Bill would let AIDEA consider funding Southeast gas project

Posted: Thursday, April 26, 2001

JUNEAU (AP) -- The House passed a bill Wednesday that would let the Alaska Industrial Development and Export Authority consider selling $76 million in bonds to finance a project to supply natural gas to Southeast Alaska.

Alaska Intrastate Gas Co. is proposing to bring liquefied natural gas from Canada to 17 communities from Ketchikan to Yakutat, plus Valdez, Cordova and Kodiak.

Paul Rusanowski of Alaska Intrastate said gas from Alberta or northeast British Columbia would come by rail or pipeline to Prince Rupert, then be barged or shipped to Southeast. Gas would be stored in holding tanks in the communities and distributed through pipeline networks as needed.

The company wants AIDEA to sell bonds to pay for the first phase of the project -- providing gas to Juneau, Ketchikan and Sitka. Rusanowski said the bond debt would be repaid by rate-payers. Other financing would probably be used to extend the network to the remaining communities, he said.

The bill was sponsored by the House Finance Committee. Co-chairman Bill Williams, R-Saxman, said it is a preliminary step toward what he hopes will be a relatively cheap and environmentally friendly fuel source for Southeast.

If the project succeeds, Rusanowski projects savings on heat and hot water of 15-40 percent over fuel oil, 60 percent over propane and 69 percent over electricity.

Passage of House Bill 236 does not mean the project will definitely be built. AIDEA must determine whether the project is financially feasible and has community support before backing it. AIDEA Executive Director Bob Poe said that process will take several months.

''There's just a lot of due diligence we have to do,'' Poe said.

He said most people would agree it would be good if Southeast Alaska could see the benefits of natural gas, but the proposal involves building a lot of infrastructure to serve relatively small, isolated markets.

''I have to be honest,'' Poe said. ''I don't know right now whether this will be financially feasible or not.''

Some House members expressed concerned that they were approving the project before AIDEA goes through that step.

''We have other AIDEA monuments in this state and I would hate for this to become a third monument,'' said state Rep. Joe Green, R-Anchorage.

Rep. John Davies, D-Fairbanks, said he also was uncomfortable with giving prior approval, but said the Finance Committee is requesting AIDEA keep the committee informed of its findings.

Alaska law requires the Legislature to approve AIDEA projects of more than $10 million.

Poe said that approval can come either before or after AIDEA has done its feasibility study, but Alaska Intrastate requested it be done before in this case and was able to get legislative support for the approach.

The bill passed 38-0 and now goes to the Senate.

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