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‘Great Wall’ of natural gas for U.S.?

Thanks to the Blackout of 2003, Congress might finally pass an energy bill — one that helps finance a $20 billion natural gas pipeline from Alaska but probably wouldn’t allow oil drilling in an arctic preserve.
Oil fields like this one in Alaska's North Slope have to reinject natural gas because there's no pipeline to ship it out. Building a pipeline hasn't been economical, but rising prices and momentum in Congress could change that.
Oil fields like this one in Alaska's North Slope have to reinject natural gas because there's no pipeline to ship it out. Building a pipeline hasn't been economical, but rising prices and momentum in Congress could change that.
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Thanks to the Blackout of 2003, the long, winding road of congressional politics might finally lead to a national energy bill. If it does, there’s a good chance that final stretch of road will pass through Alaska. It turns out the state is home to the most divisive energy project out there, but also the most bipartisan one.

The divisive one is well-known: drilling for oil in the Arctic National Wildlife Refuge, or ANWR.

The one with bipartisan, and even environmentalist, support is barely known outside Alaska or the Beltway: a $20 billion plan to build a pipeline that ships Alaska natural gas to the Lower 48.

Alaska’s North Slope is thought to have the largest natural gas reserves in the United States. The area now produces and ships crude oil, but the pipeline used for that can’t handle natural gas, leaving the gas trapped underground.

And while Alaska’s lawmakers have been relatively quiet about ANWR, they’re gushing about the pipeline prospects in terms of construction jobs and future tax revenue.

“The 3,500-mile span of pipe will consume over 5 million tons of steel, require the largest gas handling facility of its kind in the world, and will rival the Great Wall of China in length,” Sen. Lisa Murkowski, R-Alaska, noted recently.

Blackout momentum
The momentum for the pipeline, and the larger energy bill, comes from last month’s blackout in the Northeast and parts of Canada.

“There’s plenty of political pressure to pass an energy bill,” said Bill Wicker, spokesman for Democrats on the Senate Energy and Natural Resources Committee.

With the Senate and House each having passed separate energy bills, a conference committee from both sides meets this month to try to hammer out a compromise.

The House Energy Committee chairman, Rep. Billy Tauzin, R-La., has said he promised President Bush that the conference committee would have a bill ready “by the end of September.”

There’s little doubt a final package will focus on the nation’s electricity infrastructure, but it’s also likely to include the original focus on oil and natural gas.

In and out
Wicker predicted the conference committee would come up with a bill that does “plenty to promote oil and gas development — but won’t include ANWR.”

The natural gas pipeline, he added, “has always enjoyed fairly bipartisan support.”

Even mainstream environmental groups, recognizing the need for energy supplies, accept the project as long as it takes the same route as the existing Alaska oil pipeline before cutting through Canada to connect to U.S. markets.

The key obstacle, it turns out, has been the White House budget office. It is on the record as opposing any financial incentives for the pipeline, saying “market forces should select the route and timing of the project.”

Wicker acknowledges that obstacle, but also points out that the president has not threatened to veto an energy bill with a pipeline provision.

Within the Alaska delegation, meanwhile, lawmakers have stressed the pipeline while downplaying ANWR.

Murkowski, for one, cited her hopes for the pipeline in a statement tied to the power blackout and the energy bill.

Murkowski and others are calling for “fiscal enablers” to kick-start the project:

A loan guarantee “similar to those provided for other important industries,” Murkowski noted in a recent statement.

Accelerated depreciation and quicker capital recovery of related gas infrastructure, “similar to what is available to pipes in the Lower 48,” Murkowski said.

A tax credit if gas prices fall below a certain level.

Presidential material
Even with bipartisan support for the pipeline, there’s still potential for nasty run-ins over the broader energy bill.

Some Democrats contend that prior to the blackout, the president largely ignored electricity improvements, while concentrating on oil production in controversial areas like the arctic refuge.

“If it weren’t for this administration’s obsession with giveaways to their friends in the oil business, Congress likely would have passed an energy bill last year,” said Sen. John Kerry, D-Mass., who is seeking the Democratic presidential nomination.

White House spokesman Scott McClellan called such criticism “political posturing” and said the administration would work with Congress “to get the most comprehensive energy plan we can pass.”

But that very potential for conflict during the presidential campaign could be a reason for both sides to back off and pass a bipartisan energy bill that has something for everyone.

Indeed, even ANWR’s most vocal congressional backer, Republican Sen. Ted Stevens, has toned down the rhetoric.

“It’s in the House’s bill. I assume the House is going to try to get it in,” Stevens said when asked by a reporter if he’d lobby for ANWR drilling. “I’m not involved with that.

“You guys for some reason or another want us to answer questions about what’s in other people’s minds, other people’s motivations,” he added. “My motivation is to get a bill. I’m part of a leadership that wants a bill, that is committed to getting a bill.”

And how hard House Republicans will push for arctic refuge drilling is questionable.

“I expect House Republicans will back off on ANWR, but I wouldn’t expect that to happen until the conference is nearing completion,” said Frank Maisano, an energy lobbyist with Bracewell & Patterson. “They will certainly try to use it as leverage for something.”

Two Murkowskis
That might not suit Alaska Gov. Frank Murkowski, a Republican and the biggest champion of ANWR drilling who recently announced a plan to let oil companies drill a test well in state waters off the refuge’s coastline. The idea would be to drill horizontally under the coastal plain to test for oil and gas.

But Murkowski has much less input these days, having given up his Senate seat last year to run for governor.

And the current Sen. Murkowski, the governor’s daughter, has a more pragmatic side on ANWR.

“She’s nowhere near as obnoxious as her daddy was about it,” said one congressional staffer.

That pragmatic side could also pay off for Sen. Murkowski, who faces a tough election to keep her seat.

“She recognizes that ANWR is for all intents and purposes dead on arrival for the time being,” the staffer said, “whereas the gas pipeline is moving.”

The Associated Press contributed to this report.