Notwithstanding warnings from the administration and even stronger opposition from Canadian officials, Congressional conferees released a portion of energy bill draft language mandating a southern route through Alaska for a new Alaska natural gas pipeline.
The language on the pipeline, drafted by Republican members of the conference committee, was issued late Monday along with several other provisions of the bill including energy efficiency, hydrogen and clean coal research and development. Republican leaders have said they would combine the House and Senate measures and issue the various segments of an initial draft through this week. Individual items then will be open for debate and amendment.
The Alaska pipeline measure is similar to the provision voted out in the Senate bill. At this point it does not include loan guarantees. The conference committee said those provisions would be addressed in the financial tax incentive portion of the bill.
The Alaska language clearly caters to Alaska politicians, who have pushed for the pipeline to be constructed for the most part through Alaska, along the Alaska Highway, rather than using a route that would put more of the line through Canada. The bill would specifically prohibit authorization of any pipeline to transport gas from Prudhoe Bay through or along the Beaufort Sea or any pipeline that enters Canada at any point north of 68 degrees north latitude.
This runs counter to the administration’s call in a letter to the conference committee last week for the Congress to leave it open to the market to set the pipeline route. To do otherwise “would likely undermine Canada’s support for construction of the pipeline and thus set back broader bilateral energy integration.”
That letter from Energy Department Secretary Spencer Abraham was underlined by a letter sent Friday from the Canadian ambassador, saying “Canada is of the opinion that the Alaska pipeline should be built without subsidies and without the route being determined by legislation….The subsidies proposed in the draft legislation would skew the North American natural gas market and would discourage investments in natural gas development in other regions of North America.”
The letter noted that the private sector has recently submitted preliminary plans for a Mackenzie Valley pipeline that will have no government subsidies.
The bill provides for a federal coordinator to expedite permitting for an Alaska pipeline; calls for promulgation within 120 days of enactment of the new law of regulations for an open season for Alaska natural gas transportation projects; requires FERC to issue a certificate for the project within 60 days of the issuance of the final environmental impact statement; provides for expansion of lower 48 pipelines to receive Alaska gas; and sets FERC as the lead agency for environmental review.
Ambassador Michael Kergin noted the highly-integrated energy relationship between the two countries, with the Canada supplying almost 100% of the states’ electricity imports, 94% of natural gas imports, 35% of uranium imports as well as 17% of crude and refined oil imports.
The ambassador also said Canada also is opposed to opening part of the Alaska National Wildlife Refuge (ANWR) to oil and gas development. He noted the 1987 bilateral agreement between the two countries to protect the calving grounds of the Porcupine Caribou herd, “on which the Gwich’in, the indigenous First Nations people of both Canada and the U.S. depend for their sustenance, culture and way of life.”
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