Prudhoe Bay, in the state's north, holds an estimated 35 trillion cubic feet of known natural gas reserves making it the biggest untapped supply in the US. Some experts believe that reserve could ultimately grow to up to 100 trillion cubic feet.

Three majors - BP, ExxonMobil and ConocoPhillips - have already put their hands up in relation to the pipeline, which will cost an estimated US$20 million to build.

The pipeline development bill, handed down this week by Alaskan Governor, Frank Murkowski, extends the time period for the contract negotiations and sets out a description of qualifying gas projects and development companies.

Negotiations with companies are slated to be completed by the end of this year.