Acknowledging that development of an Alaska natural gas pipeline will cost too much for the state to carry alone, Alaska Gov. Tony Knowles is proposing federal legislation mandating the Alaska Highway route and is calling for federal tax incentives to enable companies to bring North Slope gas to market. However, the move, say critics, could threaten development of a gas line.

Knowles outlined his 10-point speech Thursday before the Resource Development Council of Alaska, saying the time was right for the U.S. Congress to enact an “Alaska National Interest Natural Gas Act.” His proposal calls for mandating the Alaska Highway route in national legislation, providing tax incentives to make the project economic, expanding opportunities for new companies that might be interested in gas development, hiring incentives for Alaska and Native tribes and access to gas by Alaska communities.

“Alaska is perfectly positioned to supply the nation with affordable, environmentally sound energy and [it would] be a shot in the arm to the sagging national economy like nothing else on the horizon,” Knowles said. “To achieve our goal of finally getting our gas to market requires a national effort to unite behind this project.”

For several months, BP, Phillips Alaska Inc. and Exxon Mobil have been studying possible construction of a gas pipe to the Lower 48 from the North Slope, and in July indicated that preliminary work suggests they should not use the Alaska Highway route, which would travel through the state, but rather should go north across the Beaufort Sea (see Daily GPI, July 20) and then down the Mackenzie River. The producers’ route proposal is expected to be unveiled sometime this year, but choosing a northern route would be a major blow to Alaska.

Curtis Thayer, a spokesman for the Alaska Gas Producers Pipeline Team, said that if Alaska insists on a pipe that would go through the state instead of the most economical route for producers, a pipe may go undeveloped all together.

Putting mandates on the producers “jeopardizes the project,” Thayer said. He said if the routes are chosen before the producers have completed a study, “there’s a chance that the pipeline might not be built.”

Knowles’ proposals are based in part on the work of his Alaska Highway Natural Gas Policy Council, formed earlier this year. The council has held hearings across the state and has analyzed the many “complicated issues,” said Knowles, that are associated with gas development. He said there were 10 principles “that must be included” in any federal legislation to “protect Alaska’s interests and put the project in the national interest:

Knowles plans to travel to Washington, DC, this month with a proposal he said will accomplish his goals of developing a natural gas pipeline through the state. He also plans to lobby senators about the ANWR development.

Knowles said that “right now the pipeline project is marginal at best because at up to $20 billion, the Alaska Highway gas pipeline would be the largest private construction project in American history.” He also has invited El Paso Corp., Duke Energy, Foothills, Enron Corp. and Williams to meet with him in Alaska this month to “explore opportunities for partnerships.”

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