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DOE seeks comment on Alaska gas line loan State of Alaska, potential lenders expected to submit ideas on administering program in North Slope gas pipeline project By Rose Ragsdale Petroleum News Contributing Writer
The U.S. Department of Energy is seeking public comment on an $18 billion loan guarantee program to encourage construction of a pipeline that will bring Alaska natural gas to the Lower 48. The federal agency published a notice of inquiry for a 60-day comment period in the Federal Register May 27. The comment period closes on July 26, 2005.
DOE said the pipeline will provide access to Alaska’s 35 trillion cubic feet of proven natural gas reserves and would be a major step forward in meeting America’s growing energy needs and reducing U.S. dependence on foreign sources of energy. It also would fulfill the Bush Administration’s policy to bring Alaska’s natural gas reserves to market.
“Further developing our domestic energy supply is a key priority of the President’s National Energy Policy,” Secretary of Energy Samuel Bodman said in announcing the notice. “When the Alaska pipeline is fully operational, it will have the potential to add nearly 2 trillion cubic feet of natural gas each year to our supply, which would help to further stabilize prices.”
Natural gas serves six of every 10 American households, about 62 million homes, and is used to generate about 16 percent of the nation’s electric power. It is also indispensable as a feedstock for fertilizer and chemical manufacturers.
In recent years, rising demand and limited increases in supply have resulted in high natural gas prices that affected residential and industrial users across the economy, DOE said.
Alaska Commissioner of Revenue Bill Corbus said the federal loan guarantee program is important to the proposed gas pipeline project. “The gas producers and the State of Alaska were some of the heavy supporters of including it in the energy legislation last year and they worked for that,” Corbus said June 1.
In conversations with a number of investment banking houses, Corbus said he learned that potential lenders are also interested in the loan guarantee. “They suggested various ways the loan guarantee would be put to good use,” he said.
Corbus said he anticipated that the state will submit comments to DOE on the loan guarantee program. Alaska is proposing to take an ownership interest in the gas pipeline project and would therefore have a proportionate share of the debt responsibility, he said. “I could see that federal loan guarantee coming into play with our portion of the debt,” Corbus added. Wants input on program administration DOE is also asking for comment on specific issues about how the loan guarantee program should be administered. “One purpose of the notice gathering comment is to work out how the loan guarantee program will work,” said DOE spokesman Bill Purvis.
While potential lenders and banks are expected to comment, DOE wants to hear from everyone who has an interest in the gas pipeline, a spokesman said.
No final decision has been made on whether regulations to implement the loan guarantee program are needed.
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