEAU (AP) -- A bill calling for possible state ownership of a natural gas pipeline from the North Slope is moving through the Legislature.

The House Finance Committee on Thursday approved a bill that would require the Joint Committee on Natural Gas Pipelines to prepare a report by January 2004 on the feasibility of such a publicly owned natural gas pipeline.

If the project is deemed feasible, the bill would launch the Alaska Gas Corp., a state entity that would be authorized to issue bonds to finance the project and to contract with private companies to do the actual work of building and operating the line.

The three major oil companies on the North Slope -- BP, Exxon Mobil and Phillips Petroleum -- have so far indicated a $15 billion to $20 billion pipeline project would not guarantee enough profit for them to justify the risk.

The bill's sponsor, Rep. Jim Whitaker, R-Fairbanks, says state ownership offers tax advantages to boost the project. State ownership would guarantee in-state use of the gas, assure all competitors have access to the pipeline, and bring ''substantial'' revenue to state coffers, he said.

The state Department of Revenue, however, has recommended against state ownership. The department says the risks would be great and the rewards minimal.

The debate over Whitaker's bill in the Finance Committee focused on the fact that the Legislature's legal division has deemed it ''substantially similar'' to a citizens' initiative that calls for a state-owned gas line to be built from the North Slope to Valdez.

If the Legislature passes a bill that is similar enough to a citizen's initiative, the lieutenant governor must pull the initiative off the ballot.

Initiative sponsor Scott Heyworth said he will sue if the Legislature passes Whitaker's bill and the lieutenant governor pulls the initiative, which has been certified for the November statewide ballot.

Heyworth is upset because Whitaker's bill does not require a North Slope-to-Valdez route, as his initiative does.

House Bill 302 would allow a line to Valdez, but is also open to a route that would run from the North Slope through the Interior and down the Alaska Highway through Canada to markets in the Lower 48.

Heyworth said the Alaskans who signed his petition did so because they want an all-Alaska pipeline route to ensure that the jobs and spinoff industries from the pipeline remain in the state.

The major North Slope oil and gas companies and the administration of Gov. Tony Knowles say the Valdez plan does not pencil out and that the overland Alaska Highway route has a better chance of success.

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