Alaska Dispatch

Nobody said linking the North Slope's vast natural gas reserves with markets would come cheap, and Alaska's tab is adding up.

The state has directed an estimated $142 million toward gas line development in the past six or so years. Now Gov. Sean Parnell is asking the Legislature for another $167 million through June 2011 for more work linking North Slope gas with in-state and Outside markets.

Some put the estimate of state pipeline spending even higher. Larry Persily, staff to Rep. Mike Hawker, figures the spending since the early 2000s could be at least $200 million if this year's request is funded. That's excluding $140 million of Parnell's request, which goes toward reimbursing a major pipeline project.

But some members of the House Finance Committee are wary of making big investments without assurances that a large-diameter gas pipeline will actually be built.

The committee could opt to hold some additional funds until members have a better idea of whether a state-sponsored pipeline will pan out. Officials have said Alaska won't know for sure whether a gas line will be built until the state's partner in AGIA, TransCanada, considers project sanctioning, currently scheduled for around 2015.

"How much money do we continue to invest in the blind faith that this AGIA mechanism is actually going to deliver a pipeline?" asked committee chair Rep. Mike Hawker, R-Anchorage. "How much money do we really need, immediately, without the knowledge of the outcome of the open season?"

During a Finance hearing, he asked for odds on a pipeline from Marty Rutherford, a key member of the state's gas line team and deputy commissioner at the Department of Natural Resources.

Rutherford gave a 65 to 70 percent chance a line will be built under AGIA, which Hawker called a "far cry" from statements the administration made when the act was passed.

"Personally, I think that it's still in relatively good shape," Rutherford said. "But I'd say (it's) no sure bet, and as an Alaskan ... that concerns me. That is one of the reasons I feel so strongly that moving the project forward, ensuing that they get to the benchmarks they've committed to, is so critical."

Rutherford told the committee that much of the spending goes to experts who help the state track the project momentum and constantly re-evaluate the proposal in light of a variety of economic factors.

"There has been lots of discussions around the state as to whether or not this project is still economic," she said. "Obviously we believe, and are told by our experts, that it is still in fact very competitive -- but it is a dynamic world."

She told lawmakers that should the project's economics shift, they'll need to make policy decisions on whether to keep backing AGIA.

Rutherford and the state's AGIA coordinator, Mark Myers, defended the spending as critical to protecting Alaska's interests. Revenue Commissioner Pat Galvin also defended the appropriations, some of which haven't been spent yet. He said much of the carryover will be needed for fiscal negotiations with producers.

"What we do not know ... is when that event will occur," he told the committee. "The money has been retained, basically, in reserve for those discussions because they probably will not follow a budgetary cycle."

He said it's critical the state have the expertise on tap to assist in negotiations to protect Alaska's interests.

The new spending requests were made before the House Finance Committee, which expects to sign off on a roughly $7.4 billion operating budget early next week.

Committee amendments, if there are any, could come up on Monday, and members may opt not to spend as much as the administration is asking for pipeline related work -- at least, not until the results of an open season are known later this year.

Rep. Mike Doogan, for one, is disturbed by what he termed a lack of leadership that has Alaska shoveling dollars to a broad array of projects and plans, none of which seems to have the top-level support necessary to become a reality. Spikes in energy prices in 2008 put just about everything back on the table, from massive hydroelectric projects and instate gas work, to wind power and geothermal. The menu is overwhelming, he said.

"The only thing we really know at this point is we're not going to do all of these things," Doogan, an Anchorage Democrat, said. "What I'm not seeing there is any real leadership to the extent that there is somebody who is trying to get the baseline information on each of these possibilities, so we can make a decision."

Contact Rena Delbridge at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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