Six Democrats on the Senate Energy Committee sent President Bush a follow-up letter to once again urge the administration to drop its opposition to special incentives for an Alaska gas pipeline along the Alaska Highway route. In light of increasing concerns about natural gas supply, high gas prices and the impact on the economy, highlighted by the recent comments of Federal Reserve Board Chairman Alan Greenspan, the administration should reconsider its position on the Alaska pipeline, they said.

The Office of Management and Budget’s (OMB) May 8 Statement of Administration Policy said that “market forces should select the route and timing” of the Alaska pipeline. It also stated that the administration opposes a natural gas price floor provision in the energy bill and associated tax credits because that would “distort markets and could be very costly.” The price floor would grant tax credits to producers if natural gas prices fell to less than a set amount per MMBtu.

In May, Senate Democrats urged the administration to drop its opposition to the Alaska pipeline incentives. Without the incentives the Alaska pipeline will not be built, they said. On Wednesday, they reiterated that plea.

“Presumably, suggestions to relax environmental restrictions on the production and/or transportation of natural gas, expand drilling in the Outer Continental Shelf off the U.S. coast, and increase imports of liquefied natural gas will all be on the table [a the emergency summit Thursday of the National Petroleum Council]. Each of these options is certain to generate spirited debate,” Sens. Jeff Bingaman (D-NM), Maria Cantwell (D-WA), Byron Dorgan (D-ND), Dianne Feinstein (D-CA), Tim Johnson (D-SD) and Ron Wyden (D-OR) told the president.

“There is, however, one option about which there is little controversy: building a pipeline to bring natural gas from Alaska to the lower 48 states. There are 35 Tcf of known natural gas reserves on the North Slope of Alaska that could meet projected domestic demand. That gas is currently being pumped back into the ground, because there is no way of getting it to consumers in the lower 48 states who need it.

“Unfortunately, the pipeline to transport this gas from Alaska is unlikely to be built any time soon without the involvement of the federal government.”

They noted that as the Senate prepared to address the Alaska pipeline issue once again last month, the White House policy “undercut” any support for the measure.

“It is widely acknowledged that our country faces a tight natural gas supply picture in the foreseeable future which will likely translate into higher prices and a drag on the economy. At the same time, Alaska’s North Slope oil fields hold proven natural gas reserves that can address this problem, if only gas from the reserves can be delivered to market,” they added.

“The country needs an Alaska natural gas pipeline. There is broad bi-partisan support within Congress for both the route along the Alaska Highway, and a reasonable commodity risk provision that addresses legitimate concerns about price volatility over the life of the project and protects American taxpayers. It is our hope, therefore, that you will instruct [Energy] Secretary [Spenser] Abraham to devote serious attention to what it will take to get North Slope natural gas to market, and direct OMB to reconsider its opposition to the Alaska gas pipeline provisions being debated as part of S.14, the Senate Energy bill.

“With your support, we can reduce the prospects of a future natural gas price crisis by encouraging the construction of the Alaska Natural Gas Pipeline.”

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.