Alaska gas legislation advances after legislature makes changes

Juneau (Platts)--24Apr2007

Alaska Governor Sarah Palin's legislation setting the framework for new
natural gas pipeline proposals has cleared two additional hurdles in the state
Legislature, with several changes made in the bills.

Key elements of the governor's proposal, mainly having state officials
choose a pipeline developer who commits to meet certain goals, are still
intact in the legislation, however.

The House Resources Committee completed amendments Tuesday on its version
of the bill and was expected to vote the measure out of committee later in
the day. Meanwhile, the Senate Judiciary Committee completed work on the
senate bill last week, and passed the measure on to the Senate Finance
Committee, which began hearings on Monday.

Palin's bill was approved in late March by the Senate Resources Committee
and the House Oil and Gas Committee. Among changes made in late-night meetings
on Monday was a change in state royalty policy that could eliminate one
roadblock to a pipeline cited by producing companies, namely the present
ability of the state to switch between royalty payments in value to royalty in
kind on 6-to-9 months' notice to producers.

The Resources Committee opted to limit the state to taking royalty in
value for gas committed to a pipeline licensed by the state. Producers have
said that the switching at short notice would create serious burdens in
negotiating long-term sales contracts and in purchasing long-term capacity
commitments in the pipeline in an open-season.

--Tim Bradner, newsdesk@platts.com