Senate bill may allow gas spur to peninsula

Posted: Wednesday, April 23, 2003

Kenai Peninsula Borough oil and gas industry liaison Bill Popp expressed hope Tuesday that pending legislation at both the state and national levels will produce positive growth for Cook Inlet's oil and gas industries.

Speaking in Kenai at Tuesday's meeting of the Alliance, Popp said he's optimistic the energy bill currently before the U.S. Senate will include provisions that will allow for a spur gas line to Cook Inlet from any planned North Slope natural gas pipeline.

Popp said both the House version of the energy bill -- which already has passed -- and the Senate version will allow for the spur. However, he did caution that any spur line to the peninsula is still a ways off.

"It is a number of years away for a spur line coming to Cook Inlet," he said.

Popp said that in the near term, the borough continues to focus on state-level legislation, including a bill in the Alaska Legis-lature to give incentives to companies developing stranded gas resources.

"That's a major step forward to getting the (North Slope) gas line," Popp said.

He also said the borough has been working to ensure the passage of House Bill 57, which would stabilize the price paid by Agrium and other manufacturers of value-added natural gas products to gas producers.

Currently, the state can reassess how much in royalties it charges producers. Those producers then pass any added costs on to customers, thus creating a situation where companies like Agrium don't really know what they're paying for raw materials until long after a sale. HB 57 would change that by setting a fixed price the state could charge for such royalties.

Popp said passage of the bill will help ensure Agrium continues to be a strong contributor to the borough's economy.

"Its an important bill to help stabilize that particular part of our economy, which is an important part of our economy," he said.

In addition to pending legislation, Popp told the Alliance he's excited about the potential for new oil and gas exploration and development in Cook Inlet. He said bids for an upcoming areawide lease sale will be unsealed May 7, and he believes there will be significant interest from oil companies.

Popp also said he's encouraged by the potential for two proposed federal Minerals Management Service lease sales in lower Cook Inlet to add value to the region's oil and gas industry.

"Minerals Management Service is actively out marketing those lease sales," he said. "They are being met with some positive comments."

Popp said there are still a few hurdles to clear before the lease sales can go through, including the release of a final environmental impact statement, state review and final approval by U.S. Secretary of the Interior Gale Norton. However, he said the sales are on the way to becoming reality.

"We believe we're coming into the home stretch this winter," he said.

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