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Knowles: U.S. Senate Majority Leader Daschle agrees to submit gasline amendments to energy bill Southern route mandated, along with interstate access to gas and pipeline access for future discoveries, financial safety net by The Associated Press
U.S. Senate Majority Leader Tom Daschle has agreed to introduce three amendments to the national energy bill that the governor believes will both serve Alaska’s economic needs and help spur development of an Alaska gas pipeline from the North Slope to the Lower 48, Gov. Tony Knowles said Feb. 27.
Knowles released a statement from Daschle’s office in which the South Dakota senator said he would offer amendments to S. 517, the Energy Policy Act, that would:
• mandate that the project follow the “southern route” from Prudhoe Bay to Fairbanks along the trans-Alaska pipeline right of way and the Alaska Highway through Alaska and British Columbia to Alberta;
• provide access to the gas for residential and business purposes in Alaska and access to the pipeline for future discoveries and production of natural gas; and,
• provide a financial safety net for investors against future volatility in the natural gas market.
The portions of Daschle’s existing energy bill that relate to the North Slope gasline project were written from recommendations submitted to the U.S. Senate by Alaska’s big three oil and gas owners — BP, ExxonMobil and Phillips. The companies’ recommendations were requested by U.S. Senate members and were closely adhered to in the drafting of the Democrats’ energy bill.
“This is, I think, a significant step forward for the project,” Knowles said in a news conference.
BP, ExxonMobil and Phillips have spent $100 million over the past year studying the feasibility of piping natural gas from the North Slope to markets in the Lower 48.
While final reviews of that study from the individual producers have not been announced, preliminary analysis questioned whether the project would return enough profit — i.e. be competitive with other investment opportunities around the world. Phillips encouraged by news Following the Feb. 27 announcement, Phillips Alaska Inc. spokeswoman Dawn Patience said the company is encouraged by Daschle’s announcement, although officials there haven’t seen the proposed amendment. She could not say whether those provisions would ultimately lead to a project going forward.
“This project is very large and has a lot of challenges ahead of it,” Patience said.
A spokesman for BP said he could not comment on Daschle’s announcement without seeing the proposed legislation.
Knowles asked Daschle to support Phillips’ request that federal tax credits if gas prices fall too low, with those credits to be repaid if prices rise above a certain level.
Daschle’s statement did not specify what would be in the “financial safety net” he agreed to support, and Knowles said a specific trigger price for tax credits had not been determined.
Phillips is seeking federal tax credits if the price of gas dropped below about $3.75 per million BTU.
Phillips is the only one of the three producers that has come out in support of the Alaska Highway route.
The producers have looked at two possible routes: the “over-the-top” route that would run from the North Slope under the Beaufort Sea into Canada, largely bypassing Alaska; and one that follows the trans-Alaska oil pipeline to Fairbanks and then the Alaska Highway south.
Alaska politicians oppose the northern route, saying it would not provide Alaskans the jobs and access to natural gas for in-state uses that the highway route would provide. Purchase of US steel not included Chuck Kleeschulte, a spokesman for U.S. Sen. Frank Murkowski, said the senator has also proposed amendments mandating the highway route and in-state access to the gas.
Murkowski has also proposed amendments to the energy bill that would mandate the constructors of a North Slope gasline to use organized labor and buy U.S. and Canadian pipe for the line. Although Daschle’s statement mentioned creating jobs and helping the U.S. steel industry, he did not propose amendments to buy North American pipe or use organized labor.
Both Daschle, a Democrat, and Murkowski, a Republican, support requiring access to the pipeline for future discoveries of gas.
A version of the national energy bill that passed the U.S. House prohibits the Beaufort Sea route, but does not include the tax credit provisions.
If the measure passes the Senate with the proposed amendments, differences would likely be ironed out in a conference committee.
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