NEWS BULLETIN

December 17, 2010 --- Vol. 16, No. 118December 2010

EIA drops Alaska gas pipeline from energy outlook

The U.S. Energy Information Administration has removed the Alaska natural gas pipeline from its most recent projections of the domestic energy picture over the next 25 years.

The change is one of many revisions included in a recently released overview of the 2011 Annual Energy Outlook, the EIA’s yearly update of projections for domestic energy markets through 2035. The EIA, the statistical arm of the U.S. Department of Energy, released the overview on Dec. 16 and plans to release the complete report in March 2011.

The overview only covers the “reference case,” the starting point for alternative forecasts that take into account changing laws and regulations, and fluctuating commodity prices.

In its 2010 AEO reference case, the EIA projected that the Alaska natural gas pipeline would be completed in 2023, but did not include the project in its 2011 AEO reference case. “This change is a result of increased capital cost assumptions and lower natural gas wellhead prices, which make it uneconomical to proceed with the project over the projection period,” the EIA wrote in an introduction to the 2011 AEO overview.

Although the change reflects declining confidence that an Alaska gas pipeline will come to fruition, the EIA warns against putting too much stock in the reference case, even within the already uncertain world of energy forecasting. “Because of the uncertainties inherent in any energy market projection, the Reference case results should not be viewed in isolation,” the EIA wrote. “Readers are encouraged to review the alternative cases when the complete AEO2011 publication is released in order to gain perspective on how variations in key assumptions can lead to different outlooks for energy markets.”

See more in the Dec. 26 edition of Petroleum News, available online to subscribers on Thurs., Dec. 23 by 11 a.m.


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