March 18, 2009 / 10:34 PM / 11 years ago

Palin defends natural-gas pipeline strategy

ANCHORAGE, Alaska, March 18 (Reuters) Amid economic jitters and worries about diminished investor interest in a massive North Slope natural gas pipeline, Alaska Gov. Sarah Palin on Wednesday defended her efforts to secure the mega-project that has been pursued for decades and that has been a centerpiece of her political career.

Palin said her administration’s competitive-bidding process, under a law called the Alaska Gasline Inducement Act, or AGIA, has produced concrete results.

“There had been no progress in the decades of talks and dreams and backroom deals and everything else in terms of hoping for some kind of natural gas pipeline to be built to commercialize Alaska’s rich resources until AGIA came along,” the Republican governor said at a news conference held in the state capitol in Juneau.

“I don’t think anybody can argue that, because today after this competitive process called AGIA, we have two projects progressing, plus in-state projects, and that’s good news for Alaska.”

Under the act, five entities submitted proposals, but only TransCanada Corp (TRP.TO) qualified. The state legislature, on Palin’s recommendation, granted an exclusive state license last year to the Calgary-based pipeline company.

TransCanada is planning a 1,700-mile pipeline, as is a company formed by BP (BP.L) and ConocoPhillips (COP.N), which is pursuing a competing project outside of the AGIA process. In addition, Palin has called for an in-state “bullet line” to deliver North Slope natural gas to urban Alaska markets.

Under AGIA, TransCanada is entitled to the state’s exclusive endorsement, plus up to $500 million in state subsidies and regulatory preference and streamlining, in exchange for adhering to a series of state commitments. The law does not preclude any competing projects.

The Palin strategy is the latest in a long-running campaign to commercialize the North Slope’s known 35 trillion cubic feet of natural gas and estimated supply of much more yet to be discovered. Plans for a natural-gas pipeline date back to the early 1970s, before the Trans-Alaska oil pipeline was built, but poor economics have kept the resource stranded on the North Slope.

Two Republican legislators who opposed TransCanada’s state license have introduced a resolution seeking a re-evaluation of the decision in light of new economic conditions.

Plummeting natural gas prices, abundant supplies of Lower 48 shale gas and imported liquefied natural gas and new difficulties in securing financing make it important to revisit the state’s decision, said Rep. Jay Ramras of Fairbanks, one of the resolution sponsors.

“The market conditions, the price of gas, sale and the abundance of LNG and storage facilities, these are some very significant changes,” Ramras said.

But Palin said at the news conference the current poor market conditions are merely short-term bumps on the long road to North Slope natural gas success.

“The demand will grow, obviously, and prices will rise, we believe,” she said.

The Alaska project also fits with President Obama’s goals for reducing carbon emissions, she added.

“Our project lends itself to his agenda there. So I say, politically, you know, let this be one of President Obama’s wins, let it be his baby, his idea, whatever it takes to allow that administration to know the import of this project,” she said.

Mark Myers, a former head of the U.S. Geological Survey and Alaska Division of Oil and Gas, who recently became Palin’s gas-pipeline coordinator, said the project already has Obama’s strong endorsement.

“It doesn’t get much better than that when you have the president saying this is an important project when he’s got a lot on his plate,” Myers said at the news conference. (Editing by Christian Wiessner)

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