April 27, 2002
Saturday - 12:05 am

Washington - Alaska Sen. Frank Murkowski on Thursday said the Senate energy bill has been greatly improved over the past five weeks and will promote Alaska's economic future, most notably with financial incentives for an Alaska natural gas line.

"Our gas line tax provision provides a 'safety net' to take the risk out of the construction of this huge project. It truly is a 'win-win' situation since the tax credit payback provision guarantees that it will not cost taxpayers any money. Providing financial certainty to gas producers should reduce financing costs and hopefully make the line profitable enough to be built," Murkowski said.

"Jump starting this project will create 3,500 jobs for Alaskans and bring $22 billion in likely revenues into the stat's treasury. If we shepherd this provision into law, it will mean a brighter day for all Alaskans," said Murkowski, after Senate passage of the energy bill. A conference committee will meet to iron out differences between Senate and House-passed versions of energy legislation.

The gas line tax incentive provides a tax credit to producers if the price of natural gas falls below $3.25 per thousand cubic feet. Producers will be expected to pay the credit back in full whenever the price of gas exceeds $4.85 tcf. The bill also includes a revised loan guarantee where the government could pick up some $8 billion of the first $10 billion of the cost of the line, in the event that unexpected energy price drops make the line uneconomical.

During work on the energy bill Murkowski and, in some cases, fellow Sen. Ted Stevens have won amendments to solve a host of outstanding issues involving construction of the 3,000-mile gas line. The provisions include:

• A prohibition against a northern route, guaranteeing the line will follow the Alaska Highway south through the Railbelt and Yukon to reach the Lower 48 States.
• A streamlined permitting and expedited court review process to speed construction.
• Provisions that allow Alaska to control gas to facilitate use for heating or construction of petrochemical plants in state.
• A guarantee that the gas line will accommodate an LNG plant to be developed at tidewater in Alaska whenever exports markets for the gas appear.
• Provisions to guarantee that new gas producers in Alaska will be able to get their gas to market.
• And a provision that authorizes $20 million for worker job training and promotes Alaska-hire provisions in-state.

"This measure now addresses all of the federal actions necessary to encourage construction of a gas line from Alaska. When this passes it will be up to the state and the producers to make the gas line a reality," said Murkowski.

Senator Murkowski also has added a host of additional provisions to the energy bill to help Alaska according to the news release. They include:

• Rural energy aid: The bill includes a Murkowski proposal that will provide up to $120 million in grant aid yearly for rural electric improvements in high-cost areas. The grants can go for power plants or to reduce power demands by other utilities. The provision also includes a $35 million grant ($5 million per year) to Alaska to help fund its Rural Power Cost Equalization (PCE) program that subsidies the high cost of electricity in rural Alaska.
• Healy clean coal loan: The bill authorizes the Department of Energy to make a loan of up to $125 million to retrofit the Healy clean coal plant with new equipment so it can produce power economically without causing air pollution problems. The loan should make the $278 million plant economic, provide vitally needed power to the Fairbanks area at reasonable cost and aid the Usibelli coal mine and its workers.
• Heavy oil, coal tax, biomass incentives: The bill includes a tax provision to provide a tax incentive equivalent to $3 per barrel of oil to produce heavy oil from northern Alaska or to produce low-pollutant synthetic fuels from coal. The same provision also provides a tax credit to fuels produced before 2007 from biomass, tar sands, or brine. For heavy oil, Alaska1s West Sak field contains 15 billion barrels of known heavy oil. The incentive should help make an additional 200 million barrels of production economic over the next decade.
• Arctic Research Commission: The bill reauthorizes the Arctic Science Research Act of 1984, originally authored by Sen. Murkowski, and expands its power to make grants for scientific research.
• Protection of TAPS: The bill also makes it a federal crime to damage any intra state energy pipeline. The amendment specifically provides extra legal protection to the trans-Alaska oil pipeline.
• Climate Change/Barrow Center Research: Sen. Stevens authored with Sen. Robert Byrd (D-W.V.) a Barrow Arctic Research Center to support climate change research and scientific activities. The amendment includes $35 million for planning, design, support and construction of the Barrow facility. The goal is to develop technologies needed to reduce greenhouse gas emissions.

Murkowski, while saying he was disappointed that the bill does not yet permit exploration of the Arctic coastal plain for oil, said he will continue his fight to open a small portion of the coastal plain in a House-Senate conference. The House passed energy bill contains language authorizing exploration in 2,000 acres of the arctic coastal plain.

"This bill is certainly far from perfect, but it is a lot better than it was when we started floor debate last month. Every step of the way, Republicans have successfully improved the Senate energy bill through amendments," said Murkowski.

"We have a process that started from less than an ideal point, but through the amendment process, I think we have a pretty fair bill here. We did not get everything we wanted - notably ANWR so far. The news of the day is that the Saudis may even consider using oil as a weapon against us; that they have indicated rather harshly comments on where their loyalties lay. We have seen the elevation of Saddam Huessin as one of the more popular leaders in the Middle East. These are all contrary signs as to our nation's security interests and our increasing dependence on foreign oil," said Murkowski.

He said the energy bill does contain a host of provisions to develop a comprehensive energy policy for the nation. The key provisions include:

• Tax credits for hybrid and fuel-cell vehicles.
• Tax credits for alternative and renewable fuels use and development.
• Tax credits for marginal oil producers to protect oil production from stripper wells.
• Extra funding for the Low Income Home Heating program (LIHEAP) and for low- income weatherization grants.
• Funding for an Advanced Clean Coal Technology program.
• Funding for an hydrogen energy act.
• Creation of pipeline safety provisions.
• Provisions to increase the use of ethanol in clean burning gasoline.
• Reauthorization of hydroelectric dam licensing provisions.
• Reauthorization of the Price Anderson Act to permit nuclear power to continue.
• Provisions on electricity restructuring.
• And provisions to require a sensible increase in automobile fuel efficiency standards.

Source of News Release:

Office of Senator Frank Murkowski
Web Site

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