CSHJR 44(O&G): Strongly urging the President of the United States, the United States Congress, and appropriate federal officials to support the construction and operation of the Alaska Highway Natural Gas Pipeline route.

00 CS FOR HOUSE JOINT RESOLUTION NO. 44(O&G) 01 Strongly urging the President of the United States, the United States Congress, and 02 appropriate federal officials to support the construction and operation of the Alaska 03 Highway Natural Gas Pipeline route. 04 BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 WHEREAS the Alaska North Slope (ANS) has the largest known, discovered natural 06 gas resources, estimated to be 35 trillion cubic feet, in the United States and estimated, 07 undiscovered gas resources in excess of 100 trillion cubic feet; and 08 WHEREAS demand for natural gas in the lower 48 states is expected to experience 09 record growth, rising from approximately 22 trillion cubic feet a year in 2000 to 30 - 35 10 trillion cubic feet a year in 2020, with some experts predicting demand to be as large as 50 11 trillion cubic feet a year in 2020; and 12 WHEREAS the lower 48 states have an inadequate resource base to meet this 13 expected demand and experts expect that more natural gas will have to be imported from 14 Canada and from other countries in the form of liquefied natural gas (LNG); and 15 WHEREAS the near record drilling in the last two years in the lower 48 failed to

01 deliver any significant supply response and many experts are questioning whether other 02 United States frontier areas like the deepwater Gulf of Mexico will be able to deliver material 03 new gas supplies and, therefore, more imports may be required than previously thought; and 04 WHEREAS it is important for the United States to have a reliable and affordable 05 source of domestic natural gas for its citizens and businesses, and for national security, 06 especially given the recent tragic events; and 07 WHEREAS energy supply disruptions have significant negative effect on the United 08 States economy, including the losses of tens of millions of United States jobs; and 09 WHEREAS if the United States imports significant amounts of LNG, it can be 10 subjected to the market power of the exporting country through mechanisms such as 11 embargos and price making; and 12 WHEREAS ANS is one of few known locations in the United States that can supply 13 significant natural gas supplies to the lower 48 for years to come; and 14 WHEREAS, given these supply and demand projections, several companies and 15 entities have been studying three different pipeline routes, including a "northern" route, 16 running off the shore of the Arctic National Wildlife Refuge in the Beaufort Sea to the 17 MacKenzie Delta and south through Canada to the lower 48; a "southern" route along the 18 Alaska Highway through Canada to the lower 48; and an "LNG" route adjacent to the Trans 19 Alaska Pipeline System pipeline to Valdez and LNG tankers for delivery to California; and 20 WHEREAS, in 1976, Congress passed the Alaska Natural Gas Transportation Act of 21 1976 (ANGTA) authorizing the President to select a route to transport natural gas from ANS 22 to the lower 48 and providing procedures to expedite the construction and operation of the 23 selected route; and 24 WHEREAS, in 1977, following lengthy public hearings and negotiations with 25 Canada, the President issued a decision ("President's Decision") choosing the southern route 26 and selecting the predecessor of a consortium of pipeline companies headed by Foothills Pipe 27 Lines, Ltd. ("Pipeline Companies") to construct and operate the Alaska segment of the 28 project; and 29 WHEREAS the Alaska Gas Producers Pipeline Team ("Producers") has proposed 30 new federal enabling legislation that they believe will expedite the construction and operation 31 of a natural gas pipeline from the ANS to the lower 48, including the possibility of a northern

01 route; and 02 WHEREAS the Majority Leader of the United States Senate has introduced S. 1766, 03 which contains the Alaska Natural Gas Pipeline Act of 2002 ("Pipeline Act"), similar to the 04 Producers' enabling legislation and supported by the Producers; and 05 WHEREAS the Pipeline Act is not opposed by the Pipeline Companies, and they 06 desire certain amendments to the ANGTA to modernize it; and 07 WHEREAS ANGTA granted the State of Alaska "authoriz[ation] to ship its royalty 08 gas on the approved transportation system for use within Alaska and . . . to withdraw such gas 09 from the interstate market for use within Alaska," which rights will be impaired if a northern 10 route is followed and which right is not in S. 1766; and 11 WHEREAS the President's Decision in support of the southern route explicitly 12 recognized that it could "supply the energy base required for long-term economic 13 development" within Alaska and it could supply natural gas to communities within Alaska 14 along the route as well as other Alaska communities through local distribution lines, and these 15 potential benefits will be lost if a northern route is followed; and 16 WHEREAS the northern route will strand other United States gas resources while the 17 southern line will open up opportunities for exploration and development of other United 18 States gas resources on the ANS and in other potentially large Alaska gas basins along the 19 southern route; and 20 WHEREAS the southern route presents the United States with petrochemical 21 extraction opportunities in the United States while the northern route does not; and 22 WHEREAS a northern route pipeline could not easily be expanded to increase the 23 volume of gas when needed; and 24 WHEREAS the southern route provides other marketing opportunities for ANS gas, 25 including gas to liquids (GTL) and LNG, to the West Coast or Asia, while the northern route 26 does not; and 27 WHEREAS those citizens of the United States most affected by development on the 28 ANS, including the North Slope Borough and the Alaska Eskimo whaling captains, oppose 29 the construction and operation of the northern route through the Beaufort Sea; and 30 WHEREAS art. VIII, sec. 2, Constitution of the State of Alaska, requires the Alaska 31 State Legislature to provide for the utilization, development, and conservation of all natural

01 resources belonging to the state, including land and waters, for the maximum benefit of its 02 people; and 03 WHEREAS it is widely recognized that maximum benefit to Alaskans from the 04 commercialization of ANS natural gas lies in market exposure for that gas, opportunities for 05 in-state use of the natural gas, and for participation by Alaskans in construction, maintenance, 06 and operation of the gas pipeline transportation project, and the recovery of revenue by the 07 state from the development, transport, and sale of ANS gas reserves; and 08 WHEREAS the northern route offers little to none of these benefits to Alaska; and 09 WHEREAS the Alaska State Legislature has expressed a preference for the expedited 10 construction and operation of a natural gas pipeline along a southern route and has authorized 11 funds to conduct various studies regarding a natural gas pipeline, including the study of in- 12 state natural gas demand, natural gas supply, a natural gas fiscal system, and the effect of 13 natural gas sales on the Prudhoe Bay reservoir; and 14 WHEREAS the Twenty-Second Alaska State Legislature enacted S.B. 164 15 prohibiting a northern route by prohibiting leases under the Right-of-Way Leasing Act on 16 state land in or adjacent to the Beaufort Sea; and 17 WHEREAS the Twenty-Second Alaska State Legislature also established the Joint 18 Committee on Natural Gas Pipelines ("Joint Committee") to take whatever action may be 19 appropriate to ensure that the best interests of the state are protected; and 20 WHEREAS it is vital for the continued exploration and development of natural gas 21 resources on the ANS that oil and gas companies that do not have an ownership interest in the 22 pipeline ("Explorers") have access to it on fair and reasonable terms and have the ability to 23 seek expansion of the pipeline when economically and technically feasible; and the Joint 24 Committee adopted recommendations supporting these provisions in federal law; and 25 WHEREAS it is vital for the economic development of Alaska that Alaskans and 26 Alaska businesses have access to gas from the pipeline on a fair and reasonable basis, and that 27 the Regulatory Commission of Alaska participate with the Federal Energy Regulatory 28 Commission to develop methods to provide for such access; and the Joint Committee adopted 29 recommendations supporting these provisions in federal law; and 30 WHEREAS the Joint Committee has issued various recommendations requesting that 31 Congress reaffirm the validity of ANGTA and modernize it, and requesting that the Congress

01 enact legislation to ban the northern route pipeline; and 02 WHEREAS the Legislature will exercise every reasonable power within its authority 03 to prevent the routing of a North Slope natural gas pipeline that bypasses Alaska; and 04 WHEREAS last year the United States House of Representatives passed H.R. 4, 05 banning the northern route through the Beaufort Sea; and 06 WHEREAS natural gas prices in the lower 48 states periodically fluctuate below 07 those required to adequately cover investment; and 08 WHEREAS the large volume of gas delivered to the lower 48 states may initially 09 stabilize gas prices at a lower level, bringing financial benefit to the lower 48 economy; and 10 WHEREAS governmental involvement, including tax incentives, is essential and 11 quite common on major projects to enable private enterprises to undertake the risks; 12 BE IT RESOLVED that the Alaska State Legislature strongly urges the President of 13 the United States, the United States Congress, and appropriate federal officials to actively 14 support the expeditious construction and operation of a natural gas pipeline through Alaska 15 along a southern route; and be it 16 FURTHER RESOLVED that the legislature strongly urges passage during the first 17 half of 2002 of the Alaska Gas Producers Pipeline Team's federal enabling legislation so long 18 as it contains a provision similar to that in H.R. 4 banning the over-the-top route and the 19 following amendments: 20 (1) provisions for Alaskans and Alaska businesses that ensure they have 21 access to the pipeline on a fair and reasonable basis and that the Regulatory Commission of 22 Alaska is part of the process in determining that access; 23 (2) provisions for Explorers that provide for access to the pipeline on a fair 24 and reasonable basis, including a proper open season and fair and reasonable tariffs, and that 25 provide that they and the State have the ability to obtain expansion of the pipeline if 26 economically and technologically feasible; 27 (3) provisions for the pipeline companies that provide for the reaffirmation of 28 the validity of the Alaska Natural Gas Transportation Act of 1976 and the modernization of 29 that Act as necessary; 30 (4) provisions for federal financial incentives, including accelerated 31 depreciation and an income tax credit that is designed to provide mitigation of long-term

01 natural gas price risks and the risks associated with funding the large capital costs of the 02 project; the amount of any tax credit should be limited in operation to periods when natural 03 gas prices are extremely low and recovered when natural gas prices are high; and 04 (5) specific provisions declaring that the content of amendments (1) - (4) is 05 not intended to exclude supply of Alaska North Slope natural gas to markets in the United 06 States in the form of LNG. 07 COPIES of this resolution shall be sent to the Honorable George W. Bush, President 08 of the United States; the Honorable Richard B. Cheney, Vice-President of the United States 09 and President of the U.S. Senate; the Honorable J. Dennis Hastert, Speaker of the U.S. House 10 of Representatives; the Honorable Tom Daschle, Majority Leader of the U.S. Senate; the 11 Honorable Trent Lott, Minority Leader of the U.S. Senate; the Honorable Colin Powell, 12 United States Secretary of State; the Honorable Gale Norton, United States Secretary of the 13 Interior; the Honorable Don Evans, United States Secretary of Commerce; the Honorable 14 Spencer Abraham, United States Secretary of Energy; and to the Honorable Ted Stevens and 15 the Honorable Frank Murkowski, U.S. Senators, and the Honorable Don Young, U.S. 16 Representative, members of the Alaska delegation in Congress.