Gas line legislation flows on through Congress
SENATE: Opponents complain, but more quietly than they did in the past.
By LIZ RUSKIN
Anchorage Daily News
(Published: May 1, 2003)
WASHINGTON -- Legislation to promote construction of an Alaska natural gas pipeline is cruising through Congress, so far with only muffled complaints that the financial incentives Alaska lawmakers say are needed to get the line built amount to unfair subsidies.
"Nobody is willing, it seems like, to buck the Alaska delegation," griped Forrest Hoglund, a Texan who heads a firm that wants to build a Canadian line and opposes incentives for the Alaska line.
Part of the incentives package he opposes sailed through the Senate Energy Committee on Wednesday as part of a wide-ranging energy bill.
The full Senate is scheduled to debate the bill early next week.
Gas line politics have created some unusual coalitions. The project is supported primarily by the Alaska delegation but also by Democrats and some environmentalists, who see it as a way of boosting domestic energy production without spoiling wilderness.
Sen. Lisa Murkowski, who sits on the energy committee, is focusing her arguments on the country's growing demand for natural gas. The country will need all of Alaska's gas and more, she says. The only way to get it is to build a pipeline, and that requires financial incentives, the argument goes.
Meanwhile, the Bush administration, the Canadian government, lawmakers from other gas-producing states and free-market advocates have misgivings. They say the incentives would be expensive and give Alaska gas an unfair advantage.
At least, that's what they said last year. This year, the opposition has been quieter.
"I don't think the opponents have melted off ... (but) there's not really a champion," said Keith Ashdown, spokesman for Taxpayers for Common Sense, which has been trying to find senators to oppose the incentives.
Hoglund, who favors the Canadian line, says lawmakers are reluctant to speak against the incentives the Alaska delegation wants. Don Young chairs the House Transportation Committee and Ted Stevens chairs Senate Appropriations.
"Quite obviously, they're steamrollering this through the Congress," Hoglund said. "Anybody who wants a highway or wants an appropriation isn't going to oppose it."
As it stands now, the energy bill includes loan guarantees of up to $18 billion of the $20 billion project. A more controversial incentive, a tax credit that would kick in if the wellhead price of North Slope gas falls below a certain price, is expected to be added to the bill on the floor.
Another incentive would allow the pipeline owners to accelerate the depreciation on the line from 15 years to seven.
Don Duncan, vice president of government affairs for Conoco Phillips, said the entire package of incentives is needed if the line is going to be built -- a proposition to which Alaska's gas producers haven't yet agreed.
The most controversial piece, the tax credit that would be phased in depending on the wellhead price, isn't very different from incentives the government already uses, such as one intended to keep marginal wells in production, he said. Those also apply only when prices sink to a certain level.
"Any Lower 48 (producer) that says Alaska is getting an unfair advantage -- they don't ever want to talk about these other things," he said.
Duncan also said the loan guarantees will mean lower interest rates for financing the project but are unlikely to cost the Treasury anything. Big companies like Exxon don't default on loans, he said.
Ashdown, an opponent of the incentives, said big companies might create a smaller company that would take the fall if the project failed, leaving the government paying the price.
"That's a tactic companies use all the time to hide from liability," he said.
Besides that, Ashdown said he's philosophically opposed to the notion.
"You're making the federal government guarantee the success of a private enterprise," he said.
The Senate bill does not include the other big Alaska energy proposal -- drilling in the Arctic National Wildlife Refuge. The Senate rejected the idea earlier this year.
The House bill does include ANWR. Once the Senate bill passes, the two versions will go to a conference committee to work out the differences. Even supporters of drilling in ANWR, though, say adding it would doom the bill in the Senate.