Knowles, Murkowski weigh in on natural gas pipeline Eds: Minor edits

Posted: Wednesday, August 23, 2000

ANCHORAGE (AP) -- Gov. Tony Knowles says he's convinced that a pipeline to send natural gas to the Lower 48 is in the wings, and he's planning legislation and administrative steps to clear the way for such a project. His remarks came on the heels of similar statements from Sen. Frank Murkowski.

''Because of new conditions, I believe that within two years, Alaskans can be on the working end of a shovel breaking ground on a natural gas project,'' Knowles told the Resource Development Council in Anchorage Tuesday.

Knowles said he would introduce legislation to change the state tax structure to aid construction of a gas line to the Lower 48 and projects converting the gas to a marketable liquid. He said the tax changes would allow the project backers to defer some taxes during the construction process.

In addition, Knowles said he would start the state right of way process immediately in anticipation of a Lower 48 gas line application.

Knowles' speech came just after another Alaska politician added his support for a gas pipeline to the south.

Sen. Frank Murkowski said in Fairbanks that the price of natural gas has climbed roughly 60 percent in the past year, making gas from the North Slope competitive in the national market.

The Alaska Republican, who chairs the Senate Energy and Natural Resources Committee, said he's had a number of meetings with companies interested in developing Alaska's gas.

Alaska's North Slope has 35 trillion cubic feet of known natural gas reserves. Finding a market for the gas has been a dream for more than 30 years, but projects have foundered on high cost and low gas prices.

Any natural gas pipeline that's built should be routed through Alaska, both Murkowski and Knowles said.

That echoed Sen. Ted Stevens, who last week opposed any route that bypasses Alaska and goes through Canada.

''It makes sense,'' said Murkowski. ''First of all, we've already got a corridor and now it's half owned by the state,'' he told the Fairbanks Daily News-Miner. ''Second, we've got the permits already. Thirdly, we've got a market for gas in the U.S. That's probably the most important factor.''

Preliminary numbers may favor an offshore route, but any cost benefits would be eliminated by environmental concerns, Murkowski said.

Knowles said he wanted any gas project to provide natural gas to Alaskans, and to hire and train Alaskan workers.

New and revamped power plants that supply electricity to the Lower 48 are running on natural gas instead of coal or nuclear energy, Knowles and Murkowski said. Federal and state rules call for cleaner emissions, giving gas an edge over coal and other fuels.

''There is not an option to go back to heavy hydrocarbons,'' said Rep. Jim Whitaker, R-Fairbanks.

An Alaska-Canada or cross-Alaska route could meet those market demands. Canada has an extensive pipeline system that ties into the U.S. network.

Knowles indicated that while a project to export Alaska's gas to Asia wasn't dead, exports from six other countries in the Middle East and Asia likely would be more competitive in that market.

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