Alaska’s Gov. asks for Pipeline Plans

July 3, 2007

By Steve Quinn 07.03.07, 3:14 PM ET

Associated Press

The state of Alaska began calling for applications Tuesday to build a natural gas pipeline officials believe will ultimately deliver trillions of cubic feet of reserves to market.

A potential multibillion dollar pipeline carries implications for North America’s long-term energy supply and has been widely discussed by lawmakers, energy regulators and company executives throughout North America since Gov. Sarah Palin outlined her plans in March.

Oil and independent pipeline companies have until Oct. 1 to submit an application that must outline details such as the pipeline’s route, the market it will serve and how it will be built and how the builder will avoid cost overruns.

Palin warned that the state and the nation cannot afford to let Alaska’s natural gas supplies , estimated at about 35 trillion cubic feet on the North Slope, sit untapped any longer.

In May, lawmakers heeded the warning when passing the Alaska Gasline Inducement Act, which was designed so producers and independent pipeline companies can vie for rights to build the pipeline.

The new law, known as AGIA and recently signed by Palin, is designed to stimulate competition through inducements.

North Slope producers BP (nyse: BP - news - people ) PLC, Exxon Mobil Corp. (nyse: XOM - news - people ) and ConocoPhillips (nyse: COP - news - people ) have said the Palin’s plan is too restrictive and not commercially viable for them.

Alaska has struggled to get a deal either with North Slope producers or independent pipeline companies to build a line that could possibly run from the North Slope through Canada and into the Midwest.

A proposed deal between former Gov. Frank Murkowski and North Slope producers BP, Exxon Mobil and ConocoPhillips fell part last year.

Murkowski had a deal with these companies that would have set tax and royalty terms should a pipeline get built but there was no guarantee it would.

Additionally, the Legislature did not like the terms and never voted on it, so Palin decided to start over with a more inclusive plan.

Source: Forbes.com