BOB MOEN Associated Press writer | Posted: Thursday, September 4, 2008 12:00 am
CHEYENNE - Gov. Dave Freudenthal said Wednesday that the state doesn't have the constitutional authority to fund or invest in new natural gas pipelines - one option that could help spur the export of the state's abundant gas reserves.
Freudenthal said he's opposed to state government getting involved in the pipeline business. He said he's open to discussion about amending Wyoming laws to allow greater state involvement in pipeline development, but he doesn't think a constitutional amendment would have much traction in the Legislature.
State Rep. Thomas Lockhart, who co-chairs an interim legislative committee exploring gas pipeline construction, said the panel isn't considering any constitutional changes.
"We understand the magnitude of constitutional issues, and we don't take those kinds of decisions lightly, and we're not there to do that now," Lockhart, R-Casper, said in a telephone interview.
Natural gas produced in Wyoming consistently sells for less than gas produced elsewhere in the United States because there's a shortage of pipeline capacity to carry Wyoming gas to out-of-state markets. To move the excess, Wyoming producers discount their gas to buy space in pipelines.
New pipelines are being built and others expanded in Wyoming but not at a pace that can keep up with growing gas production in the state.
Since state taxes on gas production are tied to the price of gas, the Wyoming Pipeline Authority estimates the state loses hundreds of millions of dollars in potential tax revenue.
There have been various ideas offered on how the state could spur new pipeline capacity, such as giving tax breaks to encourage more investment in new pipelines and state investment in a pipeline.
"It is a complex market and the suggestion that Wyoming would sit here and that we would build a pipeline and own a pipeline, or own equity in a pipeline, that crosses three or four other states … suddenly we are no longer acting as a government, we are acting as a private enterprise engaged in interstate commerce," Freudenthal said.
No one has been able to show whether the state could have any influence on the natural gas market, he said.
"Sometimes problems are simply the operation of the marketplace in a free market society and we need to let them work their way out," he said.
In addition, the Wyoming Constitution strictly limits state government involvement with the private sector. Freudenthal noted the state had to amend its constitution just to provide money to local governments to help maintain highways and airports.
"While you can argue that there's a distinction between buying capacity and actually operating a pipeline, that's probably a distinction without a difference because you're still using state wealth to underwrite assistance for a particular set of private parties," he said.
Also, the companies themselves are wary of any state involvement in the pipeline business, Freudenthal said.
He said the state can't do much more than work with companies to encourage them to build and invest in new pipeline capacity to move more Wyoming gas.
"What we have done is an awful lot of work to try to get companies to sign up for space, try to make sure they had the resources available for them to drill and to produce so they will sign up for the space," Freudenthal said.
The Legislature's Joint Minerals, Business and Economic Development Interim Committee is studying the pipeline issue this summer. The committee recently asked Freudenthal for any ideas his administration might have on the issue.
Lockhart, co-chairman of the panel, said the committee has not developed any formal proposals.