Although the project economics aren’t too appealing at the moment, FERC Chairman Pat Wood said Thursday that the construction of a long-line natural gas pipeline from Alaska should remain a key priority of the gas industry and the nation.

“I really do want to see some action on that. I think…the Alaska gas pipeline effort could even eclipse our RTO effort as far as the significance to the long-term [energy needs] of the country during my term as chairman,” he told energy attorneys attending the mid-year meeting of the Energy Bar Association in Washington, DC.

“The country needs that gas without question…We cannot get to a 32 Tcf market without Alaskan and Canadian gas. So the sooner we get that project underway the better,” Wood said.

Given that gas prices are less than $2.50, the project economics “are going to be tight right now,” he noted, adding that this has left “some people a little bit uncertain.” However, “I hardly think that gas [still] will be in the $2 range” at the end of the seven-year construction period.

He noted U.S. federal agencies, as well as Canadian regulatory authorities, have begun too work more closely so that “when we do get an application [for the pipeline]…we can shave a year or two” off the permitting and certification process.

On a separate issue, Wood said that the Commission’s plans for stepped-up monitoring of the energy industry are moving forward. President Bush signed legislation last week that awards FERC an additional $3 million to carry out its monitoring efforts during fiscal year 2002, and clears the way for it to hire talent from anti-trust agencies and the energy industry to fill five “high-dollar” monitoring positions.

Wood also spoke about his plans to upgrade FERC’s enforcement activities. His goal is to “elevate our existing enforcement efforts and existing oversight efforts…so that we have much more of an early warning system for things like California,” he said.

He hopes to accomplish this in part by realigning the Commission’s Enforcement Office, but he noted “I haven’t decided exactly how it’s going to be structured yet.” The “scope and duties” of the office still are being defined, said Wood, who added that an office director will be appointed in the next couple of months.

Wood further indicated he expects to announce this week who will head up the state relations division of the Office of External Affairs. The new division will work closely with states on pressing natural gas and electric regulatory issues. The initial focus of the FERC-state partnership will be on regional transmission organizations.

In the wake of Sept. 11, Wood acknowledged that energy security has become a “major issue” for him, and in fact has caused him to lose sleep. “We’ve got probably one of the most open and visible energy delivery networks in the world,” which makes it an enviable target for terrorists, as shown by the recent advisory from the Federal Bureau of Investigation of possible threats to natural gas facilities, he said.

FERC’s role, Wood noted, is to ensure that regulated energy companies can recover the added security costs through their rates or other means.

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