Murkowski Welcomes FERC Review of Gas Line Efforts

MURKOWSKI WELCOMES FERC REVIEW OF GAS LINE EFFORTS

Alaska Sen. Lisa Murkowski today said she welcomes a new report by the Federal Energy Regulatory Commission that says "much has been done" to further construction of an Alaska natural gas line project, but which says the future of the project still hinges in part on completion of negotiations between the State of Alaska and producers over fiscal terms involving construction of the more than $20 billion project.

Under last summer's comprehensive Energy Policy Act of 2005 (EPACT '05), the commission is required to update Congress every six months on the progress that is being made to build a project to move Alaska's natural gas to market. The commission early on Wednesday delivered its first report based upon progress on the line through early January.

The report says that because of FERC's ruling last winter setting up an "open season" to develop gas line regulations, congressional tax relief, loan guarantees and permit streamlining legislation in 2004 and administrative efforts governing the line's operation "much has been done to address the concerns of potential project sponsors who wanted assurances that the authorization process would be expeditious and streamlined, and that financial safeguards and incentives were in place to help absorb the huge financial costs and risks of such a project." The report also says that changes to the Alaska Natural Gas Pipeline Act in 2004 has clarified the status of old pipeline authorizations from 1977 legislation, helping the project.

The report says other progress has come from:
• TransCanada Pipeline Co., having updated its right-of-way application in Alaska; the adjudication process being finished. TransCanada holds the current Canadian permits for a pipeline through Canada.
• The Alaska Department of Natural Resources having finished a 30-year, transferable and renewable right-of-way lease in Alaska, pending signing.
• FERC having entered into agreements with the Regulatory Commission of Alaska and the National Energy Board of Canada on how the line's permit applications will be processed.
• The new Office of Federal Coordinator having worked with 13 federal agencies to establish a project management framework for construction of the line.
• From the fact that federal and state officials have already toured pipeline tours, conducted meetings with Alaska regulatory agencies and started to implement "open-season" rules beneficial to the project.
• And because the Department of Energy has finished receiving comments and is starting to implement its $18 billion loan guarantee program for a line.

The report, however, says that given the "tremendous size, scope and cost" of any Alaska pipeline project, the long lead-times involved and international questions, the extent of progress on the project is dependent on the State of Alaska reaching agreement with potential pipeline companies over financial terms under the State's Stranded Gas Act. Talks between the gas owners and the state currently are continuing. It also notes that delays in movement on a Canadian MacKenzie Delta gas pipeline could also affect timing for the Alaska project, since because of steel availability and skill labor force requirements, it may be difficult to build both lines at the same time.

"The report provides a good summary of all the work that the public may not be aware of that has been done in the past year at the federal and state level to make a gas line a reality," said Senator Murkowski. "It offers a good overview of the regulatory and financial steps that must come together to permit the Alaska gas line project to get underway. And it reconfirms that an Alaska gas line is vital for this nation to be able to meet its demand for natural gas starting in 2016 and thereafter.

"Mostly the report outlines what must happen after the state reaches a firm agreement with pipeline builders under the state's Stranded Gas Act, including reporting on the continued progress that must occur in Canada on a right-of-way and with solving Native land claim issues in Canada for this project to quickly become a reality. It shows that we have made a lot of progress in the past year, but that we have a long way to go and that time is of the essence," said Murkowski, noting that the report notes that world steel prices have risen nearly 50 percent since 2001, likely increasing the cost of the Alaska pipeline project.

http://murkowski.senate.gov/pressapp/record.cfm?id=251225