Key Senate Democrat endorses southern route for Alaska gas pipeline

Feb. 28, 2002
Senate Majority Leader Tom Daschle (D-SD) Wednesday said he wants to direct North Slope producers and pipeline companies to build an arctic gas line paralleling the oil pipeline to Fairbanks and then the Alaska Highway to British Columbia. He also favors a guaranteed natural gas floor price for producers to make the pipeline project more attractive to industry when market prices are low.

Maureen Lorenzetti
Washington Editor

WASHINGTON, DC, Feb. 27 -- Senate Majority Leader Tom Daschle (D-SD) Wednesday said he wants to direct North Slope producers and pipeline companies to build an arctic gas line paralleling the oil pipeline to Fairbanks and then the Alaska Highway to British Columbia.

"I believe that if Alaska is going to benefit, if the United States is going to benefit, if American labor is going to benefit, I think if the environment is going to benefit, the southern route is the best way to do it," Daschle told reporters.

"This could produce 400,000 jobs. This could be a tremendous new source natural gas, not only for the northern part of the United States, but virtually the entire United States," he said.

Daschle also favors a guaranteed natural gas floor price for producers to make the pipeline project more attractive to industry when market prices are low.
Democrats have an energy bill pending in the Senate that includes an Alaskan gas line provision but it does not yet endorse a specific route. A sweeping energy bill that passed the Republican-led House last August does not offer any specific government incentives to build a pipeline but calls on the government to approve the "southern" route sought by the Alaskan state government, members of the Alaskan congressional delegation, and now Daschle.

Senate bill awaiting debate
The Senate bill, which will be debated next week, contains provisions first suggested by Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-NM) to encourage construction of a natural gas line from Alaska to the Lower 48. Bingaman's provision provides federal loan guarantees of as much as $10 billion for the pipeline, as long as applications for permitting certificates are filed within 6 months of when the bill is passed.

The Senate bill also directs the Secretary Of Energy "to study the feasibility of establishing a government corporation to build the pipeline if the private sector is unable to do so." The bill further clarifies the Federal Energy Regulatory Commission's authority to update permits to meet current project needs.
Outside of the pipeline provisions, the 400-plus page Senate bill includes tax measures to encourage domestic fuel production, boost auto fuel efficiency, develop regional standards for reformulated gasolines, update wholesale electric markets, and encourage conservation.

ANWR concerns
What the Senate bill does not include is a provision in the House bill that allows the Department of the Interior to lease the coastal plain of the Arctic National Wildlife Refuge.

ANWR leasing is so controversial that some lobbyists and many lawmakers think the issue could derail final passage of a bill from Congress. ANWR drilling supporters say it is unlikely they have the votes to allow floor debate on their issue in the Senate. And it remains unclear to industry lobbyists whether the White House will approve energy legislation that does not have an ANWR provision. However, some environmental groups are predicting the White House is willing to jettison ANWR if that is what it takes to get a final bill out of Congress.

Capitol Hill's biggest ANWR drilling supporter, Sen. Frank Murkowski (R-Alas.), ranking member of the energy committee and a gubernatorial candidate, is urging fellow lawmakers and the White House not to give up on the ANWR issue.
He warned in a statement late Wednesday that Daschle's surprise action to endorse expanded incentives for an Alaskan gas line is a clumsy political gesture designed to divert attention from ANWR.
"Right now, US Senate Democrats want to tell Alaskans what we can and cannot do with our gas," Murkowski said. "Their enthusiasm for Alaskan gas doesn't reach an attempt to distract and divert efforts to open ANWR."

Alaskan gas line proposals
Earlier this month Murkowski met with North Slope producers and pledged to offer the same kind of legislative proposals Daschle just made (OGJ Online, Feb. 4, 2002). Murkowski at that meeting said that while producers do not have a preference for where the gas line should be built, a legislative ban was needed to prevent a northern "over the top" route that could pose environmental problems.

Canadians favor a northern route from Prudhoe Bay field east across the Beaufort Sea to the Mackenzie Delta, and then south along the Mackenzie Valley.
In January North Slope producers Phillips Petroleum Co., ExxonMobil Corp. and BP PLC all said they support legislation updating the 1977 Alaska Natural Gas Transportation System Act that first authorized permits for a gas line to the Lower 48. Producers also want accelerated depreciation on federal taxes. But Phillips alone publicly supported the kind of guaranteed floor price Murkowski is advocating . The company wants a price-sensitive tax incentive that would kick in when wellhead prices fell to $1.25/MMbtu, company officials said.