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Without support, Alaska gas line project at risk, Murkowski tells Canadians
Gary Park Petroleum News Calgary Correspondent
An Alaska Highway gas pipeline is a vital part of a North American energy market, but without U.S. government subsidies the project could fold, Alaska Gov. Frank Murkowski told a Calgary conference Sept. 29.
Indicating he is confident a new U.S. energy bill will offer Alaska producers a guaranteed floor price, Murkowski said the legislation will identify new sources of energy and “the gas line will definitely be a part of it.”
But without tax credits “there will very likely be no project at all,” he told delegates to the Far North Oil and Gas Forum sponsored by Insight Information.
Pressing his case for some form of government financial support for a pipeline, Murkowski challenged those in the U.S. and Canadian governments who have insisted subsidies will distort the continental gas market and could undermine the planned Mackenzie Valley project.
However, Murkowski insisted subsidies are routine for the energy sector and pose no threat to the market.
The alternative, he argued, is imported liquefied natural gas that will increase U.S. reliance on gas from risky sources. For Congress to pass a bill without any new sources of domestic energy would be politically “very dangerous,” he said. Governor says incentives not uncommon “Tax incentives ... are not uncommon,” he said, noting they are already available for the deepwater Gulf of Mexico and coalbed methane and predicting they will be offered for ethanol, wind and nuclear power in the energy bill.
“I think incentives are a red herring,” Murkowski said, adding that spending a lot of time debating incentives will not accomplish anything.
The Alaska line “will be built because of the demand ... or demand will be met with LNG.”
To the Canadian government opponents of subsidies, including Prime Minister Jean Chretien, he suggested they should back out of the debate.
“I don’t think it’s an issue of the Canadian government, necessarily,” he said.
“We don’t interfere or comment on your own decisions on making incentives at whatever level you see fit in your own projects and we expect the same courtesy when we make decisions,” Murkowski said. Kakfwi softens on subsidies He also brushed aside comments last week by Federal Energy Regulatory Commission chairman Pat Wood, who said the Bush administration has paid heed to Canadian concerns about a floor price for Alaska gas. (See page 1 story.)
Murkowski said FERC has “absolutely no role in the (pipeline) decision-making process.”
For now, he said the window of opportunity is open, but it won’t stay that way indefinitely.
Meanwhile, Northwest Territories Premier Stephen Kakfwi softened his view of subsidies, telling the conference that the issue was one for the Canadian government and gas producers and not his “small, remote” government.
“It is not a compelling issue that requires my attention,” he said.
His greatest priority is to extract a deal from Prime Minister Jean Chretien, who leaves office in February, on the transfer of wide-ranging powers, including revenue-sharing, from the federal government to the Northwest Territories.
Kakfwi said there are no deal-breakers standing in the way of the Mackenzie project, which he described as “ready to go ... if interest rates stay the same, the economic demands are there.”
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