AGIA Pact Thwarting In-State Gas Line

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By Matt Buxton - Fairbanks Daily News-Miner / mbuxton@newsminer.com

Story Created: Feb 5, 2013 at 9:37 AM AKDT

Story Updated: Feb 5, 2013 at 9:37 AM AKDT

House Speaker Mike Chenault, R-North Kenai, is joined by Representative Tammie Wilson, R-Farmers Loop/Two Rivers, in answering reporters' questions during Friday's House Majority Press Availability at the Capitol.

JUNEAU — The shadow of the Alaska Gasline Inducement Act is hanging over the state’s plans to move forward with its natural gas pipeline.

That was the feeling during the House Resources Committee on Monday, where supporters of the Alaska Gasline Development Corp.’s efforts to build a pipeline for in-state use said the project might not reach its full potential thanks to the state’s agreement with TransCanada under AGIA.

House Speaker Mike Chenault, R-Nikiski, who is co-sponsoring House Bill 4 with Rep. Mike Hawker, R-Anchorage, expressed optimism that AGDC’s project is the only project with momentum — momentum, he said, that the private backers of the large-diameter pipeline have yet to prove. Both lawmakers have been outspoken opponents of AGIA.

“It may not be the magical big 48-inch pipeline,” Chenault said, “but a pipeline of this size does a number of good things. It brings down the cost of utilities in Fairbanks and brings down the air quality in Fairbanks. It brings a long-term energy supply to the Cook Inlet.”

But under AGIA, the size of the state pipeline is limited to a maximum of 500 million cubic feet so as to not compete with the larger pipeline.

House Bill 4 passes a number of regulatory changes that would allow AGDC to gauge the level of interest in the pipeline by reaching an open season, where the company can take commitments from buyers and sellers of gas.

House Energy Co-Chair Rep. Dan Saddler, R-Eagle River, asked what would happen if there was more than 500 million cubic feet of interest, whether it would drive the price of gas up or down.

Chenault said he hoped there would be room for everyone’s gas in the pipeline, suggesting the state need to rethink its commitments under AGIA.

“What a terrible position the state of Alaska would be in if we had people stepping up to the plate and bidding more gas than our proposed project would handle,” he said. “I believe the state would step in and make the right choice, which would be to let any of them get in.”

Chenault’s bill comes as AGDC unveiled a reworked pipeline project that could potentially hold more than the 500 million cubic feet of gas if ran at a higher pressure. How much more the engineering team was reluctant to look into because of the potential legal challenge TransCanada could bring.

Contact Fairbanks Daily News-Miner staff writer Matt Buxton at 907-459-7544 and follow him on Twitter: @FDNMpolitics.
 

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Anonymous said on Wednesday, Feb 6 at 1:01 AM

"What a terrible position the state of Alaska would be in if we had people stepping up to the plate and bidding more gas than our proposed project would handle". You mean like Conoco bidding it all to japan for 18 bucks per mbtu???? Leaving us short again of our own gas??..in a CONTRACT PIPE??? Any pipeline the state builds aside from AGIA`s statute needs to be a common carrier or we will never see a low tariff for home customers of gas in the railbelt. This bill is DESIGNED to undercut AGIA and make it untenable, leaving the whole future state supply of slope gas in the hands of "Alaska`s Oil and gas company". Nice that Hawker, Johnson, and Chenaults little scheme is so obvious.

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