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Alaska Gov. Urges FERC Not to Overlook State's Access to Gas Pipeline

Alaska Gov. Urges FERC Not to Overlook State's Access to Gas Pipeline

Alaska Gov. Frank Murkowski urged FERC on Friday to address his state's access to a proposed Alaska natural gas pipeline as part of the agency's efforts to create an open-season process for capacity on the line.

The Commission's notice of proposed rulemaking (NOPR), which seeks to establish standards for creating an open season process for an Alaska pipe, did not take up the issue of Alaska's in-state needs of natural gas, particularly for its liquefied natural gas plant on the Kenai Peninsula and a urea and ammonia facility in the state, the Republican governor told the Commission at a technical conference in Anchorage, AK, Friday. The NOPR was issued in November.

Congress, in passing the Alaska Natural Gas Pipeline Act in mid-October, said sponsors of the approved pipeline project would be required to study Alaska's in-state gas needs, and must provide the state with "reasonable access" to the pipe to supply gas, Murkowski said. But FERC regulations "are silent on how in-state needs will be accommodated in the open-season process."

The Alaska pipeline act advocates the construction of the long-line system from Alaska's North Slope to the Lower 48 states and will offer an $18 billion federal loan guarantee to carry out the construction of the project. The new law requires FERC to implement a final rule governing the open-season process on the Alaska pipeline by Feb. 10.

Murkowski noted that FERC should establish "as clearly as possible the rules of the game" for access by producers/explorers to the pipeline both in the critical initial open season and later. It also was important that the pipe be designed and sized right to accommodate all the serious long-term bids in the initial open season, and to have a design that permits later expansions.

The Commission should consider "sooner not later" regulations for dealing with expansions of an Alaska pipeline to ensure non-discriminatory access to the system for future natural gas supplies, Murkowski said.

The $20 billion pipeline project, which would add roughly 1,800 miles of pipe to an already existing infrastructure, would have an initial flow of approximately 4.5 Bcf/d and a design capacity of 6-6.5 Bcf/d, he noted. Murkowski estimated proven North Slope gas reserves were 37 Tcf, with total gas resources pegged at 200 Tcf -- a 50-year supply. He believes the mammoth gas pipeline can be completed by 2014.

Murkowski said his administration had three goals with respect to the planned Alaska pipeline: 1) get the pipeline underway as soon as possible; 2) make sure that the pipe serves Alaska's domestic needs; and 3) ensure that the pipeline is sized correctly and has the right terms of access so that all explorers and developers of Alaska natural gas, whether affiliated with a pipeline or not, will be assured they can get gas under fair and predictable terms.

The state's ongoing negotiations with two applicants to build the Alaska pipeline are "encouraging," he told the Commission. The state's three top gas producers, BP, ExxonMobil and ConnocoPhillips, had been expected to respond to the state by late November about their plans for the pipeline, Murkowski said. Their response is now expected to come in the second week of December.

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