Juneau, Alaska (Platts)--2Mar2009

Alaska Governor Sarah Palin introduced bills in the state legislature
late Friday giving the Alaska Natural Gas Development Authority, or ANGDA, a
state gas corporation, expanded authority to build a possible in-state
pipeline to bring gas from the North Slope to the state's major population
areas in south-central Alaska.

Palin said Anchorage and other southern Alaska communities need gas and
work needs to be accelerated on an in-state pipeline as an alternative if a
large-diameter pipelines to the Lower 48 states proposed by BP and
ConocoPhillips or a competing pipeline proposed by TransCanada fails to
proceed. Both groups plan open seasons to solicit customers for shipping gas
in 2010.

"Alaskans have been excited about the progress made toward our big gas
line, but we know that we cannot wait for that project to come to fruition
before addressing our own heating and power-generating needs," Palin said in a
statement.

The large pipeline project cannot be built until 2018 or 2020 but
utilities in south-central Alaska are running short of gas because gas fields
in the region are being depleted.

Enstar Natural Gas Co., the regional gas utility, said it will be short
of supplies beginning in 2011 and would like to get gas from the North Slope
by 2015 at the latest.

Enstar is working on its own plan for a $4 billion, 20-inch pipeline to
the North Slope that would move as much as 500,000 Mcf/day.

Palin's idea is for the state, through the gas authority, to aid Enstar's
effort or to do its own pipeline, sources in state government familiar with
the plan said.

The state corporation now has authority only to work on an LNG export
project and a spur line from a large diameter pipeline built through Interior
Alaska to the Lower 48 states.

"Since others are working on a possible LNG project, our efforts have
been focused on the spur line," Harold Heinze, ANGDA's executive director,
said.

The spur line plan also involves a 20-inch pipeline moving 500,000
Mcf/day, but built off a large pipeline at Delta, east of Fairbanks, and built
parallel to the existing trans-Alaska oil pipeline to Glennallen, and then
parallel to a highway to the Anchorage area.

Palin said more details of her plan will be available March 3.

A source in state government said Palin's plan involves a project capable
of moving as much as 1.4 Bcf/day.

Both the BP-ConocoPhillips and TransCanada proposals involve moving 4-4.5
Bcf/day from the North Slope to Alberta and the Lower 48.

--Tim Bradner, newsdesk@platts.com