Spokesman: Gas producers will shut down study if route is mandated

Posted: Friday, September 07, 2001

FAIRBANKS (AP) -- A spokesman for Alaska's three main gas producers is warning lawmakers that the companies will shut down their study of a gas line to the Lower 48 if government ends up deciding the route.

''The continuation of our study is only justified if a route is not mandated,'' said Curtis Thayer, spokesman for a consortium of Exxon Mobil, BP Exploration (Alaska) and Phillips Petroleum.

The warning came as members of the group plan to pitch their proposed federal legislation to members of Congress next week.

The producers' proposal, given to Alaska's delegation in mid-July, would create a regulatory framework that could speed construction of a line, but does not describe the line's route.

The warning is a challenge to lawmakers in both Alaska and Washington where the trend is to try and legislate a preferred route.

The Alaska Legislature last session passed a bill that was signed by Gov. Tony Knowles prohibiting a line across Alaska's North Slope into Canada. In July, Rep. Don Young added language to the U.S. House energy bill that would do the same. The House passed its bill in early August, but the Senate has yet to act its own.

The Senate Energy and Natural Resources Committee will start the final writing of its energy bill next week.

The committee's chairman, Democratic Sen. Jeff Bingaman of New Mexico, said in a floor speech Thursday afternoon that the starting version of the bill will contain language to ''streamline the regulatory approval process'' for a gas line from the North Slope. Bingaman made no mention of designating a route.

Alaska Sen. Frank Murkowski is an ''avowed opponent'' of a gas line across the North Slope into Canada, said his spokesman, Chuck Kleeschulte.

Murkowski, the ranking Republican on the Energy Committee, hopes to hold hearings on the gas line issues in late September or early October, Kleeschulte said.

BP-Amoco, Exxon-Mobil and Phillips Petroleum are more than halfway through $100 million worth of studies of the gas line, Thayer said.

The information developed to date shows that neither a northern route crossing the North Slope nor a southern route paralleling the Alaska Highway is currently feasible, he said. The producers group is going back over the information to look for cost savings.

But Thayer said the study group now has some ''compelling facts'' when comparing the two routes. One of those facts is that the northern route would be $2 billion cheaper than the southern route, he said.

''As they look at the issue, their opinion might change,'' Thayer said. ''If a route is mandated, the chances of a gas pipeline are reduced.''

John Katz, head of Knowles' office here, said the governor is working to make the southern route more attractive.

''The governor's goal is to make the southern route economic for all the concerned parties,'' Katz said.

Knowles' proposed federal bill, unveiled last week, would offer an investment tax credit, a gas tax credit and accelerated depreciation. It also, however, would mandate the southern route along the Alaska Highway.

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