RDC STUDIES ALASKA GASLINE INDUCEMENT ACT

The Resource Development Council’s statewide board of directors has embarked on a series of workshops this spring to review and formulate the organization’s position on Governor Sarah Palin’s Alaska Gasline Inducement Act (AGIA).

RDC is receiving briefings from the state administration, the producers, the independents and others on the proposed law.  The Governor’s gasline bill is now before the Legislature where the administration is seeking authorization before the session ends in May.

AGIA has six primary goals: initiates an application process open to any project sponsor; takes all possible steps to promote construction of a gas pipeline as quickly as possible; ensures the North Slope basin is open to long-term exploration and production; provides reasonable natural gas tariffs; makes North Slope gas available to Alaskans and creates natural gas pipeline jobs for Alaskans.

The bill contains specific mandates from any entity or coalition of entities interested in building the pipeline.  Applicants must commit to expanding the pipeline project when justified by enough new gas.  Applicants must also commit to propose and support tariff rates that would produce the lowest reasonable costs to produce the highest price at the wellhead.  The bill also requires “distancesensitive rates” to delivery points in Alaska.  Applicants must provide a minimum of five off-take points in Alaska and they must commit to establishing a local project headquarters and hiring offices.

In return, the state would provide a matching capital contribution up to $500 million on the cost of obtaining initial regulatory certification.  The state would also provide a coordinator to expedite permitting.  It would train Alaskans in gas pipeline management, construction, operation and maintenance.

Under AGIA, the state would exempt producers from increases in gas production taxes for 10 years after the start of commercial operations.

If AGIA is passed by the Legislature this session, Palin’s timeline would provide three months for an entity to submit a proposal to the state.  Applications would then be available for public review and comment for 60 days.  After the comment period closes, the state would have discretion in the time it takes to issue a notice of intent to award a license.  From that point, the legislature would have 30 days to disapprove a license authorizing an entity to build the pipeline.  Pipeline field work could begin as early as the summer of 2008 under the strict timeline.

In February, over 200 people attended a gas pipeline primer luncheon hosted by RDC and featuring Representative Ralph Samuels and Senator Charlie Huggins.  The presentation has since been downloaded more than 10,000 times from RDC’s web site.