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Alaska Lawmakers Ponder In-State Gasline Bill

Legislation aimed at consolidating and advancing efforts to develop an in-state natural gas pipeline to commercialize North Slope reserves and get much-needed gas to Alaskans in the central and southern part of the state has been approved by the state's House of Representatives, but it was put on a back burner when it reached the Senate.

HB 9 would advance plans by the Alaska Gasline Development Corp. (AGDC) for an in-state line (see NGI, Aug. 8, 2011). The legislative package combined several existing bills with recommendations by AGDC and additional tools to bring Alaskans closer to a pipeline project.

"This is the only project currently under way that has a realistic and reasonable chance at completion, barring a significant change in events with the AGIA [Alaska Gasline Inducement Act] line," said House Speaker Rep. Mike Chenault (R-Nikiski), who introduced the bill earlier this year (see NGI, Jan. 30). "We're advancing the line with this bill, empowering AGDC to do the work necessary, while making sure all reasonable steps are being taken to safeguard Alaska's interests and deliver cost-effective, low-cost and reliable energy to significant portion of our state's population."

The House approved the bill by a 27-12 vote after the Republican majority voted down a series of amendments offered by Democrats, who had sought to strengthen state regulators' oversight of the project. The bill was transmitted to the Alaska Senate and referred Wednesday to three upper house committees -- Community & Regional Affairs, Finance and Resources -- which may be a sign that Senators aren't eager to take up HB 9. The legislature's current session is scheduled to end April 17.

"The passage of HB 9 significantly advances the legislature's efforts to get a gas pipeline project under way that finally makes Alaska's North Slope natural gas available for Alaskans," state Rep. Mike Hawker (R-Anchorage) said after the House vote. "HB 9 empowers the Alaska Gasline Development Corp. to pursue an economically viable bullet line, or align the state's interests under the umbrella of AGIA to develop a larger project."

In his state of the state address earlier this year, Gov. Sean Parnell said he wanted backers of in-state and Lower 48-bound gasline plans to "consolidate their efforts" and said the state and North Slope producers needed to settle their differences on leases (see NGI, Jan. 23). Before Alaska can commercialize its estimated 200 Tcf of gas reserves it needs a gasline, something it has sought for decades, Parnell said.

While the prospects have dimmed for a large diameter line connecting the North Slope with Canada and the Lower 48, there is a new possibility being discussed which would have the bulk of the North Slope gas ending up in Asia. The North Slope reserves owners, ExxonMobil Corp., ConocoPhillips and BP plc, reportedly are negotiating with Alaskan officials on plans for a major pipe which would drop off in-state supplies on its way to a prospective liquefied natural gas (LNG) export terminal at an ice-free port in the south (see NGI, March 26).

Critics of the legislation to deliver North Slope gas to southern Alaska say it could hamper development at Cook Inlet, where some producers already have reported new gas discoveries. Not so, according to Chenault.

"I'm from the Cook Inlet. I own a home and a business there, and I wouldn't be pushing this bill today if I felt one bit that it would jeopardize development and exploration there," Chenault said. "House Bill 9 will help Cook Inlet communities, who will for the foreseeable future have to guard against rolling brown-outs and threats to their gas supply."

The Interior Department is seeking industry comments to gauge interest in a potential oil and natural gas lease sale in the Cook Inlet Planning Areas off the coast of South-Central Alaska (see related story). The U.S. Geological Survey (USGS) estimates that total undiscovered gas resources in the region range between 4.97 and 39.74 Tcf, with a mean estimate of 19 Tcf (see NGI, July 4, 2011). Total undiscovered oil resources in Cook Inlet range between 108 million and 1.36 billion bbl, with a mean estimate of 599 million bbl. As for natural gas liquids, the USGS said total undiscovered resources fell between 6 million and 121 million bbl.

Alaska on Friday settled a seven-year legal battle with natural gas and oil producers over the Point Thomson leases, and the operators in turn agreed to develop the huge gas field (see related story).

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