A tax incentive proposal intended to speed up contractual support for natural gas pipelines narrowly escaped death this week in the Legislature's Joint Minerals, Business and Economic Development Committee.

A key change from the original proposal scraps the idea of giving a severance tax break to producers who commit to new export transmission projects. Instead, the Wyoming Pipeline Authority suggests the state could provide some sort of incentive payments.

"It gets away from the perception that this is an effort to benefit producers when actually it's a benefit to the state," said Wyoming Pipeline Authority executive director Brian Jeffries.

Committee Chairman Rep. Tom Lockhart, R-Casper, was prepared to mothball the proposal on Tuesday, citing doubts that it would actually prompt gas companies to act on pipelines in a more timely manner.

But Sen. Eli Bebout, R-Riverton, urged the committee to continue working draft legislation. Bebout said the estimated $470 million loss of revenue to the state this year alone is too critical to ignore a potential remedy.

"This is an issue that will not solve itself," Bebout said. "This is a huge, huge issue. This could be one of the biggest issues that comes out of this session."

In Casper Tuesday, the Pipeline Authority provided figures to lawmakers suggesting that the cost of the incentive program could be $164 million, with a payoff of well over $500 million.

Jeffries said details about exactly where the incentive money would come from still need to be worked out. But the advantage is that an incentive payment could spur all natural gas shippers into action, not just producers.

Producers typically make up 40 percent of all shipping contracts originating in the Wyoming, Colorado and Utah area, according to the Pipeline Authority.

Although three major pipeline expansion proposals have been announced in recent weeks, none are on schedule to come online before rapidly growing gas supplies in the Rockies again meet export capacity sometime in 2010 and kill wholesale prices here.

The "Rockies natural gas price differential" is estimated to sap an estimated $470 million in unrealized revenue to Wyoming this year, according to information provided by the state's economic analysis division.

Energy reporter Dustin Bleizeffer can be reached at (307) 577-6069 or dustin.bleizeffer@casperstartribune.net.

* Last we knew: Growth in natural gas production in the Rockies outpaced available pipeline capacity to ship the commodity to outside markets, sapping hundreds of millions of dollars from public coffers in lower wholesale prices.

* The latest: A legislative committee narrowly agreed to continue draft legislation to provide a tax incentive for quicker commitments to pipelines.

* What's next: The committee will reconsider the draft legislation before the next legislative session in February.]]->