SCS CSHJR 44(RES) am S: 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 SENATE CS FOR CS FOR HOUSE JOINT RESOLUTION NO. 44(RES) am S 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 provide any significant gas supply increase 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 studied three different pipeline routes, including a "northern" route, running off 16 the shore of the Arctic National Wildlife Refuge in the Beaufort Sea to the Mackenzie Delta 17 and south through Canada to the lower 48; a "southern" route along the Alaska Highway 18 through Canada to the lower 48; and an "LNG" route adjacent to the Trans Alaska Pipeline 19 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 is currently being debated in the United States Senate; 31 and

01 WHEREAS the Majority Leader of the United States Senate has introduced the 02 Energy Policy Act of 2002, which contains the Alaska Natural Gas Pipeline Act of 2002 03 ("Pipeline Act"); and 04 WHEREAS the Pipeline Act is not opposed by the Pipeline Companies, and they 05 desire certain amendments to the ANGTA to modernize it; and 06 WHEREAS ANGTA granted the State of Alaska "authoriz[ation] to ship its royalty 07 gas on the approved transportation system for use within Alaska and . . . to withdraw such gas 08 from the interstate market for use within Alaska," which rights will be impaired if a northern 09 route is followed; and 10 WHEREAS President Carter's decision in support of the southern route explicitly 11 recognized that it could "supply the energy base required for long-term economic 12 development" within Alaska and it could supply natural gas to communities within Alaska 13 along the route as well as other Alaska communities through local distribution lines, and these 14 potential benefits will be lost if a northern route is followed; and 15 WHEREAS the United States Senate has concurred with the United States House of 16 Representatives to oppose the northern route and has expressed its support for the southern 17 route; and 18 WHEREAS the southern route presents the United States with petrochemical 19 extraction opportunities in the United States while the northern route does not; and 20 WHEREAS a northern route pipeline could not easily be expanded to increase the 21 volume of gas when needed; and 22 WHEREAS the southern route provides petrochemical extraction opportunities in the 23 United States and other marketing opportunities for ANS gas, including gas to liquids (GTL) 24 and LNG, to the West Coast or Asia; and 25 WHEREAS it is widely recognized that maximum benefit to Alaskans from the 26 commercialization of ANS natural gas lies in market exposure for that gas, opportunities for 27 in-state use of the natural gas, and for participation by Alaskans in construction, maintenance, 28 and operation of the gas pipeline transportation project, and the recovery of revenue by the 29 state from the development, transport, and sale of ANS gas reserves; and 30 WHEREAS the Alaska State Legislature has expressed a preference for the expedited 31 construction and operation of a natural gas pipeline along a southern route and has authorized

01 funds to conduct various studies regarding a natural gas pipeline, including the study of in- 02 state natural gas demand, natural gas supply, a natural gas fiscal system, and the effect of 03 natural gas sales on the Prudhoe Bay reservoir; and 04 WHEREAS the Twenty-Second Alaska State Legislature established the Joint 05 Committee on Natural Gas Pipelines ("Joint Committee") to take whatever action may be 06 appropriate to ensure that the best interests of the state are protected; and 07 WHEREAS it is vital for the continued exploration and development of natural gas 08 resources on the ANS that oil and gas companies that do not have an ownership interest in the 09 pipeline ("Explorers") have access to it on fair and reasonable terms and have the ability to 10 seek expansion of the pipeline when economically and technically feasible; and the Joint 11 Committee adopted recommendations supporting enactment of these provisions in federal 12 law; and 13 WHEREAS it is vital for the economic development of Alaska that Alaskans and 14 Alaska businesses have access to gas from the pipeline on a fair and reasonable basis, and that 15 the Regulatory Commission of Alaska participate with the Federal Energy Regulatory 16 Commission to develop methods to provide for such access; and the Joint Committee adopted 17 recommendations supporting enactment of these provisions in federal law; and 18 WHEREAS the Joint Committee has issued various recommendations requesting that 19 Congress reaffirm the validity of ANGTA and modernize it; and 20 WHEREAS natural gas prices in the lower 48 states periodically fluctuate below 21 those required to adequately cover investment; and 22 WHEREAS governmental involvement, including tax incentives, is essential and 23 quite common on major projects to enable private enterprises to undertake the risks; 24 BE IT RESOLVED that the Alaska State Legislature strongly urges the President of 25 the United States, the United States Congress, and appropriate federal officials to actively 26 support the expeditious construction and operation of a natural gas pipeline through Alaska 27 along a southern route; and be it 28 FURTHER RESOLVED that the Alaska State Legislature strongly urges passage 29 during the first half of 2002 of the Alaska Gas Producers Pipeline Team's federal enabling 30 legislation, so long as it contains a provision similar to that in H.R. 4 banning the over-the-top 31 route and the following amendments:

01 (1) provisions for Alaskans and Alaska businesses that ensure they have 02 access to the pipeline on a fair and reasonable basis and that the Regulatory Commission of 03 Alaska is part of the process in determining that access; 04 (2) provisions for access to the pipeline for in-state consumption and value- 05 added manufacture by Explorers on a fair and reasonable basis, including a proper open 06 season with fair and reasonable tariffs, and that provide that they and the State have the ability 07 to obtain expansion of the pipeline if economically and technologically feasible; 08 (3) provisions for the reaffirmation of the validity of the Alaska Natural Gas 09 Transportation Act of 1976 and the modernization of that Act as necessary; 10 (4) provisions for federal financial incentives, including accelerated 11 depreciation and an income tax credit that is designed to provide mitigation of long-term 12 natural gas price risks and the risks associated with funding the large capital costs of the 13 project; the amount of any tax credit should be limited in operation to periods when natural 14 gas prices are extremely low and recovered when natural gas prices are high; and 15 (5) specific provisions declaring that the content of amendments (1) - (4) is 16 not intended to exclude supply of Alaska North Slope natural gas to markets in the form of 17 LNG or GTL. 18 COPIES of this resolution shall be sent to the Honorable George W. Bush, President 19 of the United States; the Honorable Richard B. Cheney, Vice-President of the United States 20 and President of the U.S. Senate; the Honorable J. Dennis Hastert, Speaker of the U.S. House 21 of Representatives; the Honorable Tom Daschle, Majority Leader of the U.S. Senate; the 22 Honorable Trent Lott, Minority Leader of the U.S. Senate; the Honorable Colin Powell, 23 United States Secretary of State; the Honorable Gale Norton, United States Secretary of the 24 Interior; the Honorable Don Evans, United States Secretary of Commerce; the Honorable 25 Spencer Abraham, United States Secretary of Energy; and to the Honorable Ted Stevens and 26 the Honorable Frank Murkowski, U.S. Senators, and the Honorable Don Young, U.S. 27 Representative, members of the Alaska delegation in Congress.