Knowles, oil companies to testify before Congress

Posted: Friday, September 21, 2001

JUNEAU (AP) -- Gov. Tony Knowles is planning to travel to Washington, D.C., next month to push for federal legislation mandating that a proposed natural gas pipeline to the Lower 48 go through Alaska.

The governor will also outline proposed federal incentives to make it profitable to build a pipeline from the North Slope along the Alaska Highway, said Bob King, his press secretary.

Knowles is scheduled to testify before the Senate Energy and Natural Resources Committee on Oct. 2. The governor had planned to go earlier, but postponed his trip after the terrorist attacks on the East Coast.

Sen. Frank Murkowski, R-Alaska, ranking member of the committee, said it was time for Congress to hear from those affected by the project. State legislators, the Bush administration and representatives from the oil companies have also been asked to testify.

''More than 35 trillion cubic feet of natural gas is available on Alaska's North Slope -- gas that belongs to Alaska,'' Murkowski said. ''The citizens of our state have a right to say how their resource is going to be used.''

In August, Knowles rolled out his proposed package of federal incentives to entice ExxonMobil, Phillips and BP to build a pipeline along the so-called ''Alaska Highway'' route.

He wants accelerated depreciation, an investment tax credit, and additional credits if natural gas prices drop. The investment tax credit is valued at $1.5 billion. No specific estimates were available for the other incentives.

''These are worth billions of dollars, and so they are substantial financial incentives to get this project going,'' King said.

The oil producers have commissioned a $100 million study to determine whether a pipeline is feasible, and if so which of two routes it should follow. The companies expect to have their study complete by the end of the year.

One of the routes being considered is the Alaska Highway route, which follows the trans-Alaska oil pipeline to Fairbanks, then runs along the Alaska Highway to Alberta.

The other option being studied by the producers would mean a 300-mile underwater pipeline in the Beaufort Sea from Prudhoe Bay to Canada's Mackenzie Delta, then a land line south. That route is about 200 miles shorter and taps into natural gas reserves identified in the Mackenzie valley.

Oil companies have opposed any legislation mandating a specific route, and a spokesman said Knowles' tax credits are unlikely to sway the gas owners.

''The project needs to stand on its own merits first,'' said Curtis Thayer, a spokesman for the Alaska Gas Producers Pipeline Team, which is studying the project.

The oil companies are backing legislation that would speed up the permitting process without specifying a route.

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