Committee to recommend against state ownership of gas pipeline

Posted: Thursday, October 25, 2001

ANCHORAGE (AP) -- A committee appointed by Gov. Tony Knowles to evaluate state investment in a natural gas pipeline will recommend against the idea unless a compelling and overriding public interest becomes evident.

The committee is part of the governor's Natural Gas Policy Council, a 28-member group formed last spring to consider state policy issues regarding proposals to build a natural gas pipeline from the North Slope to the Lower 48.

The committee said a public authority such as the Alaska Gasline Port Authority, put together by three Alaska municipalities, might finance or own part of the gas pipeline, as long as the authority tapped private markets for financing.

The state ownership committee reached its conclusions at a meeting Oct. 3 in Anchorage, according to a story in the Alaska Oil and Gas Reporter, and the conclusions are tentative.

''Until the full committee takes action, nothing is certain,'' said chairman Bill Corbus on Wednesday.

Corbus, head of Alaska Electric Light & Power, the Juneau electric utility, said the decision was made with four of the seven committee members present. The full 28-member council will take up the recommendation Oct. 31.

Corbus confirmed that committee members generally do not back state financing.

''We would not recommend state ownership unless it's the last straw that's needed to build the pipeline,'' Corbus said.

''We don't believe that is going to be necessary,'' Corbus said.

According to the group's draft recommendation, ''The committee believes the pipeline is economically feasible for certain investors, and should be undertaken with private financing.''

The draft recommends against direct state investment unless there is clear evidence of economic benefit to Alaska that cannot be achieved through other regulatory or political mechanisms.

The panel went on to encourage ''exploration of creative financing structures to facilitate all or part of a gas pipeline and/or in-state gas infrastructure, provided such entities finance their activities through private markets.''

That was in reference to proposals by the port authority, the independent public authority formed by the city of Valdez, the Fairbanks North Star Borough and the North Slope Borough, to finance or build a gas project.

In general, the panel concluded, the most important state policy goals, such as access to a pipeline, can be achieved without state investment in a pipeline.

Lease provisions through a right-of-way lease on state-owned lands was mentioned as an example, as well as state participation with the Federal Energy Regulatory Commission in regulatory proceedings.

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