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Legislature tells governor it does not agree with his pipeline decisions Joint Committee on Natural Gas Pipelines crafts own views on producers’ proposed amendments to Natural Gas Act Kristen Nelson PNA Editor-in-Chief
The Legislature’s Joint Committee on Natural Gas Pipelines has taken issue with both the governor and the North Slope producers on proposals for changes in federal gasline legislation, and has proposed a package of its own amendments to the 1977 Alaska Natural Gas Transportation Act.
Chairman John Torgerson began a Sept. 19 meeting of the Legislature’s natural gas pipelines committee by objecting to a statement in Gov. Tony Knowles’ Sept. 10 letter to U.S. Senators Jeff Bingaman and Frank Murkowski. The governor said: “It is fair to say a consensus exists among Alaska businesses, Alaska Natives, organized labor, environmental and civic groups and the Alaska Legislature that the following principles should be embodied in any new federal legislation authorizing and encouraging the construction of the Alaska portion of the Alaska Natural Gas Transportation System (ANGTS).”
“As this committee knows,” Torgerson said, “we have not had any conversations with the administration on this. … We’ve tried, but been rejected” in attempts to interact with the administration.
John Katz, the governor’s special counsel in Washington, D.C., told the committee by phone that he was heading up a legislation drafting group for the governor, and that a draft would be shared next week with the governor’s gasline policy council. The plan, he said, was to consult with the council, the producers, pipeline companies and the Legislature, but the Oct. 2 hearing date set for the U.S. Senate Energy Committee was creating a time bind.
Producers’ proposal rejected At the end of its Sept. 19 hearing, the committee rejected federal pipeline legislation proposed by the Alaska Gas Producers Pipeline Team. The committee said Congress has already established the legal framework for an Alaska-Lower 48 natural gas pipeline, ANGTA.
The committee also proposed a package of amendments, which Torgerson said he would present at the Oct. 2 Senate Energy Committee hearing in Washington, D.C.
The amendments included requests that Congress reaffirm that ANGTA is the prevailing law covering transportation of Alaska natural to the Lower 48 and allow amendments to modernize the act.
The committee requested that Congress eliminate the Dempster Lateral, included in ANGTA to move natural gas from the Northwest Territories, pointing out that the Northwest Territories has developed plans for their own pipeline.
The committee requested that Congress prohibit the over-the-top route.
It requested that Congress create a mechanism allowing for “transparent and fair distribution” of tariff costs associated with a conditioning plant. Torgerson said companies exploring south of Prudhoe Bay would have to build their own conditioning plants to process gas, and shouldn’t have to pay for the conditioning plant at Prudhoe Bay in their tariffs.
Funds already spent Money spent by partners who have withdrawn from the Foothills Alaska Highway gasline project has been a concern to the committee, and it requested that Congress limit tariff charges from prior work to that which does not need to be duplicated and which is appropriate to the current transportation system.
The committee had already had a discussion about the obligation the partnership has to withdrawn partners with John Ellwood, vice president of Foothills Pipe Lines Alaska Inc. and Curt Moffatt, an attorney who represents Foothills in Washington, D.C.
Torgerson said the existence of a $4 billion liability is a “major stumbling block in my support of your project.” Ellwood said the current partners (Foothills and TransCanada) are talking to the withdrawn partners, hope to have the issue completely off the table and asked the committee to be patient for “a few more days” while we sort this out.
Moffatt told the committee that the potential liability to withdrawn partners is a private contractual agreement and it not going to be recovered in the tariff.
“We’re not in the project to recover historic costs,” Ellwood said. “We’re here for the investment opportunity going forward.”
Joint state-federal advisory body Nan Thompson, chair of the Regulatory Commission of Alaska, told the committee that a joint board concept — already used in telecommunications — might be useful for advising the Federal Energy Regulatory Commission on issues where state commissioners have more knowledge.
One of the committee’s amendment requests that that Congress pass legislation to ensure that Alaska has fair and reasonable access to gas from the state and to create a joint board of members from FERC and the RCA to advice the FERC on issues that affect Alaska.
The committee also requested that a formula be developed that would allow for setting of different tariff rates for natural gas distribution at points along the pipeline.
Access a concern Mark Hanley of Anadarko Petroleum Corp. briefed the committee on Anadarko’s concerns about access, since the company is exploring in areas without a developed gas resource and may be uncertain as to its transportation needs when gasline plans are made and space requirements projected.
The committee asked Congress to ensure that gas producers without an ownership interest in the pipeline have “fair and reasonable access to space in the pipeline” and also have the ability to obtain pipeline expansion.
Tax incentive, disincentive The committee voted for two incentive amendments: one that allows an accelerated depreciation schedule for federal tax purposes of seven years for Alaska natural gas brought to United States markets, and one that requests that Congress prohibit tax incentives for liquefied natural gas from sources outside of North America. The first amendment was in support of a producer request for accelerated depreciation; the second was a jab at producer projects to bring gas supplies from elsewhere in the world into the Lower 48 as LNG.
The committee’s final amendment proposals produced considerable discussion of constitutional issues. Both were described as “warm fuzzy” statements that probably wouldn’t have much effect: one a request for project labor agreements for pipeline construction and the other a request for preference for Alaska businesses for construction and maintenance of a natural gas pipeline.
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