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New York Times: Alaska Governor’s Gas Pipe Plan Gains Support

By REUTERS
Published: April 16, 2007
Filed at 12:53 p.m. ET

ANCHORAGE, Alaska (Reuters) – Gov. Sarah Palin’s plan to encourage competition between companies interested in building an Alaska gas pipeline is gaining support with lawmakers despite the opposition of the oil majors that control the state’s gas reserves.

Alaska has struggled for decades to come up with a workable plan to build a multibillion-dollar pipeline to ship the 35 trillion cubic feet of natural gas held on the North Slope to markets in the lower 48 states.

Last year, legislators rejected a pipeline contract signed by former Gov. Frank Murkowski with the North Slope producers that critics slammed as a giveaway because there was no competitive bidding for the project.

Lawmakers say Palin’s new plan should pass with few changes.

“It may take a little longer than the regular session, but it’s going to pass,” said Senate Judiciary Chairman Hollis French, an Anchorage Democrat.

“The last sole-source contract we saw was such a disaster that the legislature wants to see competition.”

Murkowski had argued that only the major North Slope producers had the financial strength and project management experience needed to build the pipeline, which is expected to cost $20 billion or more.

Murkowski was unseated by Palin in the Republican primary election last year amid widespread opposition to his gas pipeline plans.

Palin’s proposed Gasoline Inducement Act offers a state subsidy of up to $500 million as well as tax credits and speedy permitting to encourage companies to come up with workable proposals for the pipeline.

The major North Slope producers — ConocoPhillips, BP and Exxon Mobil Corp. — have panned the bill.

The producers argue that instead of the state selecting a project to win the state license and the accompanying fiscal rewards, the decision should be left to the free market and the Federal Energy Regulatory Commission.

“The project is just too big to have a winner-loser mentality,” Wendy King, director of state negotiations for ConocoPhillips, told a state Senate committee last month.

“What if the chosen winner makes promises that can’t be delivered on?”

State officials hope to select a preferred project by the end of the year and win legislative approval in early 2008, which would allow construction to get under way before 2010.

In addition to the North Slope producers, Shell, Chevron Corp., BG Group, Enbridge Inc., TransCanada Pipeline, and MidAmerican Energy Holdings Co. have expressed interest in the pipeline project.

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