In an email to lawmakers on Friday, the governor stated the proposal will include an evaluation of options for routes, gas resources, and potential industrial and residential users.

The first bill broadens the responsibilities of the Alaska Natural Gas Development Authority (ANGDA).  Under current law, ANGDA is restricted to examining and promoting a pipeline project intended to deliver North Slope natural gas to tidewater for export as Liquefied Natural Gas (LNG).  The requested revisions will allow ANGDA to examine and pursue all options for an in-state gas line.

The second bill proposes changes to the Right Of Way Leasing Act and the Pipeline Act.  The bill addresses technical right-of-way issues for pipelines and clarifies oversight by the Regulatory Commission of Alaska.

Last month, the governor stated that her legislative priority was to facilitate an in-state gas line.

For those of us who have watched this gas line process from the start, it's a telling sign of just where we actually are with gas development here in Alaska compared to the political posturing.

Two years ago when they rolled out AGIA, it was supposed to fill two needs with one pipe; the economic needs of getting maximum value in Midwestern markets while providing a supply of gas for Alaskans.

Today, the governor is saying, "we know that we cannot wait for that project to come to fruition before addressing our own heating and power-generating needs. We can't wait for the big line."

This is an admission by the governor that plan A, or AGIA, faces serious problems.

On May 22, 2008, when introducing TransCanada as the AGIA nominee, Palin told Alaskans, "Alaska will benefit from a pipeline that will be expanded to accommodate additional natural gas supplies that can be dedicated to meet Alaska's energy needs. Alaskans will benefit from the opportunity the TC Alaska project creates for a "Y line" LNG project and the "bullet line" to Southcentral Alaska. Alaska will benefit from the potential for lower energy costs as natural gas is made available to communities throughout Alaska through off-take points along the pipeline route and spur lines."

So with all that benefit in one package, why do we need a plan B?

Aside from the fact that TransCanada, under the terms and conditions mandated by AGIA, will never attract the necessary open season commitments to build the pipeline, the global economic meltdown and the investment in alternative gas supplies has saturated the U.S. market.

However TransCanada is less concerned for two major reasons; their financial exposure through AGIA is mitigated by the state of Alaska picking up a lion's share of their costs and AGIA does not require them to actually build the pipeline.

While the Denali project, a joint venture by BP and Conoco Phillips, is pushing ahead outside of the AGIA process and taking a longer view of the U.S. gas market, it's possible that bottom line economics will factor in the need for some kind of delay.

At the IHS-CERA energy conference three weeks ago in Houston, the discussions all centered around the glut of natural gas in the United States.

An ongoing wave of new domestic shale gas production and an expected influx of LNG from new liquefaction plants in Qatar and elsewhere look set to converge with a massive outflow of industrial gas demand as the recession deepens. Prices are already below $4.50 per million Btu and talk is being heard of $3/MMBtu gas.

Many domestic shales are now economic at gas prices of $4/MMBtu and some are at $3/MMBtu which creates an economic safe haven from risks associated with more expensive plays.

All of this could mean a potential delay in the big line which in turn would mean a delay in getting gas to Alaskan communities.

The governor, in an attempt to address the public concern about the rising cost of natural gas in southcentral and high energy costs in general, is now preparing to offer up her second attempt to jump start an in-state gas pipeline.

There are concerns about the economic viability of an in state gas pipeline. Some lawmakers are worried that it may cost too much to be economical.