Alaska Gov. Frank H. Murkowski told a legislative committee last week that he supports the state taking an equity position in the construction of a massive natural gas pipeline from the North Slope to the Lower 48 states.

“Whether we are talking about an independently operated gas line or a producer-built and operated gas line, it has become clear to me that the most likely path for starting construction soon will require the state to take an ownership position in the project and bear a certain amount of shippers’ risk,” he said during a hearing before the Alaska Legislature’s Legislative Budget & Audit Committee.

The governor called on state lawmakers to express their views on Alaska taking an equity interest in the proposed gas pipeline. “I do not want our administration’s team to spend months negotiating a contract with equity and shippers risks incorporated into a document only to have you suggest to me that this concept is a complete non-starter,” he said.

This issue has been thrust into the spotlight, given that President Bush last week approved legislation that provides an $18 billion federal loan guarantee and authorizations for the mega-gas pipeline from Alaska (see Daily GPI, Oct. 15). Congress also passed tax incentives for the Alaska line, which still are awaiting the president’s signature (see Daily GPI, Oct. 12).

A response by Alaska during the construction of the trans-Alaska Oil Pipeline could have resulted in billions more for state coffers, Murkowski noted. “We may have missed the boat when the trans-Alaska Pipeline was built, and we have stood on the sidelines for nearly 30 years watching a lot of revenue flow to those who were willing to take the risk.”

Pedro van Muers, the state’s natural gas project consultant, told the panel that every other nation that has sought to ship its stranded gas to market has adopted some form of equity share or shippers risk.

Alaska administration officials currently are negotiating with the state’s three major oil and gas producers (ExxonMobil Corp., BP and ConocoPhillips), as well as TransCanada Corp. over separate proposals to construct a pipeline from the North Slope to the Lower 48. State officials said they also are beginning negotiations with Enbridge Inc.

Without the state of Alaska’s investment, there is a good chance the oil and gas producers won’t build the pipeline, sources told The Wall Street Journal in Monday’s edition.

Murkowski said negotiations with interested parties have progressed to a point that the state must now address the issue of how much risk it is willing to consider in a pipeline project that is estimated to cost between $14 billion and $20 billion.

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