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March 2008

Vol. 13, No. 9 Week of March 02, 2008

Governor not backing down on AGIA

Kristen Nelson

Petroleum News

Alaska Gov. Sarah Palin said Feb. 21 that she agrees with many points U.S. Sen. Ted Stevens, R-Alaska, made to the Alaska Legislature in his annual address Feb. 19.

But her administration is not backing down on AGIA, the Alaska Gasline Inducement Act, passed by the Legislature last year.

“We’re certainly not changing course, though, away from AGIA,” the governor told members of the press.

“There has been more progress thanks to AGIA on a gas line than this state has seen in these decades, wishing and hoping for a gas line,” she said.

The state has competing projects, Palin said, the TransCanada application the administration is evaluating under AGIA and a non-AGIA proposal by ConocoPhillips.

Stevens said Congress would reject the bridge-shipper concept suggested by TransCanada and any changes in the federal loan guarantee. TransCanada proposed the bridge shipper concept to meet the eventuality of the North Slope producers failing to commit gas to a pipeline in open season. TransCanada suggested that the U.S. government could step in and commit to ship, essentially holding space until commitments of gas were made to a line. Gas pipelines are financed based on shipper commitments.

“With all due respect to our senior senator, he doesn’t speak for the entire Congress,” Palin said.

She said TransCanada isn’t asking for the bridge shipper or changes in the federal loan guarantee provisions. “In fact they have made suggestions, at the state’s request,” Palin said, suggestions about what to do if plan A — a successful open season — doesn’t happen.

“They came to us with other ideas and that will be helpful for us. The more information, the more ideas we have presented to us, the better decisions will be made by our commissioners when it comes time to choose that best partner to build this project,” she said.

Stevens said he believes the window is closing on an opportunity for an Alaska gas pipeline.

Palin said Alaska has a “wonderful opportunity … right now to contribute and to produce for our residents and also for the rest of the United States.”

She said AGIA was created to get the gas pipeline project moving.

As to taking back leases, the governor said recent statements attributed to her were in the context of Point Thomson, where the state is in judicial proceedings after terminating the unit administratively.

“We always have the ability, the right, as the owners of the resources, to remind and even demand the producers to provide by the provisions of their leases. And if they refuse to abide by then, through the judiciary we can revoke a lease.”

Stevens told the press after he talked to the Legislature that he does not think Congress, or the courts, would put pressure on the North Slope producers to sell gas.

Palin said she disagrees. “I think that there will be pressure at some point … from FERC (Federal Energy Regulatory Commission), from Congress, elected officials in this state and around the nation” because there are markets for North Slope natural gas and “the burden that is being put on Americans, our homes, our businesses, when there are rich reserves in the ground that are essentially being warehoused.”

“… There will be pressure, I believe, put on industry to tap those resources and get them flowing,” the governor said.

And, the governor said, a reserves tax, a tax on gas in the ground — which she did not support when it was the subject of a ballot initiative — might be “a tool that Alaskans, the resource owners, need to have in their tool belt.”






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