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Alaska House Approves Gas Pipeline Plan

July 23, 2008

JUNEAU — Members of the House of Representatives voted late Tuesday to approve an exclusive state license for a Canadian energy company proposing to build a natural gas pipeline down the Alaska Highway to Alberta.

The 24-16 vote supports the license for Calgary-based TransCanada Corp., one of the continent’s biggest gas pipeline operators. The House could take a re-vote today before sending the proposal to the Senate.

The vote came after House members soundly defeated several amendments offered by skeptics of the deal.

During hours of debate, some lawmakers said licensing TransCanada would be a landmark step toward construction of a nationally important superpipe while others predicted a state-subsidized failure.

The legislation the lawmakers have weighed this summer in special session, House Bill 3001, would authorize the administration of Gov. Sarah Palin to award TransCanada a license that carries up to $500 million to help plan a pipeline likely to cost more than $30 billion. Lawmakers must pass a separate bill to appropriate the money for TransCanada.

Palin picked TransCanada from among a handful of bidders that submitted applications under AGIA, the Alaska Gasline Inducement Act, which lawmakers passed last year.

One of Palin’s top gas line team members, state Revenue Commissioner Pat Galvin, and TransCanada’s Alaska point man, Tony Palmer, barely cracked a smile after the 9 p.m. vote. They know they’ve still got work left to win a similar vote in the Senate, with hearings scheduled for today.

“I’m not going to celebrate until this is over,” Palmer said.

“We’ve got a long ways to go,” added Galvin, standing in the bustling hallway just outside the House chamber. He said he expected the vote might have been closer in the House.

Sixteen Democrats and eight Republicans voted in support of the license, with one Democrat and 15 Republicans voting against. Among those voting no were House Speaker John Harris, R-Valdez, and House Majority Leader Ralph Samuels, R-Anchorage.

Twelve Anchorage and Mat-Su area lawmakers voted in support of the license, including Rep. Kevin Meyer, a South Anchorage Republican who has a job with oil company Conoco Phillips. Eight area representatives voted against.

PARTNERSHIP OR DISASTER?

The license is not a contract for actual construction. Rather, it grants cash and favored status to TransCanada to try to assemble the package of customers, financing and permits necessary to start digging and welding.

“This does not get us to a pipeline,” said Rep. John Coghill, R-North Pole. But he said licensing TransCanada is “a good partnership” that will put the state on the right path to achieve one of its most prized economic development goals.

During the debate, Rep. Bob Lynn, R-Anchorage, reminded lawmakers that the House passed AGIA last year by a vote of 39-1, and they shouldn’t abandon the process.

To back off now, Lynn said, “would be a disaster from which we might never recover.”

But others see disaster — a waste of state money and years of lost time — coming from the other direction.

Rep. Mike Hawker, R-Anchorage, delivered a long speech citing a litany of worries with the deal.

“AGIA — I’m a little bit afraid it stands for Alaska Goofs It Again,” he said.

Hawker said an earlier state attempt to broker a gas pipeline deal, under former Gov. Frank Murkowski, justifiably fell apart in 2006.

The AGIA deal also will fail, Hawker said, because only the financial marketplace, and not the government, can sort out the conflicting players and pick a winning project.

The major oil companies that control most of the North Slope’s vast natural gas reserves — BP, Conoco Phillips and Exxon Mobil — oppose the TransCanada deal.

Two of the companies, BP and Conoco, recently formed a partnership called Denali to build a competing pipeline down the Alaska Highway. The oil companies didn’t apply for the $500 million subsidy under AGIA.

On Monday, BP distributed a letter to some lawmakers urging them to reject the TransCanada license and touting Denali’s superiority.

The Senate has until midnight Aug. 2 to also pass the TransCanada license or the deal is off.

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Find Wesley Loy online at adn.com/contact/wloy or call him in Juneau at 586-1531.

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North Slope gas pipeline proposals

TRANSCANADA

–PROJECT: 1,715 miles, to Alberta, Canada

–Capacity: 4.5 billion cubic feet a day

–Status: Awaiting Alaska Legislature vote on an exclusive state license and $500 million subsidy

–Key strength: Experienced pipeline builder and owner

–Key weakness: Owns no North Slope gas production that could go in its pipe

–What’s next: If Legislature approves the license by Aug. 2, TransCanada over the next several years would start preliminary pipeline work and seek commitments from North Slope producers to use any pipeline the company would build

BP-CONOCO PHILLIPS

–PROJECT: About 2,000 miles, into Alberta, Canada

–Capacity: 4 billion cubic feet a day

–Status: Several years of pre-construction studies and other work begun this summer

–Key strength: Companies own natural gas that could flow through the pipeline

–Key weakness: Companies want changes to state tax laws that state officials might not want to give

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How they voted

FOR: 24

–REPUBLICANS: Bob Lynn of Anchorage, Kevin Meyer of Anchorage, Carl Gatto of Palmer, Wes Keller of Wasilla, John Coghill of North Pole, Mike Kelly of Fairbanks, Paul Seaton of Homer, Bill Thomas of Haines

–Democrats: Bob Buch of Anchorage, Sharon Cissna of Anchorage, Harry Crawford of Anchorage, Mike Doogan of Anchorage, Les Gara of Anchorage, Berta Gardner of Anchorage, Max Gruenberg of Anchorage, Lindsey Holmes of Anchorage, Andrea Doll of Juneau, Bryce Edgmon of Dillingham, David Guttenberg of Fairbanks, Scott Kawasaki of Fairbanks, Reggie Joule of Kotzebue, Beth Kerttula of Juneau, Mary Nelson of Bethel, Woodie Salmon of Beaver

AGAINST: 16

–REPUBLICANS: Nancy Dahlstrom of Anchorage, Anna Fairclough of Eagle River, Mike Hawker of Anchorage, Craig Johnson of Anchorage, Bob Roses of Anchorage, Ralph Samuels of Anchorage, Bill Stoltze of Chugiak, Mark Neuman of Big Lake, Mike Chenault of Nikiski, John Harris of Valdez, Kyle Johansen of Ketchikan, Gabrielle LeDoux of Kodiak, Kurt Olson of Soldotna, Jay Ramras of Fairbanks, Peggy Wilson of Wrangell

–Democrat: Richard Foster of Nome




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