August 26, 2003 --- Vol. 9, No. 83August 2003

State gas development authority wants $3 million this fall

The Alaska Natural Gas Development Authority board of directors voted Monday to seek up to $3 million in state funding this fall to prepare a business plan, cost and development timeline projections to determine if the state can competitively deliver liquefied natural gas to the West Coast.

Board members, after listening to a presentation by Harold Heinze, chief executive officer, agreed that the authority must move quickly to determine the cost and construction schedule of a project to pipe North Slope natural gas to Valdez, liquefy and load the gas on tankers for delivery to West Coast terminals expected to open in 2007 and 2008.

“We have a very limited amount of time,” Heinze told the board.

Sempra Energy is moving forward with plans for an LNG receiving terminal on Mexico’s Baja Peninsula, just south of the California border, while a subsidiary of Japanese trading house Mitsubishi Corp. is working toward building an LNG terminal at Long Beach, Calif.

The Alaska Natural Gas Development Authority, established by a voter-approved initiative on the November 2002 ballot, is operating under a $150,000 budget granted by the Legislature this past session. Proponents of the authority had suggested a first-year appropriation of up to $3 million, but lawmakers opted for a much lower start-up budget.

The authority’s job is to determine the feasibility of the state building, owning and/or operating a pipeline from the North Slope to Valdez for shipping Alaska natural gas to market aboard LNG tankers.

Heinze told the board Monday he would like to see a special gathering of key legislators early in September to hear a presentation on the authority’s progress to date and the need for an immediate boost in funding. “We know enough now to ask for this money.”

The additional funds are needed for conceptual engineering, project drawings, a detailed business plan, cost and schedule estimates, Heinze said. The state needs to be ready as soon as next year to make a decision on spending $100 million or more for full engineering of the project if it is to have any hope of supplying the Sempra or Mitsubishi LNG terminals, he told the board.

Authority members and Heinze were unsure how they could obtain state funding while the Legislature is not in session.

Deputy Revenue Commissioner Steve Porter, who serves as liaison to the authority, said, “We’re looking for you to see if there’s a way to do that.”

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