Two Energy Bills for Cook Inlet Gas Pass House

By Dave Donaldson

Communities and residents around Cook Inlet are already making and practicing contingency plans for a possible shortage of natural gas reserves – beginning with sudden, prolonged cold weather beginning soon – and stifling utilities if the shortage continues.  

The pair of bills that passed with no opposition would address some of the problems – however, neither comes with any guarantee of success … or of what consumers will have to pay for energy security.

Speaker Mike Chenault’s plan focuses on building a small-diameter pipeline that would deliver gas from the North Slope to the region.   His bill sets up a new management structure to replace two existing entities,  gives the group studies and conclusions already done and being worked on now, and sets firm, relatively quick deadlines – with the mandate of coming up with a plan that would get gas into circulation by the last day of 2015.

Chenault says the solution to the region’s shortage starts with someone making decisions based on available information.

Alaskans are clamoring for cheaper and more reasonable fuel supplies.  We have thirty five T’s of know reserves sitting at Prudhoe Bay.  And while there are other projects out there – and I’ll bring it up, the AGIA process – Alaskans are concerned about their own in-state security.  And without that security we’re not going to move forward as a state.

There were plenty of questions about the plan:   does it put AGIA at risk,  the large diameter pipeline from the North Slope to Canada. Chenault says no.   Who builds and owns the line?   Chenault says it is still undecided.

And he was asked about the price.  When the new Development team gives its plans for the line to the legislature in the summer of next year,  Chenault says it will include an estimate of the price that consumers would expect.  Analyses given to lawmakers over the years indicate that gas from the small line would be more expensive than a take off from the large line to Canada.

Anchorage Republican Charisse Millett said the actual price is a secondary concern in her district.   And she says people have waited long enough to see a solution come from the state.

People in my district don’t care about the cost.  What they care about is when they flip their switch or turn their heater up, that there is a gas supply that they can count on.   And irregardless, the last thing that I want to do is come back from session and tell my people that we did nothing.

The Second Natural Gas Bill sets up a regulatory process and incentives that will allow gas to be stored in depleted wells in Cook Inlet.  Sponsored by Finance Co-Chair Mike Hawker,  the bill allows constant gas production – with no seasonal fluctuations.

When the demand peaks for gas, you can actually pull gas back out of your depleted well and continue to produce out of your new well.  Essentially, being able to double your deliverability out of one well,  produce gas in a period of low demand,  put it in the ground, pull it back out when you have high demand situations.

Minority Leader Beth Kerttula  said it was hard to accept the incentives offered under the plan.  It offers tax credits, with the ability for  a tax to go to less than zero,  the use of Cook Inlet taxes against production taxes elsewhere,  and some operating expenses to be used as both tax deductions and tax credits.   She said those are heavy things to accept.

Those are things that give me pause.  We’ve had a hard time figuring out credit after credit after credit for Cook Inlet on how to get people out there exploring and bringing it back in.  And I hope this will do it, because I’m not sure what else we really could do to incentivize it.   So, when we start to look at these kinds of breaks,  I hope when it comes to the rest of the state, when our energy problems, we’ll remember that we have certainly gone a far way for Cook Inlet.

The bills next go to the Senate,  where There is no similar legislation to the Cook Inlet storage bill.   A gasline bill has been introduced and is in the Finance Committee there.


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