|
(Juneau) - The Senate Resources Committee, chaired by Sen. Scott Ogan (R Mat Su/Chugiak), heard testimony Monday on legislation to expand the scope of the Alaska Natural Gas Development Authority to include consideration of a natural gas pipeline project from the North Slope to the Canadian border.
Sponsored by Sen. Ogan, would allow the authority to examine the feasibility of a pipeline that parallels either the Trans Alaska Pipeline System or the Alaska Highway. It would also require the authority to evaluate opportunities for private sector involvement, and give the authority an additional six months to submit a plan to the Legislature.
"All three of those things I consider to be very friendly," ANGDA chief executive officer Harold Heinze told the committee. "I truly believe the authority has the ability to be of value on behalf of the state contributing toward the success of any private sector project that's undertaken with North Slope gas. We stand ready to do that. We also stand ready to work with any group in a very compatible way with our LNG project. We think both of those opportunities are very important."
Ogan said the idea for the bill came from a series of meetings this summer in his capacity as chairman of The Energy Council, an international organization of legislators from 10 energy-producing states, four Canadian provinces and the nation of Venezuela. In those meetings, including a meeting of the Pacific NorthWest Economic Region (PNWER), senior managers of TransCanada PipeLines Ltd. indicated an ability to accept up to two billion cubic feet of North Slope gas into their existing infrastructure.
"It looks to me if we expand the authority to go to the border, interested companies might be willing to take advantage of the tax-free status of a state-owned pipeline," Ogan said, adding that the bill is not meant to favor any particular group over another. "I think even the existing oil producers could possibly take advantage of this. I don't think it's mutually exclusive to any one group." ANGDA CEO Heinze agreed.
"I believe this is a very friendly approach to this," Heinze said, adding that the authority believes its ability to provide a business structure that offers advantages over any commercial enterprise is important to commercialize North Slope gas.
"As you know, the tariffs associated with that (natural gas) movement are right at the edge of commerciality, and the tax status that would be associated with our efforts could probably reduce those tariffs by around one third," Heinze said. "That is a very significant number that would make a very significant difference for both economics and the competitiveness of any project to bring North Slope gas to market."
The bill also requires the authority to evaluate the opportunities for private sector involvement.
"Philosophically, I feel better about the private sector having more of a risk-taking role in this project. Given the history of state-owned projects in the past, I don't want anything like that on my watch, so the more private sector money we have invested into it, the better," Ogan said. He also said that a cursory legal opinion indicates private sector investment would not jeopardize the tax-free status of state ownership.
Ogan and Heinze agree that a line from Delta Junction to the Canadian border could also potentially reduce the cost of a line to Valdez, which would share the first 530 miles of pipeline.
"To the extent both projects could share in the cost, building, and use of that 530 miles, that also offers a tremendous potential for cost reduction and subsequently tariff reduction, and better economics, and better wellhead values for the state," Heinze said. "We've had our eye on the desire to try to work with the project proponents who are looking at the highway route."
ANGDA was created by voter initiative in 2002 to present a plan to the Legislature for constructing and operating a state-owned natural gas pipeline to Valdez. Under its current mandate, it can consider only a pipeline from Prudhoe Bay to Prince William Sound with a spur to the Southcentral gas distribution grid. As chairman of the House Oil & Gas Committee, then Rep. Ogan introduced legislation to create ANGDA the session before voters approved it.
# # # |
