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(Juneau) - MidAmerican Energy Holdings Co. Chairman David Sokol told members of the Senate Resources Committee Wednesday that MidAmerican and its partners hope to have negotiations under the Stranded Gas Act completed by mid-March, a contract approved by the legislature in early May and gas delivered to the Lower 48 by 2010.
"March 12 is the date we have agreed on with the stranded gas committee to complete our negotiations, make the contract available for public comment and then obviously for additional legislative consideration," Sokol said, adding that actual construction would begin in 2007.
MidAmerican plans to build a 745-mile, $6.3 billion natural gas pipeline from the North Slope to the Alaska-Yukon border near Beaver Creek that would connect with a new companion pipeline in Canada for delivery into virtually every market center in Canada and the Lower 48.
Sokol, chairman and chief executive officer of MidAmerican and Bob Sluder, president of both Alaska Gas Transmission Co. and Kern River Gas Company, gave the Senate Resources Committee an overview of the project Wednesday.
"The time for this project is now," Sokol told the Committee. "You've got probably the best financial climate in the Lower 48, a recognition of the need for the gas and the reasonableness of its pricing, you've got a serious concern of the long-term gas pricing in the Lower 48, and you've got a very supportive administration in Washington to see this project expedited, and we think that's an opportunity that should not be lost."
The state accepted an application Jan. 28 from MidAmerican subsidiary Alaska Gas Transmission Co. under the Alaska Stranded Gas Development Act to enter into fiscal and tax negotiations for building the pipeline. MidAmerican is 80 percent owned by billionaire Warren Buffet's Berkshire Hathaway Inc.
Sokol said Buffet, who sits on the MidAmerican board of directors, "is fully apprised of this project and extremely supportive of it."
MidAmerican's interstate pipeline subsidiaries Kern River and Northern Natural own and operate more than 18,000 miles of pipeline facilities, making MidAmerican the second-largest interstate natural gas transmission company in the United States.
"I think it's exciting that we have an independent pipeline proposal because competition is a good thing. Competition keeps you honest, and keeps you sharp. So ultimately I think Alaskans win by having more than one proposal floating around," said Senate Resources Committee Chairman Scott Ogan, (R-Mat-Su/Chugiak). "America needs Alaska's gas."
Other members of the sponsor group are Alaskan-owned CIRI and Pacific Star Energy, LLC, which would each hold up to 9.95 percent interest. MidAmerican estimates up to 19.9 percent of all pipeline profits would stay in Alaska and flow through Alaska's economy.
With unique expertise in commercializing, constructing, owning and operating pipeline assets, Sokol said MidAmerican brings a different piece of the puzzle to the table. He said it will be an open-access common carrier pipeline that will non-discriminatorily handle any shipper that wants to ship or purchase natural gas from Alaska into the Lower 48.
As an owner-operator pipeline regulated by the Federal Energy Regulatory Commission, the project will guarantee access to all participants and move forward more quickly than a producer-owned project because many of the pieces of the transaction can be resolved simultaneously, Sokol said.
Sokol said he does not believe the MidAmerican proposal would preclude a project under study by the Alaska Natural Gas Development Authority to build a pipeline from Prudhoe Bay to Prince William Sound with a spur to the Southcentral gas distribution grid.
"We are not at all in conflict with the Authority," Sokol said. He said to the extent the proposal to pipe gas to Valdez for conversion to liquid natural gas makes economic sense, the MidAmerican project would just make it make more sense. "We view them as a customer."
"They will be buying shipping rights. All we really do is make their project less expensive," Sokol said.
Sokol also committed to use local resources.
"We recognize the value of local content and local involvement. We have committed to use the greatest extent of local sub-contractors, contractors, suppliers and labor that can possibly be obtained in Alaska," he said. "That's a common sense commitment because
frankly this project is very large and will require all of the access to talent and skills that
we can provide and they're much less expensive to provide from within the state than to bring them in from out of state."
Sokol said his company is best suited to build the pipeline because of its financial strength, experience and the ability to complete it.
The overall project is dependent on local, state, federal and Canadian regulatory approval.
In addition to the one from MidAmerican, the state has received another application under the Stranded Gas Act from the three major producers, Conoco/Phillips, British Petroleum and Exxon. The administration has approved the applications and appointed a team to negotiate contracts and bring them to the Legislature for approval. State statute requires a 30-day public comment period.
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