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Back in the spotlight Blackout revives Alaska gas line aid; Canadian government on edge Gary Park Petroleum News Calgary Correspondent
The big blackout that cascaded across North America’s economic heartland may clear the way for speedy passage of comprehensive energy reforms in the United States.
It has also given fresh hope to those who favor U.S. government loan guarantees and other incentives for an Alaska Highway natural gas pipeline.
In the aftermath to Aug. 14, when 50 million people in eight states and Ontario lost power, stumbling efforts to shape the first overhaul of U.S. energy policy in a decade got a fresh jolt of life.
President George W. Bush said he wants to sign a comprehensive bill soon — legislation likely to include up to $35 billion in incentives to boost domestic energy supplies.
Bush told reporters that top Senate and House negotiators — New Mexico Sen. Pete Domenici and Louisiana Rep. Bill Tauzin — were “very optimistic they can reach agreement, obviously on infrastructure and modernization, but as importantly (on) other issues related to energy.”
Paul Cellucci, the U.S. ambassador to Canada and a close friend of Bush, said he believed the blackout is “going to be a pretty powerful incentive for both governments to act and to make sure we get a regulatory regime that encourages the kind of investment we need.”
He said the loss of power to homes and industry was a “clear reminder that our network of generating and storage facilities in some cases is strained and deteriorating.”
John Katz, director of Alaska Gov. Frank Murkowski’s Washington, D.C., office, also believes the blackout could help win passage of the energy bill by creating a need for lawmakers to show the public they’re working to solve the problem. Joint U.S.-Canada task force The immediate focus is on a joint U.S.-Canada task force, co-chaired by U.S. Energy Secretary Spencer Abraham and Canada’s Natural Resources Minister Herb Dhaliwal, to probe the blackout and propose solutions.
That is expected to mean new rules to create super-regional electricity grids that reduce the vulnerability of some regions to shortages.
While electricity remains the dominant concern, government officials in Canada are uneasy about what the final U.S. legislation will contain with pressure again high to establish a floor price for Alaska gas.
“The blackout throws a new dynamic into the debate,” a spokesman for the Canadian embassy in Washington told the Globe and Mail. “We’re going to be watching it closely.”
He said Canada objects to either guaranteeing North Slope producers a floor price for Alaska gas or the introduction of tax credits when gas prices fall.
“Both are offensive to us,” the spokesman said. Canadian producers could live with tax credits The Canadian Association of Petroleum Producers has indicated it could live with tax credits, so long as they are repayable, but the Canadian government along with the Bush administration has argued any subsidies could seriously distort the continental gas market and divert investment from the Mackenzie Delta gas project.
Those worries are heightened by the urgency given to delivering a single bill to Bush, which could mean the last-minute inclusion of proposals such as a floor price measure.
Also troubling the Canadian government is the prospect that Bush will agree to open up the coastal plain of the Arctic National Wildlife Refuge to exploration, although analysts have generally ruled out such a move because of the political upheaval it could triggers at a time when a bigger fight is brewing over changes to the electricity transmission grid.
Editor's Note: Larry Persily, Petroleum News Juneau correspondent, contributed to this story.
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