JUNEAU — Federal energy regulators say they are ready for Alaska to submit a plan for a multibillion dollar natural gas pipeline, but the state's schedule has “slipped considerably.”
In a periodic report submitted by the Federal Energy Regulatory Commission to Congress the last week of January, the agency said the prospects for a pipeline are “more remote than last year.”
The report is the third by FERC, which reviews the state's progress every 180 days. In its conclusion, the agency offered this assessment:
“The federal government is ready to act. However, no pipeline application has been developed, and the prospects of an application are more remote than a year ago. Over the past year, the schedule for an Alaska gas pipeline has slipped considerably.”
A key state lawmaker, House Majority Leader Ralph Samuels, said he is concerned that the FERC report to Congress may be paving the way for more aggressive action by the federal government in pushing the state.
Federal laws enacted by Congress in 2004 require a study of a possible takeover of the project by the federal government. That study, by the U.S. Department of Energy, is currently underway.
In Washington, D.C., Sen. Ted Stevens, R-Alaska, expressed his concerns over the FERC report and the state's position on the project.
“We have a very difficult timeframe. Once the state acts, there are a series of federal agencies that must act under specific federal laws,” Stevens told the Associated Press.
“We have an existing 18-month provision in law for permitting, but the agencies say they want a total of 44 months before the permitting begins, and that's because they each look at their jurisdiction separately.”
“We're going to have to try and consolidate those reviews into one review for the federal government, and we can't do that until the state acts,” Stevens said.
Gov. Sarah Palin and members of her energy team disagreed with the FERC assessment.
“Any reference to timeline slippage is simply not true,” said Marty Rutherford, acting commissioner for the Department of Natural Resources.
“The governor has embarked on a new course to ensure that a viable contract, and hence an application, can be approved,” she said. “There is absolutely no indication a timeline has slipped.”
Last year, former Gov. Frank Murkowski struck an agreement with BP PLC, Exxon Mobil Corp. and ConocoPhillips to build a $25 billion pipeline from the North Slope through Canada and into the Midwest.
The line would ultimately have delivered 4.5 billion cubic feet of natural gas a day, which is about 7 percent of the current U.S. demand.
But lawmakers felt the deal gave too many considerations to the big firms, including locking in tax rates for several decades, and provided few key assurances for the state.
As a result no contract was ever brought before the House or the Senate for a vote. Therefore the federal report should not presume so much ground has been lost, lawmakers said.
“There is serious concern of whether we would have ever gotten to closure and if we had whether the agreement itself would have resulted in a pipeline being built,” said Sen. Gene Therriault, R-North Pole.
Rep. Beth Kerttula, D-Juneau, says lawmakers are acting with a sense of urgency while awaiting a proposal from Palin. The governor has reopened negotiations with 12 entities interested in building the pipeline. She's also soon expected to deliver a new proposal to the Legislature.
Murkowski's plan may have failed or simply run out of time, but it did provide the necessary foundation moving forward, Kerttula said.
Additionally new lawmakers received a two-hour industry briefing from Rep. Ralph Samuels, R-Anchorage, in late January.
“Now, when things start to happen, they can happen more quickly because everybody understands things better,” Kerttula said.
Moving forward, FERC's report states that the pipeline's future hinges on the merits of Palin's “fresh competitive approach.”
Palin said recently she plans to present the Legislature with a bill that calls for a transparent and competitive process to bring the state's resources to the most viable market.
That could mean shipping gas to the Midwest markets through Canada or tapping into the energy industry's emergence of liquefied natural gas terminals.
“This needs to be done as expeditiously as possible for two reasons,” Rutherford said. “It's in the best interest of Alaska and the best interest of the nation.
“We are much further ahead than the report suggests. The governor sees this as a critical component to our nation's energy strategy,” Rutherford said.
Journal of Commerce reporter Tim Bradner contributed to this article.
