Alaska Prepares for New Gas Pipeline

Alaska Gov. Frank Murkowski has reached a deal with three major oil companies that would hasten construction of a $20 billion natural gas pipeline from Prudhoe Bay to the lower 48 states.

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STEVE INSKEEP, host:

The business news starts with more energy from Alaska.

Alaska's Governor, Frank Murkowski, has reached a deal with three major oil companies. It would hasten construction of a massive natural gas pipeline from Prudhoe Bay to the lower 48 states.

Elizabeth Arnold reports.

ELIZABETH ARNOLD reporting:

Governor Frank Murkowski wants a legacy. He's spent the last two years negotiating with Conoco Phillips, ExxonMobile, and BP, to build a pipeline to tap into the largest known reserve of natural gas in North America.

The gas comes up with the oil pump from Prudhoe Bay, but it's been re-injected back into the ground for decades. Now, Murkowski says, he has a deal. He's offered the oil companies a new tax structure that would be based on profits instead of production as an incentive for the industry to build the $20 billion dollar gas pipeline.

Governor FRANK MURKOWSKI (Republican, Alaska): While the oil stands independent of the gas, clearly there is a connection, because what the producers basically accepted was a package.

ARNOLD: While the tax change could add as much as a billion dollars more a year to state coffers at current oil prices, it could also mean a lot less when oil prices drop.

The Legislature is eager for a new gas pipeline, and lawmakers have argued for years the tax system needs to be revamped. But they're wary of the deal, crafted behind closed doors without their involvement.

Juneau Democrat Kim Elton summed up the sentiment, saying, Alaskans aren't just going to kiss the pinkie ring of the oil industry.

For NPR News, I'm Elizabeth Arnold, in Anchorage.

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