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Alaska Congressmen Propose to Axe Multi-Billion Dollar Natural Gas Pipeline

Nathanael Baker's picture
, EnergyBoom Media Inc.

Nathanael Baker is the Managing Editor of EnergyBoom. He has been immersed in the areas of renewable energy and climate change for two years. Before joining EnergyBoom, Nathanael was the Director...

  • Member since 2018
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  • Feb 9, 2011

Alaska lawmakers have proposed legislation which would abandon the Alaskan natural gas pipeline project.

Building a pipeline capable of transporting Alaska’s immense natural gas reserves has been the topic of discussion since the 1970s.  However, it was not until 2008, when former Governor Sarah Palin signed into a law a bill — The Alaskan Gasline Inducement Act — to construct the pipeline, that the pipeline become more than a dream.

TransCanada Corporation (NYSE: TRP) won the contract, and has since received $36 million of the $500 million the Alaskan government promised in subsidies.  The cost of the building the gas pipeline is estimated to be between $20 and $41 billion.  TransCanada said it could complete construction by 2018.

Since the contract was awarded little progress has been made on the project.  This has left Alaskan politicians impatient and wary that the pipeline is an unfeasible venture.  The proposed legislation, sponsored by five Republican congressmen, would establish deadlines for the project to prove it is economically viable.  For example, the bill sets a July 15, 2011 deadline for TransCanada to show it has received firm shipping commitments.  Additionally, the legislation calls for the government to conduct a report analyzing the progress of the pipeline and if it is failing as an initiative.

According to the bill, if both the Alaskan government and TransCanada deem the project uneconomic, the deal will be terminated.  However, if there is a disagreement between both parties, the issue will be settled by an independent arbiter.  As the Alaska Dispatch highlights, if the venture goes to an arbiter, a nasty legal battle could ensue.

Nevertheless, the authors of the bill state, “A deadline: That is something that Alaskans have a right to expect.  Let’s get this project started or get on with something else.”  The Congressmen further added the public has “a right to know if we’re simply throwing good money after bad.”

Governor Sean Pernall is reviewing the legislation.  When the Alaskan Gasline Inducement Act was passed, it was hailed as an economic boon for a struggling economy.  Just two years later it stands to be an enormous economic and political failure.


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