US FERC chief endorses new plan for Alaska natgas

By Yereth Rosen

ANCHORAGE, Alaska, Feb 26 (Reuters) - The chairman of the U.S. Federal Energy Regulatory Commission on Monday endorsed a plan to allow competitive bidding for rights to build a long-envisioned Alaska North Slope natural gas pipeline, FERC said.

FERC Chairman Joseph Kelliher met Monday with Alaska Gov. Sarah Palin in Washington and endorsed the new governor's plan.

"We talked about her efforts on the Alaska natural gas pipeline, which I believe represent the best hope for building a pipeline to bring Alaska's vast natural gas resources to the energy-consuming lower 48 states," Kelliher said in a brief statement.

"The Commission looks forward to her efforts on the Alaska gas line being successful and we stand ready to help to the extent we can."

FERC and the Bush Administration, particularly Vice President Dick Cheney, pushed hard for Alaska to approve a plan fostered by big Alaska oil producers and former Alaska Gov. Frank Murkowski, which failed to gain needed support in the Alaska legislature.

The Murkowski plan -- aspects of which are expected to be resubmitted -- called for 3,500-miles of a natural gas pipeline to run from Prudhoe Bay on Alaska's North Slope to the U.S. Midwest at a cost of about $20 billion, tapping into the known but languishing North Slope reserves of about 35 trillion cubic feet.

The project would deliver 4 billion cubic feet of natural gas per day, or about 6 percent of U.S. natural gas consumption.

Among alternatives Palin advocates is one for a much shorter, all-Alaska pipeline that would deliver gas to tankers that would carry liquified natural gas to the lower 48 states.

Prior to Monday, Kelliher had said Alaskans should support Murkowski's idea fostered along with the three major oil and gas producers on Alaska's North Slope.

Palin, who defeated Murkowski overwhelmingly in the Republican primary before winning the general election last November -- largely because of the pipeline issue -- has harshly criticized her predecessor's gas pipeline strategy.

She and other critics say the Murkowski proposal was overly generous in tax, royalty and regulatory concessions it gave to the producers -- BP Plc (BP.L), ConocoPhillips (COP.N) and Exxon Mobil (XOM.N) -- while securing no meaningful commitment to actually build a pipeline.

"The old plan just had no timeline. They could study the project for four years," said Palin press secretary Meghan Stapleton. "There was no promise to ever build the project, much less apply for a permit."

Palin plans on Friday to introduce a bill in the Alaska legislature to define terms for open competition for rights to build the project, Stapleton said.

Instead of allowing private negotiations to shape a single gas pipeline plan, as Murkowski did, the bill would establish conditions that any project sponsor must meet.

The goal is to attract proposals from a variety of potential sponsors and to allow the public to compare several plans, Palin administration officials say.