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Friday, October 5, 2001 - Page updated at 12:00 AM

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Alaska governor pitches 3,500-mile gas pipeline

Seattle Times staff reporter

TACOMA — In an era of corporate downsizing and dot-com busts, Alaska Gov. Tony Knowles came to Washington yesterday to talk about an economic boom — the kind fueled by a proposed 3,500-mile pipeline bringing North Slope natural gas to the Lower 48.

"At $20 billion, it would be the largest private-sector project in our nation's history," Knowles, a Democrat, said at a maritime conference. "We are America's energy storehouse and it's time we develop those resources."

That storehouse already yields Prudhoe Bay and other oil fields that have made Alaska unique among the 50 states. Thanks to oil revenues, there are no state sales taxes and no state income taxes, and an oil-wealth savings account pays out annual dividends to every resident.

The new Alaskan energy development appeared close to reality as power producers nine months ago drove natural-gas prices to record levels. Alaska appeared poised to profit from yet another energy boom because of the pipeline and the possible opening of the Arctic National Wildlife Refuge to oil exploration, thanks to a Republican-controlled Congress and a Republican president.

But this is October — deep into a year that has included a sharp economic downturn, a Democratic takeover of the U.S. Senate and terrorist attacks that have put more sectors of the economy in limbo.

The natural-gas markets have collapsed, with prices nearly 90 percent lower than their January peaks. Oil-industry officials say the pipeline project — without special federal financial incentives — doesn't seem feasible. And in a Senate now controlled by Democrats, talk of oil drilling in the pristine refuge still inspires fierce opposition.

But in his pitch for the gas pipeline, Knowles isn't stressing the national-security advantages of a U.S. pipeline to the nation's largest gas fields. Rather, he's stressing job creation and economic spin-offs, even though groundbreaking for the pipeline would be years away.

His brief swing through Tacoma was an attempt to rally support among some of his most faithful Washington allies — the maritime industry that ferries supplies north to Alaska and transports oil south to Northwest refineries. A 1996 study by the Tacoma and Seattle chambers of commerce found that business between Alaska and the Puget Sound region accounted for nearly $3 billion in annual wages and 90,000 Puget Sound jobs.

Knowles said the gas pipeline and ANWR oil exploration would pump up the Puget Sound-Alaska cargo trade, most of which funnels through Tacoma. And he urged the creation of a new economic and environmental partnership between Alaska and the Pacific Northwest to make that happen.

"Let's kick it up a notch," Knowles, 58, said at a luncheon speech to the Propeller Club Convention and Merchant Marine Conference at the Tacoma Sheraton.

Knowles' own background with the energy industry includes a bit of hands-on experience. Born in Oklahoma, he graduated from Yale University in 1968 and then went to work in the Alaska oil fields through 1969. He founded a popular deli in downtown Anchorage, was mayor of Anchorage and now is in his second term as Alaska governor.

Knowles has gained broad support for the gas pipeline from fellow Democrats, including Gov. Gary Locke.

But what Knowles wants now is a tougher sell — federal aid to make the pipeline happen. In Washington, D.C., this week, he testified in favor of financial incentives that would include investment tax credits and subsidies akin to those paid to farmers. If gas markets fell below these price supports, federal payments would kick in to make up the difference.

So far, there is no legislation to offer such incentives, though some congressmen are now discussing the idea, Knowles said.

The Alaska governor splits with Washington Democrats on opening the wildlife refuge, with Washington's two Democratic senators, Patty Murray and Maria Cantwell, opposed to the idea.

Knowles says he met with Cantwell and Murray during his trip this week to Washington, D.C. A Senate vote on whether to open a portion of the wildlife refuge to oil exploration could come within the month.

Alaska's economy, even without the pipeline and the refuge exploration, is doing a lot better than most parts of the nation.

The state this year has been stung by a fall in salmon prices that has hurt many rural areas — but major federally funded construction projects, as well as stepped-up oil and gas drilling, have buoyed the Alaska economy.

And then there are the Permanent Fund checks. A check for $1,850.28 will be sent out this month to every Alaskan.

Hal Bernton can be reached at 206-464-2581 or hbernton@seattletimes.com.

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