By the OGJ Online Staff
HOUSTON, Feb. 12 -- Alaska Gov. Tony Knowles (D) Tuesday proposed legislation to authorize Alaska Railroad Corp. to issue $17 billion in tax-exempt bonds to finance an Alaska Highway natural gas pipeline.
Knowles announced the creative funding attempt last week (OGJ Online, Feb. 7, 2002). Some had previously said the pipeline would be too expensive to build along that route. Knowles said the bonds could lower the cost of the line by $1 billion, possibly enough to make the line economically viable.
Although Alaska Railroad Corp. would be the conduit for issuing the bonds, neither the railroad nor the state would own the gas line or be liable for the debt, which would fall to the privately owned companies that would build, own, and operate the gas line.
Knowles said, "We've asked the producers to sharpen their pencils and give this a close, hard look. Fully utilizing this unique opportunity would be a significant step forward in Alaska's effort to finance and construct what would be America's largest privately funded construction project."
Previous conduit financing attempts helped Alaska to finance the construction of the Valdez pipeline terminal and purchase the Snettisham Hydroelectric Project in Juneau.
Knowles said, "The bottom line is, tax-exempt financing saves money, and lots of it. ... Support for pursuing this financing option is strong. We are moving forward with this legislation because we are confident that it will help Alaska deliver as much as 6 bcfd of natural gas to the nation."
Knowles and others favor a pipeline route along the Alaskan Highway that would keep a large portion of the construction within the state. But several industry representatives have been leaning toward a less expensive alternative Arctic offshore route from Alaska to Canada (OGJ Online, Feb. 7, 2002).
Knowles also Tuesday signed a bill that would provide $1 million in funding to Arctic Power, a nonprofit group that lobbies the US Congress in support of oil exploration in the Arctic National Wildlife Refuge. Knowles said the move is "particularly timely as Congress is currently scheduled to begin debating a national energy bill later this week."