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Alaska spends big on natural gas line Legislature approves $9 million for natural gas project work Larry Persily Petroleum News Government Affairs Editor
As soon as Alaska Gov. Frank Murkowski signs his name to the legislation, the departments of Revenue and Natural Resources will have $9.08 million to spend on the state’s growing efforts to get a natural gas pipeline built from the North Slope to market.
Legislators approved the gas line funding May 11, the final day of the 121-day session. The money was included in a much larger package of public works and capital projects spending.
Unlike the usual operating budget appropriations that lapse at the fiscal year-end the next June 30, the gas line money will stay on the books through June 30, 2009, though lawmakers and the governor hope it doesn’t take nearly that long to find a project developer willing to break ground on the long-awaited gas line.
The money will pay for Stranded Gas Development Act negotiations with applicants that want to strike a fiscal deal in lieu of state and municipal taxes, should they decide to go ahead and build the gas line. And some of the money will pay for an analysis of state investment in the project, asking the questions would it help for the state to share in the financial risk and, if so, how could Alaska best take a stake in the project.
Although the administration earlier in the budget process had talked of giving the risk assessment funding to the Department of Revenue, it was switched to Natural Resources. “DNR has the people who best understand the pipeline business … and the resource issues,” Mike Menge, the governor’s special assistant on oil and gas issues, said last month.
The risk assessment work is estimated at $1.58 million. Money for advance right-of-way work From the appropriation, Natural Resources will get $3.9 million to start working on pipeline rights of way to get ahead of the job — in anticipation that whichever potential developer decides to build the multibillion-dollar line will need the right-of-way leases.
The rest of the money will go to the Department of Revenue for Stranded Gas Act negotiations with the three major North Slope producers that have submitted a joint application; with applicant Enbridge; and with anticipated applicant TransCanada.
The funding will also pay for studies of potential in-state gas use and benefits from a gas line project, and the state’s cooperative efforts with Alberta.
The state-owned Alaska Natural Gas Development Authority will also share in the pot to continue its feasibility analysis of a publicly owned liquefied natural gas project. Permanent Fund will help pay for work Lawmakers approved taking 25 percent, or $2.27 million of this year’s appropriation, out of Permanent Fund earnings. The Legislature in past years has used the same tactic to avoid taking the entire amount out of the state general fund. The argument is that Alaska’s Permanent Fund savings account gets 25 percent of the state’s oil and gas royalties, so it’s only fair that it pay 25 percent of the cost of getting those royalties.
The same funding split is used for the Oil and Gas Division at the Department of Natural Resources and the Tax Division at the Department of Revenue.
This session’s legislative funding brings total appropriations for gas line efforts to more than $11 million since last spring.
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