Senate committee to take up gasline issue

Posted: Monday, October 01, 2001

FAIRBANKS -- Alaska natural gas owners and pipeline operators will gather in Washington D.C this week to deliver a message to senate committee members that has significantly changed from last year's message.

A year ago, gas-company owners vowed to apply for permits to build the line within the next year. But now the same companies are saying they don't think the line is feasible.

A dramatic drop in natural gas prices is behind the about-face.

But no is writing off the pipeline idea entirely. There are enough other variables still at play, including federal and state taxes, acceptable rates of return on pipeline investment and now the threat of war.

The Senate Energy and Natural Resources Committee will hold a hearing Tuesday on the issue.

Committee member Sen. Frank Murkowski, R-Alaska, said companies will be asked about various economic incentives that could help them develop a gas pipeline.

''Further, the producers should be prepared to address the governor's 10 points,'' Murkowski said, referring to Gov. Tony Knowles' list of conditions a pipeline should meet, some of which would require federal legislation. Murkowski said he also wants gas producers to respond to proposals circulating in the Alaska Legislature, the Fairbanks Daily News-Miner reported.

''You can have a hearing like this get away from you if you don't focus in on the specific bottom line,'' said Murkowski. ''And to me 'What is it going to take to build the pipeline?' is the bottom line.''

Murkowski also wrote to Knowles, who planned attend the hearing, asking him to address what incentives the state should offer.

While Murkowski said he would focus on the steps necessary to make a project happen, he stopped short of advocating outright federal subsidies.

Murkowski said he remains, along with most of Alaska's elected leaders, committed to the proposed southern route through Fairbanks and down the Alaska Highway. The alternate northern route would send a buried, undersea pipe directly east from Prudhoe Bay to the MacKenzie River region.

The gas producers group studying the routes say the northern route is cheaper.

And two prominent Alaska economists, David Reaume and Arlon Tussing, have recently challenged the net benefits to the state of the southern route.

Curtis Thayer, spokesman for members of the gas producers group, said the gas producers-- Exxon Mobil, BP and Phillips Petroleum -- don't want a route mandated but also wouldn't build a line that Alaskans oppose. The group gave Murkowski model legislation this summer that leaves the route open and sets up an expedited process for federal review of any proposed line.

The Energy committee's chairman, Sen. Jeff Bingaman, D-N.M., has said he would offer legislation to promote construction of the line, saying it would contribute to the nation's security. He has not endorsed a route.

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