CSHJR 44(RES): 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(RES) 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 the 03 Energy Policy Act of 2002, which contains the Alaska Natural Gas Pipeline Act of 2002 04 ("Pipeline Act"), similar to the Producers' enabling legislation and supported by the 05 Producers; and 06 WHEREAS the Pipeline Act is not opposed by the Pipeline Companies, and they 07 desire certain amendments to the ANGTA to modernize it; and 08 WHEREAS ANGTA granted the State of Alaska "authoriz[ation] to ship its royalty 09 gas on the approved transportation system for use within Alaska and . . . to withdraw such gas 10 from the interstate market for use within Alaska," which rights will be impaired if a northern 11 route is followed; and 12 WHEREAS the President's Decision in support of the southern route explicitly 13 recognized that it could "supply the energy base required for long-term economic 14 development" within Alaska and it could supply natural gas to communities within Alaska 15 along the route as well as other Alaska communities through local distribution lines, and these 16 potential benefits will be lost if a northern route is followed; and 17 WHEREAS the northern route will strand other United States gas resources while the 18 southern line will open up opportunities for exploration and development of other United 19 States gas resources on the ANS and in other potentially large Alaska gas basins along the 20 southern route; and 21 WHEREAS the southern route presents the United States with petrochemical 22 extraction opportunities in the United States while the northern route does not; and 23 WHEREAS a northern route pipeline could not easily be expanded to increase the 24 volume of gas when needed; and 25 WHEREAS the southern route provides other marketing opportunities for ANS gas, 26 including gas to liquids (GTL) and LNG, to the West Coast or Asia, while the northern route 27 does not; and 28 WHEREAS those citizens of the United States most affected by development on the 29 ANS, including the North Slope Borough and the Alaska Eskimo whaling captains, oppose 30 the construction and operation of the northern route through the Beaufort Sea; and 31 WHEREAS art. VIII, sec. 2, Constitution of the State of Alaska, requires the Alaska

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

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

01 depreciation and an income tax credit that is designed to provide mitigation of long-term 02 natural gas price risks and the risks associated with funding the large capital costs of the 03 project; the amount of any tax credit should be limited in operation to periods when natural 04 gas prices are extremely low and recovered when natural gas prices are high; and 05 (5) specific provisions declaring that the content of amendments (1) - (4) is 06 not intended to exclude supply of Alaska North Slope natural gas to markets in the United 07 States in the form of LNG. 08 COPIES of this resolution shall be sent to the Honorable George W. Bush, President 09 of the United States; the Honorable Richard B. Cheney, Vice-President of the United States 10 and President of the U.S. Senate; the Honorable J. Dennis Hastert, Speaker of the U.S. House 11 of Representatives; the Honorable Tom Daschle, Majority Leader of the U.S. Senate; the 12 Honorable Trent Lott, Minority Leader of the U.S. Senate; the Honorable Colin Powell, 13 United States Secretary of State; the Honorable Gale Norton, United States Secretary of the 14 Interior; the Honorable Don Evans, United States Secretary of Commerce; the Honorable 15 Spencer Abraham, United States Secretary of Energy; and to the Honorable Ted Stevens and 16 the Honorable Frank Murkowski, U.S. Senators, and the Honorable Don Young, U.S. 17 Representative, members of the Alaska delegation in Congress.