To: Pete Sprague, Assembly President

Kenai Peninsula Borough Assembly Members

Thru: Dale L. Bagley, Mayor

From: Bill Popp, Oil & Gas Liaison

The Kenai Peninsula Borough Administration offers the following points on Senate Bill 247, sponsored by Senator Tom Wagoner, as it relates to the proposed Alaska Natural Gas Development Authority (ANGDA) LNG project to commercialize Alaska North Slope natural gas.

1. The Kenai Peninsula Borough has long advocated for the Railbelt route, Fairbanks to tidewater in the Cook Inlet Basin, if a North Slope natural gas pipeline to a LNG facility is constructed. The Kenai Peninsula Borough should continue to hold that position today based on the many geographical, financial, and economic and infrastructure advantages offered by the Cook Inlet Basin to the project.

2. The underlying premise of Proposition 3 that established ANGDA is that an "all-Alaska" LNG project will "maximize jobs for Alaskans, revenues for the Alaskan treasury, and access to gas for Alaskans." The administration believes that under this premise, the best route for the ANGDA LNG project follows the disturbed rights-of-way of the Railbelt from Fairbanks to tidewater in Cook Inlet. These rights-of-way include the Parks Highway, the Alaska Railroad corridor and the Northern Power Intertie. Seventy percent of the State of Alaska's population resides along this route and will directly benefit from this project, as will the Railbelt communities and State Government through increased business and employment activities.

3. It is the position of the Administration that economics will rule when it comes to the success or failure of this project. To give the LNG project its best chance for success, the Alaska Natural Gas Development Authority should base its decisions on sound project economics, which the Administration believes will ultimately favor the Railbelt route from Fairbanks to tidewater in the Cook Inlet Basin. But the only way to know for sure is through a full comparative cost and design analysis performed on both the Valdez and Railbelt routes.

4. Senate Bill 247 requires a full study of both routes.