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Alaska lawmakers begin hearings on proposed North Slope gas pipeline
Larry Persily Petroleum News government affairs editor
Alaska legislators will look mostly at tariff issues in the first in a summer series of committee hearings on the proposed North Slope natural gas pipeline project. The opening hearings are set for June 16-17 in Anchorage.
The intent is for lawmakers to learn as much as they can about gas line tariffs, taxes, economics and market issues in anticipation of eventually receiving and voting on a fiscal contract negotiated between state officials and gas line project developers.
“It really is the beginning of a process, a series of meetings to get a lot of information on the table,” said Senate President Gene Therriault, vice chairman of the Legislative Budget and Audit Committee, which is holding the hearings with the Senate Resources Committee.
The meetings are to ensure “we are schooled up and able to evaluate what the administration hands us,” said Therriault, a North Pole Republican.
The administration of Gov. Frank Murkowski is negotiating under Alaska’s Stranded Gas Development Act with the three major North Slope producers — ExxonMobil Production Co., ConocoPhillips Alaska Inc. and BP Exploration (Alaska) Inc.— for a long-term fiscal contract setting out payments in lieu of state and federal taxes should the companies go ahead with the gas line.
The administration also is negotiating with Canadian pipeline companies TransCanada Corp. and Enbridge Inc. for their own Stranded Gas Act contracts, should either or both companies take a role in the project. State law requires legislative review State law requires legislative approval of any contract before it can take effect. Murkowski has said he hopes to complete a draft contract before the end of this year.
“The Legislature is not an integral part of that,” Therriault said of the administration’s negotiations. The hearings will better prepare lawmakers for their consideration of the contracts, he said.
“It’s education for legislators and to get the word out to the public so that the public realizes it’s more than just a buy-a-new-car kind of contract,” said Rep. Ralph Samuels, chairman of the Budget and Audit Committee.
It’s especially important in an election year to take the politics out of the discussion and make sure everyone understands the complexity of tariffs and the potential multibillion-dollar pipeline investment, the Anchorage Republican said.
The first round of public hearings is set for June 16-17 in Anchorage, at the Legislative Information Office. The meetings are scheduled to run from 8:30 a.m. to 5 p.m., June 16, and 8:30 a.m. to early afternoon, June 17.
“This one is heavy on tariffs,” Therriault said. The agenda includes presentations on pipeline costs and tariffs, regulatory oversight, the effect of tariffs on future exploration, and the effect of tariffs on state royalty and tax revenues.
Presenters will include the state departments of Revenue and Natural Resources, the North Slope producers, Anadarko Petroleum Corp., TransCanada and Enbridge, the Regulatory Commission of Alaska, J.P. Morgan Chase & Co. and state gas line consultant Lukens Energy Group Inc. Next hearings to include access, expansion The next two hearings likely will cover the state’s desire for access for new producers to feed their gas into the line and for Alaskans to draw out gas for local use, and expansion of the line to accommodate future production, among other issues, Therriault said. Other possible agenda items include “potential pitfalls” the state should look for in any fiscal contract for a gas line, and short-term vs. long-term project benefits to the state, he said.
The two committees are expected to meet two more times this summer, with the dates and agenda to be announced.
The membership of the Legislative Budget and Audit and Senate Resources Committee totals 16 lawmakers, one-quarter of the entire House and Senate. The Legislature’s gas line consultant, former state Oil and Gas Division Deputy Director Bonnie Robson, is advising the committees on the meeting agendas and helping to line up presenters, Samuels said.
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