Senate Energy Bill Update #9 (AK Gasline)

May 22, 2003
12:00 AM
In this run-up to recess, with no action on the energy bill for at least another week, you may be looking for things to write about. We’re trying to help. Below is a letter to President Bush sent today by Sens. Bingaman, Breaux and Daschle, stressing the need to build a pipeline to bring natural gas from Alaska to the Lower 48. The letter notes the strong support in Congress for this project, and it urges the Administration to reconsider its opposition to the Alaska gas pipeline provisions being debated as part of S. 14, the Senate Energy bill. For the benefit of those new to this Alaska gasline issue, I’m proud to point out that Senate Democrats have led the effort to see that this pipeline gets built: Sen. Bingaman, in legislation he introduced more than two years ago, was the first to recognize the nation’s need to build a pipeline to provide U.S. consumers with a new source of gas supply -- the vast reserves of natural gas that have been discovered in the Alaskan Arctic but are trapped there. Sen. Breaux, a Finance Committee member, supported the tax incentives that are needed for this pipeline, due to the investment risks associated with such a massive construction project. And Sen. Daschle offered the first amendment to last year’s Senate-passed energy bill, a provision that specified a southerly route for the pipeline. Hopefully, this background helps explain why Senate Democrats are so proactive on this Alaska Natural Gas Pipeline project. May 21, 2003 The President The White House Washington, D.C. 20500 Dear Mr. President: We write today to reiterate our strong support for the construction of the Alaska Natural Gas Pipeline along the “southern route” through Alaska. It remains our goal to enact a sensible and balanced plan to guide the nation in its energy use over the next few decades. In our view, such a plan should reduce our dependence on foreign oil, make sure that energy remains abundant and affordable for all Americans, and create jobs for American workers. One of the most responsible ways to meet these criteria is to build a pipeline to bring natural gas from Alaska to the lower 48 states. U.S. demand for natural gas is outstripping growth in conventional supplies. A recent Cambridge Energy Research Associates (CERA) analysis predicts that, by 2010, the supply deficit may be as much as 4.5 billion cubic feet of gas per day, the exact figure the Alaska producers want to ship to the United States, and that higher prices for natural gas will limit economic growth. There are 35 trillion cubic feet of known natural gas reserves on the North Slope of Alaska that can prevent these negative impacts to the U.S. economy. Right now, however, that gas is being pumped back into the ground because there is no way of getting it to consumers in the lower 48 states who need it. Unfortunately, the pipeline to transport this gas from Alaska will not be built without the help of the federal government. Last year, we strongly supported provisions in the Senate-passed energy bill that would ensure that the pipeline would be built through Alaska. However, that bill died in conference due to unrelated issues. We appreciate that the Office of Management and Budget’s Statement of Administration Policy (SAP) on the energy bill sent to Congress on May 8, 2003, puts the Administration on record in support of the construction of “a commercially viable Alaska natural gas pipeline.” We are concerned, however, that this SAP also states that “market forces should select the route and timing of the project,” and that “the Administration opposes the price-floor tax subsidy provision in the Senate Finance Committee bill, because it would distort markets and could be very costly.” Given the inevitable volatility of gas prices over the 50 year life of this project, this Administration position effectively means that no pipeline will be built, an outcome that risks higher natural gas prices and the loss of American jobs. It has been estimated that construction of the Alaska Natural Gas Pipeline along the so-called southern route through Alaska would generate 400,000 jobs, use an estimated 5 million tons of U.S. steel, and generate over $90 billion in government revenues over the course of the project. And, most importantly, the pipeline would add 4.5 billion cubic feet of natural gas per day to U.S. supplies and needed flexibility to the flow of natural gas in the United States to ensure that natural gas is marketed in the most economical manner. We continue to support language in the energy bill to ensure that the pipeline is built along the “southern route” through Alaska and to address the producers’ and investors’ concerns about potential price volatility. And we respectfully request that your Office of Management and Budget reconsider its opposition to the Alaska gas pipeline provisions being debated as part of S. 14, the Senate Energy bill. With your support, we can avert a potential natural gas price crisis by encouraging construction of the Alaska Natural Gas Pipeline. Sincerely, John Breaux Jeff Bingaman Tom Daschle