Juneau, Alaska (Platts)--8Apr2008

The Alaska Legislature Monday asked Governor Sarah Palin to expand the
scope of a special session planned for June to discuss a proposed pipeline
intended to bring North Slope natural gas to the Lower 48 to include a smaller
pipeline to bring gas to Alaska communities and to a liquefied natural gas
export project.

Both the state Senate and House of Representatives passed the resolution
Monday.

Palin opposes expanding the special session because it would distract
attention from consideration of the state's recommendation on an application
by TransCanada to build a large-diameter pipeline from northern Alaska to
Alberta, where it would connect with the company's existing pipelines.

As an alternative the governor may propose a $6 million effort to update
previous studies on an in-state pipeline, Palin spokeswoman Sharon Leighow
told Platts. An analysis of an alternative LNG export project will also be
included in the governor's decision on TransCanada's proposal, to be released
June 19.

Legislators have the power to expand the special session by themselves,
however, and may do so to respond to public complaints over high fuel prices,
House Speaker John Harris in an April 4 briefing.

Harris said constituents want elected officials to use the state's 3
trillion cubic feet of royalty gas on the North Slope to lower costs for home
heating and power generation. If a proposed large-diameter pipeline built from
the North Slope is delayed, the state should push for a smaller project that
can be built sooner, Harris said.

The issue has become a test of wills between Palin and the legislature,
with the resolution intended to be a message to the governor that lawmakers
intend to limit Palin's influence in the special session gas pipeline
deliberations.

Enstar Natural Gas, the gas utility for Southcentral Alaska, has proposed
a 24-inch pipeline from the North Slope to the Anchorage area in southern
Alaska to alleviate a looming shortage of natural gas.

The resolution also calls for the state administration to evaluate
value-added industries that could manufacture products such as fertilizer or
petrochemicals with gas and natural gas liquids delivered from the North
Slope.

TransCanada submitted the only qualifying bid to the state in a
solicitation for proposals under the Alaska Gasline Inducement Act, a state
law that grants incentives and special benefits to a project that meets
certain criteria.