Gov. Sarah Palin of Alaska on Thursday proposed granting state subsidies to a Canadian company to build a long-sought natural gas pipeline.

The 1,715-mile pipeline would deliver natural gas from the North Slope of the state to markets in Alaska and the lower United States. Ms. Palin, a Republican, proposed providing $500 million in matching funds to the company, TransCanada.
The plan comes as the appetite for natural gas has increased nationally and the state is looking for economic alternatives as oil production on the slope declines. But the proposal faces considerable obstacles, both in the State Legislature and the private sector.
The pipeline, which could supply as much as 7 percent of the current natural gas use of the United States, would extend from the North Slope, over the Brooks Range and into Alberta, Canada, where it would connect with pipelines that deliver gas to Canada and the United States. It would cost $30 billion to $60 billion, and it would not be completed until at least 2017 and potentially several years after that.
“A domestic supply of clean energy, you can’t go wrong with this,” Ms. Palin said in a phone interview on Thursday. “We’re ready to tap it.”
The pipeline has been a dream for Alaska for decades, and Ms. Palin, a popular governor, made it a central focus when she ran for office in 2006. Her administration said the pipeline would be the largest construction project ever in North America, bringing jobs and economic stability to Alaska, as well as a reliable source of energy.
Ms. Palin’s proposal now goes to the Republican-controlled Legislature, which has created special committees to review the plan over the next two months. Lawmakers, like Alaskans in general, are overwhelmingly in favor of building the pipeline. It is the details of how to do so that creates conflict.
State Senator Bert Stedman, vice chairman of a special Senate committee involved in the review, said that market conditions would ultimately shape the way the pipeline is developed and that Ms. Palin’s plan appeared to take a great risk by offering so much in incentives to TransCanada. Mr. Stedman said the company would have no guarantee that producers that own rights to the gas on the slope would commit to using the TransCanada pipeline.
Then again, Mr. Stedman said, the producers are looking for firm commitments on future gas tax rates from the state, giving some leverage back to the state and TransCanada.
“How do you get it financed where there’s a return to the investors and the state is treated fairly and compensated for its resources?” Mr. Stedman said.
Two of the three major producers on the North Slope, BP and ConocoPhillips, announced last month that they were moving forward with building a pipeline on their own, and that demand and the high price of natural gas meant they would not need subsidies from the state. They say they have committed to spending $600 million on early development of the pipeline.
“We’re confident we can build this project,” said Steve Rinehart, a spokesman for BP Alaska, which runs Prudhoe Bay, the nation’s largest oil field. “We’re going forward no matter what. We’re interested in what’s being said today, but we’ve already started.”
Ms. Palin said her plan was superior because it included “enforceable commitments” from TransCanada and gas producers that want to use the line, including an ability to expand the line so new companies can use it, at reasonable rates. Mr. Rinehart said the producers were ready to meet those requirements, too, but Ms. Palin said there was no concrete evidence that was true.
With the state’s economy in the balance as oil production declines, the governor said: “We don’t have time to mess around. It is time to get the project built and not just keep guessing what the oil producers want from the state.”
(Source: New York Times)