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Alaska's Murkowski Sees Progress on Natural Gas Pipeline Project

Alaska's Murkowski Sees Progress on Natural Gas Pipeline Project

Calling the construction of a natural gas pipeline "our greatest prospect for new jobs and prosperity," Gov. Frank Murkowski told Alaskans Wednesday he expected to be able to soon deliver to the legislature one or more Stranded Gas contracts by applicants seeking to build pipelines to tap the state's huge gas resources.

"We are pleased to have a Stranded Gas Act application from the three major North Slope producers and from TransCanada," Murkowski said, adding that the state Port Authority and the Alaska Natural Gas Development Authority also are pursuing gas pipeline proposals, but as yet have not applied under the Stranded Gas Act. "I have also met with Warren Buffett regarding a proposal by MidAmerica," the governor revealed, and with other producers to advance the pipeline project to the Lower 48 and to develop new reserves.

"I was recently in London meeting with senior BP officials who renewed BP's commitment to proceed expeditiously with negotiations," the governor said. BP is one of the three major oil companies with already developed North Slope reserves awaiting an outlet.

"It is in the interests of the state to support the first economically viable project that can be built," the governor said in his state of the state message; "One that provides gas and gas liquids for Alaskans and access to new sources of gas for explorers. Proposals should provide gas to the Lower 48 and evaluate the economics of an LNG facility in Valdez and spur lines to Southcentral [Alaska] and the Kenai."

"Constructing the gasline is the most important economic development project in Alaska's history and my highest priority for Alaska," said the governor, who as a senator worked in the U.S. Congress for years to win the federal loan guarantees, recently enacted to support the long line to the lower 48. The governor also noted the state's pledge to take an equity interest in the pipeline..."subject to negotiating equity percentages."

"State equity ownership will go a long way toward solving the state's fiscal problems....Alaskans should also be able to invest directly in the pipeline, and we are working on a plan to make that a reality."

On another major issue, that of opening of a section of the Alaska National Wildlife Reserve to drilling, the governor also was eloquent. "There is now a more favorable national climate to oil and gas exploration in Alaska. In Washington, D.C., there is renewed confidence that ANWR will finally be opened. We've got a delegation that is taking the lead on the issue, a president who supports ANWR, and a Congress that after the recent election appears supportive. And, last week after meeting with Secretary of Interior Gale Norton in Washingon, D.C., there is no question she wants ANWR open on her watch."

The latter is in spite of the fact that the second of the three largest Alaska producers, ConocoPhillips, has joined BP in dropping out of the lobbying group seeking permission to drill in a small portion of ANWR.

"Our administration is working hard here in Alaska to promote more exploration," Murkowski said, adding, "I have been meeting with new explorer companies to develop additional strategies to increase exploration -- among them Pioneer, Kerr McGee, Shell, and Armstrong. On the Alaska Peninsula, there is a grassroots call for oil and gas exploration. We're planning a lease sale there in the fall of this year.

"There are significant oil and gas opportunities in the Susitna and Copper River basins, Yukon Flats, and Nenana, where we expect to see additional exploration activity this year."

The governor said "the energy situation on the Kenai Peninsula is critical. There is a need to increase onshore and offshore exploration in Cook Inlet. Again, I would ask the legislature to evaluate whether the state should pay a portion of the mobilization and demobilization costs to bring a jack-up drilling rig to Cook Inlet to get exploration moving again. I challenge industry to match the state's mobilization/demobilization contribution and also put up the risk capital necessary to find more gas in Cook Inlet.

"We also need to explore in the Kenai National Wildlife Refuge where the Swanson River field continues production. We also must work with the Interior Department to ensure that the Swanson River field be available for summer gas storage. We cannot sit idly by and wait until both Kenai plants are shut down for lack of natural gas. Once the plants close, more than 300 jobs are lost, the plants are likely to never open again."

Murkowski said another issue important to the Kenai is the disposition of the experimental gas to liquids facility owned by BP. "I discussed this matter with officials in London last week and there may be a practical commercial application for the facility that could also involve the University of Alaska Fairbanks."

The Alaskan government estimates construction of the gas pipeline from Alaska into Canada will create 8,500 jobs. "We recently graduated a class of 100 pipeline workers in Fairbanks, and that's only the beginning. This time, when the line is ready to be built, Alaskans will be ready to build it."

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