Bill mandates southern route
House Bill 83 is sponsored by the House Special Oil and Gas Committee, chaired by Rep. Scott Ogan, R-Palmer.
The bill would set in statute a definition of the state constitution’s mandate that state-owned resources be used to the "maximum benefit" of residents.
For a gas pipeline transporting state-owned royalty gas and crossing state lands, "maximum benefit" is defined as a requirement that the project should allow access by Alaskans to gas, including "reasonably foreseeable" future needs, and that it maximize employment opportunities for residents, according to the legislation.
"It’s clear that Alaska’s interests are best served by a southern route, and this bill puts that into law," Ogan said.
Producers are studying a route through Interior Alaska that would follow the Alaska Highway into Canada, called the southern route, as well as a northern route that would run east from the Prudhoe Bay oil and gas field to the Mackenzie River delta of northern Canada.
Alaska’s leaders, including Gov. Tony Knowles, are supporting the southern route through the Interior because it would create more jobs for residents, although that route is longer and may be more costly.
House Bill 83 would amend three existing state laws by requiring them to conform to the statutory interpretation of the constitutional language.
These include the state right-of-way leasing act, under which pipeline corridors across state lands are leased to pipeline companies. The commissioner of Natural Resources would be required to certify that a gas pipeline right-of-way lease conforms to the policy of maximizing residents’ access to gas.
Another law change is to the state public utilities act, to require the Regulatory Commission of Alaska to order the pipeline be built with spare capacity, so that a future spur line to a liquefied natural gas export project in southern Alaska is not foreclosed.
The bill also changes the state Stranded Gas Act, a law enacted three years ago that allows the Commissioner of Natural Resources to negotiate special tax terms for a gas pipeline and LNG export project.
Under the proposed change, a gas project would not be eligible for negotiated tax terms unless it met the requirement that residents have access to gas.
Ogan admitted the committee bill is just a starting point for discussions on the gas pipeline.
The three major North Slope gas owners are still engaged in studies of different routes and don’t expect to be able to make a decision until the end of the year.
Two related bills have also been introduced, separate proposals by Gov. Tony Knowles and Rep. Joe Green, R-Anchorage, which both amend the Stranded Gas Act so that it is not exclusive to LNG projects. Under the proposals by the governor and Green, developers of a conventional gas pipeline or another gas project, such as a gas-to-liquids plant, could negotiate special tax arrangements under the Stranded Gas Act.