State agency head to Legislature: Limits won’t hinder gas line project

By Stefan Milkowski
Published January 21, 2008
Posted in News

JUNEAU — The head of the Alaska Oil and Gas Conservation Commission made it clear Friday that state rules dictating how oil and gas fields are developed won’t stand in the way of a large-scale natural gas pipeline.

AOGCC commissioner Cathy Foerster told members of the Senate Resources Committee that natural gas produced on the North Slope and reinjected underground continues to boost the recovery of oil, and said “later is better” when it comes to shipping gas to market.

But she added that her agency, which is charged with limiting resource waste in the development of oil and gas fields, would not limit the amount of gas that can be removed from the slope’s biggest field to the point that it would stop a gas line project.

“(W)ithin reason, whenever we get a gas line and whatever gas sales volume — within reason — is called upon from Prudhoe Bay, it will be the right answer,” she said in a written version of her testimony.

The current Prudhoe Bay offtake limit is 2.7 billion cubic feet per day. Various entities have proposed pipelines carrying 4 billion cubic feet or more per day.

Foerster noted that removing gas from the field would only affect a fraction of the remaining oil, and said the loss could be limited by aggressive oil production in the years leading up to the start of gas production.

The AOGCC only studies the mechanics of oil and gas production and does not consider economics.

Foerster made her comments during the Senate Resource Committee’s first hearing of the legislative session, which started Tuesday.

Sen. Charlie Huggins, a Republican from Wasilla and chair of the committee, said he was set on finishing the session in the allotted 90 days — including a possible vote on a pipeline proposal — and planned to make the gas line the “No. 1” focus of his committee.

The committee is scheduled to take testimony today from the Department of Natural Resources and Department of Revenue on how Alaska’s fiscal policies compare to those in other producing areas.

Next week, the committee will begin a series of presentations from companies that have submitted gas line proposals, as well as some that chose not to, according to Huggins, who described the goal as “information gathering.”

ConocoPhillips, which submitted a proposal outside of the process under the Alaska Gasline Inducement Act, is scheduled to testify Wednesday.

House Republicans are also planning to hold gas line talks.

House Speaker John Harris, R-Valdez, announced Thursday that the House majority will hold a series of meetings over the next few weeks to hear from ConocoPhillips and the four entities that applied under AGIA but whose applications were deemed incomplete, including the Alaska Gasline Port Authority.

Gov. Sarah Palin announced earlier this month that only one company, TransCanada, submitted a pipeline proposal that met all of the requirements laid out in AGIA. Her administration is taking public comment on the proposal through March 6 and will announce afterward whether or not it will seek legislative approval to go ahead with the deal.

“TransCanada has said repeatedly that it cannot build the pipeline without the producers, and has said it expects the State of Alaska to negotiate upstream issues,” Harris said in a written statement announcing the meetings, “so what ConocoPhillips has to say in their proposal could be crucial.”

The House meetings, which are being called “open caucuses,” will be open to all lawmakers and to the public.

Harris will chair the meetings.

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