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Lawmakers Call on AG to Renew 2007 Local Gas Supply Guarantee

Alaskans deserve same assurances in the future as we have now

Seven Alaska lawmakers today called on the state to work to extend the current agreement that ensures companies which export gas from Cook Inlet will meet Alaskan gas needs before shipping it overseas. In 2007, the state required local needs be met first as a condition of the state’s support for the companies’ last export permit. That agreement will expire at the end of the current export license in 2011.

“Southcentral Alaska’s population is growing, and the state should work to extend the current agreement which ensures Alaska’s gas meets Alaskan needs first,” said Rep. Tuck.

Enstar has stated it is not yet confident it has enough natural gas to supply Southcentral’s heating demands through the period of the requested 2011-2013 export license.  It has been trying to secure a contract for this supply with ConocoPhillips but has not been successful.

“Without the agreement, Alaskans might get the gas they need to heat their homes, but why not extend the agreement to give them certainty?” asked Senator Bettye Davis.

“This can be a win-win for all parties,” Senator Bill Wielechowski said.  “Alaskans get the gas they need and the companies are able to export.  It’s just the right thing to do.”

Unmet local gas needs amount to around 5bcf (billion cubic feet) over the life of the contract, and ConocoPhillips and Marathon expect to export between 40 and 45bcf during that time. Committing to meet unmet local needs would not jeopardize plans to export the rest.

“It’s not a choice between meeting local needs and exporting,” said Rep. Petersen, “We support doing both like we are under the current settlement, and extending it would make sure everyone’s needs are met going forward too.”

The lawmakers want ConocoPhillips and Marathon to agree to the same provisions agreed to in 2007 when the state intervened in the last export license process. The provisions were designed to ensure consistent local gas supplies and to spur exploration and development of Cook Inlet gas.

Under the current agreement, the state supported the companies’ export license application once:

1. All natural gas supply needs for local utilities are under contract,

2. The companies agree to explore for new gas reserves to replace the gas that’s exported, and

3. The companies allow other gas explorers access to the LNG plant to process and export gas.

“No one expects for-profit corporations to put Alaskans’ needs ahead of their shareholders. It’s the state’s job to look out for Alaskans’ interests,” said Rep. Gardner. “When the state intervened in 2007, Alaskans got a settlement that served both Alaskans and industry. That’s all we’re asking for this time.”

Senators Bill Wielechowski, Bettye Davis and Hollis French as well as Representatives Pete Petersen, Berta Gardner, Les Gara, and Chris Tuck signed the letter in a follow up to their request to ConocoPhillips earlier this month to meet Alaska’s gas needs before exporting Alaska’s gas.

Each of these lawmakers support the Kenai LNG export facility, voted to create needed gas storage (which will not likely be available until 2012 or 2013), and voted for Cook Inlet exploration incentives this session.  But they believe, as the state required in 2007, that local gas needs should be supplied as well. 

“I’m an optimist and like to assume companies will do the right thing.  But I want a guarantee, like consumers received the last time this export license issue came up, to ensure we’ll have an adequate supply of natural gas,” said Rep. Gara.

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