The beat goes on: natural gas project takes twists and turns.

• Author: Liles, Patricia

The ongoing saga of the Alaska natural gas pipeline project has taken a dramatic directional change in its initial chapters under the Gov. Sarah Palin administration.

Following its successful shepherding of the new governor's Alaska Gasline Inducement Act through the state legislature this spring, the Palin administration is now prepared to seek competitive applications from those entities hoping to build a natural gas transportation system that will carry Alaska's vast, untapped gas resources from the North Slope to commercial markets.

The next chapter in Alaska's gas pipeline story now swings to industry and its response to AGIA, which outlines the state's procedure for soliciting proposals to develop the $20 billion-plus project. State officials plan to open the Request for Applications on July 2 and close it in October, according to a spokeswoman.

Following a public review of all applications, AGIA provisions call for Palin's commissioners of Revenue and Natural Resources to evaluate and select a preferred pipeline plan, giving state lawmakers time during the 2008 legislative session to approve or disapprove the plan.

Which companies or collaborations of entities will apply under the new legislation is the next big question.

"We were skeptical about it ... we thought the (AGIA) provisions were far too restrictive," said Paul Laird, general manager for the Alaska Support Industry Alliance. "We're hopeful but not optimistic.

"In the best case scenario, there may be as many as three applicants to build the line. In the worst case, only one or two," he added. "If we take the producers at their word, they will not apply to build ... the three companies are probably the best people to build the pipeline and they're out of the process."

Alaska's three largest North Slope producers--BP Exploration Alaska, ConocoPhillips Alaska and ExxonMobil--collectively hold leases to more than 30 trillion cubic feet of known natural gas resources needed to initially feed a large-scale gas pipeline. In testimony before state legislators this spring, representatives from all three companies said that they wouldn't apply under the recently created and just-passed gas inducement act.

"We are disappointed that we cannot submit a bid that conforms to the regulations of this bill," said Steve Reinhardt, spokesman for BP Exploration Alaska, in an interview in late May. "We spent a good bit of time in committee meetings, providing information and answering questions and outlining several points in the bill that diminishes the chances for a successful gas project.

"This bill we don't think will lead to a...