WASHINGTON, D.C. - Senator Frank H. Murkowski (R-AK), the Ranking Member of the Senate Energy Committee, today released the following statement during a hearing on a potential Alaska natural gas pipeline. “A few of you might recall it was September 14th of last year that we held our first hearing to consider the transportation of Alaskan North Slope natural gas to market. My objective in calling last year’s hearing was to get a process underway that would move the project along. That hearing explored the economics of marketing Alaskan gas, the energy security implication and route alternatives for moving the gas through Canada as well as the issue of developing LNG from Alaska. “Many of the witnesses that were with us a year ago are back today. Including the producers - Exxon, BP, Phillips; as well as DOE, DOI, FERC, Foothills, Yukon Pacific, Arctic Resources and others. “I think all would agree that last year’s hearing accomplished its purpose and that the issue of developing Alaskan gas will one day become a reality under certain conditions. We hope to learn today just what those conditions are. Some may suggest that the Federal Government subsidize the project. “Let me enlighten you to the comments made by Federal Reserve Chairman Alan Greenspan and Former Secretary of Treasury Bob Rubin when I posed that question at a Finance Committee meeting last week. Their consensus was the gas pipeline would inevitably be because natural gas is the energy choice of today and tomorrow. The issue is when the economics would justify the investment. In their view, to federally subsidize the project would set a bad investment precedent and draw down the current surplus for an unreasonable duration. They opposed any federal subsidy, but they did not rule out allowing accelerated depreciation for all gas pipeline projects. “I note that the producers in their testimony express concern that they need to have assurance from the State on long-term fiscal certainty. This may be one of the major threshold issues the Governor and Legislature will have to deal with. A project of this magnitude must have the certainty that the whims of the States taxing authority are tied in real terms to the market price of gas. “It would seem that while attention has been directed to the proposed Federal pipeline legislation, the State needs to be prepared to address how it proposes to provide fiscal certainty regarding its taxing authority. I would remind my colleagues that the gas we speak of developing and sending to markets in the Lower 48 lies beneath State lands - this is Alaska’s gas unlike ANWR which is in Federal lands. “And while there is no question that the development of this resource is important to both Alaska and the nation - it must be done with an eye to the long-term effect its development will have in my State.” MURKOWSKI/FIRST ADD October 2, 2001 “Today we are presented with a number of proposals from petroleum and pipeline companies to bring Alaska gas to markets in the Lower 48.While many of the proposals and suggestions are intriguing, many questions still remain. How can we reduce the cost of this project through technological advances or State and Federal incentives? Is existing Federal law sufficient to expedite construction or is new Federal legislation needed? How do we ensure development of secondary gas industries in Alaska and active participation of all production companies in Alaska? “Yes, significant progress has been made since the last hearing we had on Alaska gas and a great deal of money has been spent by the producers to assess the economic viability of a gas project - but we still haven’t crossed the finish line. “At the conclusion of last year’s hearing, I asked the producers to submit draft legislation which they presented to our committee a few months ago. We are prepared to address their recommendations in detail. This Committee has an obligation to hear from Alaskans who will be directly impacted by this project - their experience, their insight, and their role in this project must be part of the consideration. “In my letter to the witnesses, I stressed that testimony from the producers should address the economic incentives that might be required. Further to comment on the Governor’s 10 points and any proposal circulating from the Alaska legislature. I also asked that the Governor and Legislative Representatives to be prepared to comment on what incentives the State might consider. “It is my hope that by the end of this hearing we will have a much better understanding of the important issues that need to be addressed as this Committee contemplates Alaska Gas Line Legislation and that we have moved the process even further toward realization. “In the end, America can not allow itself to become dependent on overseas sources of natural gas - the potential for disruption of supply makes this solution to our energy needs simply unacceptable. Getting North Slope gas to consumers in the Lower 48 is vital to the energy security of the Nation. “Where do we go next? It is my hope that after today, after airing the respective conditions in some detail, we can come together again soon - in a less formal setting - either here or in Alaska to work collectively to initiate the start up of economically viable project to bring Alaska gas to market via the southern route - a project as bold and imaginative as any ever conceived. “A project of scope to challenge American’s technical skills and environmental sensitivities!” ###