Alaska Natural Gas Transpipeline Up for Review

By Pat Forgey | JUNEAU EMPIRE

Legislative opponents of Gov. Sarah Palin's natural gas pipeline plan are asking the Legislature to reconsider the endorsement it gave Trans-Canada Corp.'s plan just months ago.

"All Alaskans want a gas pipeline. But we need to temper that with the reality of the U.S. and world markets today," said Rep. Craig Johnson, R-Anchorage, co-chair of the House Resources Committee.

Johnson and Rep. Jay Ramras, R-Fairbanks, have introduced House Concurrent Resolution 12, a measure calling on the Palin administration to "review and re-evaluate" the license the state issued to TransCanada last year after spending 60 days in special session reviewing its application.

The "license" gives TransCanada exclusive access to $500 million in state money to help develop a pipeline, but also commits the Calgary, Alberta-based company to develop and finance a pipeline in ways that are good for Alaska.

Johnson and Ramras expressed concern that troubled credit markets would make the project difficult to finance, while new supplies of gas, including imports of liquefied gas and gas from shale beds, would depress market prices.

Department of Revenue Commissioner Pat Galvin said he was mystified at the resolution, coming just months after approval of TransCanada.

"It's kind of strange to come this quickly after the Legislature approved the license," he said. "The issues raised in the resolution are not ones we see as long-term detriments to the project."

Ramras said that in the business world, large projects are routinely re-evaluated when risk factors change, and that's what happened with credit market and liquid natural gas changes.

"It's been a tectonic change in the Lower 48," Ramras said.

Galvin said the license awarded to TransCanada under the terms of the Alaska Gasline Inducement Act was intended to get the long-term project beyond short term market fluctuations.

"It's ironic that we're in this short-term dip in gas prices that makes AGIA so necessary," he said. "It's a contractual obligation to keep moving forward."

Rep. Beth Kerttula, D-Juneau, called the resolution a "political attack" on the AGIA pipeline.

"I'm certain the governor and her administration are completely on top of that project and don't need to be told to stay on top of it," she said.

Resolution sponsors Ramras and Johnson both opposed the TransCanada license last summer. Kerttula supported it.

House Speaker Mike Chenault, R-Nikiski, has referred the bill to the House Resources Committee, which Johnson co-chairs, and the Energy Committee, on which Ramras sits.