JUNEAU - Alaska has few incentives to own a stake in a natural gas pipeline from the North Slope to the Lower 48 states, according to a Department of Revenue report, although it stopped short of warning against such an investment. <br>
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``Ultimately it's a public policy call in terms of how much direct involvement the state should have in developing its resources,'' said Larry Persily, deputy director of the Department of Revenue. <br>
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The report, ordered by the Legislature amid talk among the oil industry about such a project, was released Thursday. <br>
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It concluded that Alaska does not have the money to own a great share of the project without tapping into the state's Permanent Fund and its financing options are uncertain. <br>
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If the state owned the pipeline facilities, it could cost up to $14 billion that would not begin to show a return for seven years, the report said. <br>
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Even if Alaska held a 12.5 percent ownership in the project - which is equal to its royalty share of North Slope natural gas - it would still cost up to $1.75 billion. <br>
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Declining oil revenues have left Alaska with an $865 million deficit that is projected to grow to $1.1 billion by next year. The state's Constitutional Budget Reserve is expected to be empty by 2004. <br>
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The prospect of financing such a project through loans is unclear, the report said. <br>
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The department also concluded that oil companies do not need financial assistance and oil and gas interests interviewed for the study do not favor having Alaska as a shareholder. <br>
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The industry commissioned its own study to determine whether the cost of a gas pipeline would be profitable. <br>
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Results of the report, which considered routes through both Alaska and Canada, have not been made pubic, but the industry has tentatively said neither route appears economically viable.
