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Emphasis on ANWR Legislature will look first at funding Arctic Power; gasline also on agenda, no more ‘take it or leave it,’ bills akin to HB 519, says Senate President Therriault Patricia Jones PNA Contributing Writer
Alaska’s state Senate President Gene Therriault, R-North Pole, says one of the most timely oil and gas issues the Legislature will face in the upcoming session is how to best show continued support for opening the coastal plain of the Arctic National Wildlife Refuge to drilling.
“That has the opportunity to provide big returns for the long term,” he said in a Dec. 23 interview with PNA. With the Republicans controlling the flow of legislation in the U.S. Senate, “things look good but we still need to make our case, like how we’re going to protect the environment.”
Additional funding for the state’s lobbying group, Arctic Power, could be considered early in the Legislative session, Therriault said, “… if our congressional delegation gives us an indication that things are aligned and they need an active push from the state.”
But, he added, he has not heard of any specific effort or need for that kind of financial commitment. “With how tight of a fiscal situation we’re in, we will question any request for additional appropriations,” he said..
Support may be waning for gasline While more attention may be focused on encouraging drilling in ANWR, Therriault said state legislative efforts will continue to assist a natural gas pipeline project.
“When the Democrats were in control (of the U.S. Senate), they did not want ANWR — they were really against that,” he said. “So to show some favorable movement they were willing to negotiate on the gas pipeline.”
With the recent change in the political make-up of the U.S. Senate, there is “more incentive on ANWR,” Therriault said.
That political change, combined with some bipartisan opposition to price subsidies for Alaska natural gas, makes a gas pipeline project less likely to win federal legislative support in the near future, he added.
“Strategically the pipeline has less incentive now,” he said. “It’s a little strange dynamic — the gas pipeline had a better chance with the Democrats in control … but I don’t think it precludes it. Eventually we’ll secure (approval) on both fronts.”
Incentives for gasline In the upcoming Legislative session, Therriault anticipates a resurrection of several gas pipeline incentive bills, including something similar to House Bill 519. That proposal, which did not pass in last year’s Legislature, would have provided a property and sales tax break during construction and the first two years of operation of a gas pipeline.
It would have also revived the Stranded Gas Act, allowing the state’s administration to negotiate with producers on a number of different economic incentives.
“Anything that allows the administration to negotiate — the Legislature is going to be careful what authority they give to the administration,” Therriault said. “We want to make sure we are protecting certain constitutional rights for the full utilization of our state resources.”
Such negotiated incentives must be approved by the Legislature, he added, but under the former bill’s format, they come up for consideration in a ‘take it or leave it’ type of contract. “The Legislature prefers not to be placed in that position,” Therriault said.
Furthermore, the state legislators must consider keeping an avenue open for participation of independent oil and gas companies. Under the prior proposal, “independents were concerned we were locking them out of discussions a bit,” Therriault said. “With the state’s major players wrapping up exploration here, independents may be the ones who we are dealing with in the future.”
Another hurdle to work out is concern by existing pipeline communities, such as Fairbanks and Valdez, that such negotiated incentives might eliminate some of their property tax revenue stream.
“They worry that the project goes through and there’s an increase in population, schools and social service needs, but not an according increase in revenue,” Therriault said.
Nevertheless, some sort of legislative action is needed on the gas pipeline project, he said.
“We need to show that Alaska is ready, with our limited ability, to do something to help the economics,” Therriault said. “The amount we can impact the overall economics of a project of that kind is fairly small, compared to what Congress can do with a price floor … Congress has more impact on that decision than we do.”
Therriault calls for review of permitting process Another way the Legislature can help assist a gas pipeline project, or most other natural resource development planned for Alaska, Therriault said, is with a thorough review of the state’s permitting process.
“The governor has expressed desire to work on the whole permitting process, which is so long and has so much uncertainty,” Therriault said. “The process is so cumbersome, it lends itself to obstacles.”
He’s also concerned that opponents use the permitting process as a tool to prevent any development.
“We need to look at the overall system and see if it makes sense to modify the existing process or create a new system,” Therriault said.
Last year, legislators considered a bill that would allow permitting of a gas pipeline project to be phased, rather than require developers to submit the entire plan at one time.
“The gas project is so huge, it’s almost impossible to come up with a full proposal at one time,” he said.
A phased-in permitting process would allow state agencies to work on the project in phases. This would allow regulators to “continue to look for potential bottlenecks or snags, so our permitting process does not become a barrier to moving forward,” Therriault said. “This is not to say we’ll rubberstamp anything, but we don’t want the process itself to become an obstacle.”
More roads needed Finally, access to remote areas continues to be a hold-up for Alaska’s natural resource-based economy.
With exploration moving farther west in the National Petroleum Reserve-Alaska from existing North Slope infrastructure, transportation costs become a factor, Therriault said. Surface access to a new western staging area has the potential to help bring on marginal fields, he said.
The state’s financial situation makes those kinds of investments limited, he added.
“We have to weigh the economics from the development with the impact, but we certainly don’t want to have resources stay in the ground just because the economy of a 10-mile stretch of road makes it a no-go,” Therriault said. “We want to do it in a way that makes sense for whatever might be found, but not build a spider web of roads.”
Access might also be needed in other areas such as the foothills of the Brooks Range. Independents working in the area “may need (transportation) infrastructure to help with the economics,” Therriault said.
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