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State-owned gas line plan passes House

Posted: Tuesday, April 23, 2002

JUNEAU (AP) -- A bill calling for possible state ownership of a natural gas pipeline from the North Slope passed the House on Monday.

The measure would require the Joint Committee on Natural Gas Pipelines to prepare a report by January 2004 on the feasibility of such a state-owned line.

If the report says the project is feasible, the bill would launch the Alaska Gas Corp., a state entity that could issue bonds to finance the project and contract with private companies to build and operate the line.

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

The bill's sponsor, Rep. Jim Whitaker, R-Fairbanks, has said state ownership offers tax advantages. State ownership would guarantee access to the gas for in-state uses, assure all competitors have access to the pipeline and bring revenue to the state treasury, he said.

He sees a state-owned pipeline as similar to other projects the state builds to help move goods to market, such as roads or airports.

''It is no more than a basic infrastructure system,'' Whitaker said.

But Rep. Vic Kohring, R-Wasilla, said it could be an expensive government boondoggle, similar to failed state attempts to boost Alaska agriculture.

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

If the bill passes both the House and the Senate, a citizens' initiative could be pulled from the general election ballot this fall. That would occur if the lieutenant governor decided the bill was substantially similar to the initiative.

That initiative calls for a state-owned gas line from the North Slope to Valdez.

Initiative sponsor Scott Heyworth has said the two proposals are different because Whitaker's bill does not require a North Slope-to-Valdez route, as his initiative does. He said he will sue if the initiative is removed from the ballot.

House Bill 302 passed 35-2, with Reps. Kohring and John Coghill, R-North Pole, voting against it.

It now moves to the Senate.



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