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Stevens doesn’t support initial LNG export Says gas pipeline should be viewed as transportation system for 50 years; construction will encourage investment in hydrates By Kristen Nelson Petroleum News
U.S. Sen. Ted Stevens, R-Alaska, told the Alaska Legislature Feb. 19 that he thinks “the window of opportunity” for a gas pipeline from Alaska’s North Slope to market “is rapidly closing” and encouraged legislators and the governor to “resolve the outstanding issues that you face as quickly as possible.”
At least 40 percent of the natural gas consumed in the U.S. will be imported by 2015, he said, and billions of dollars are being invested around the world in liquefied natural gas plants and cryogenic tankers to bring LNG to the U.S.
New technologies are being used to find new sources of gas in the U.S., Stevens said, citing recent reports of as much as 50 trillion cubic feet of recoverable gas in the Marcellus shale in the Appalachian Mountains (see stories in Petroleum News).
Stevens believes that fiscal certainty will be required for the project.
“I think to achieve our goal — in my opinion — the right climate for investment must exist here,” he said. With cost estimates as high as $40 billion: “No entity will commit to that kind of money — whether it’s $20 (billion) or $40 billion — without certainty in the financial aspects of the project’s economics.”
At a press conference after his presentation to legislators Stevens said “This will be the largest project ever financed with private capital in the history of the United States.” The money will come from the financial markets and it will be an issue of the terms they will accept.
“I don’t think those terms are going to be set by the Legislature or by the governor or by the Congress. They’re going to be set by the people that manage the money.”
No chance for bridge shipper In response to a question from Rep. Bob Roses, R-Anchorage, on the chances of Congress stepping in as a bridge shipper, Stevens said he’d anticipated that question and checked with the Office of Management and Budget. OMB said Congress has never approved a bridge-shipper concept. The loan guarantee provision in the 2004 Alaska Gas Pipeline Act only got in at the last minute because the Alaska delegation “thought it was the one thing that might help us accelerate the building of the pipeline,” he said. Initially it was opposed by House and Senate leadership and the president, but, Stevens said: “At the last minute they all said, OK, try it.”
Now there is a suggestion that the state and TransCanada jointly approach Congress “to obtain a bridge shipper provision and to increase the loan guarantee. Neither has any hope at all. It cannot be done,” Stevens said.
Rep. Les Gara, D-Anchorage, asked Stevens if Congress would help the state pressure the North Slope producers to sell gas into a line.
“No, I don’t think Congress would,” Stevens replied. There has never been a bill to “compel a producer of oil or gas to sell,” he said, adding that he thinks any effort to compel a sale would lead to litigation.
“I feel as a lawyer that they have every right to say that they will not sell it and I don’t think any courts or the Congress would compel them to sell,” Stevens said.
Sen. Tom Wagoner, R-Kenai, asked how Stevens thought Congress and the U.S. Department of Energy would react to a request to export North Slope gas as LNG.
“Tom, I don’t support taking the first 35 trillion cubic feet to an LNG port,” Stevens told Wagoner. “I do support having the alternative of having a gas pipeline to Southcentral, a gas pipeline to Valdez and a gas pipeline to the border.”
Support in Congress for an Alaska gas pipeline comes from the Midwest, and it’s bipartisan support Stevens said, because pipeline gas would go there. “On the shores they don’t care too much because they know they’ve got gas coming in in LNG.” Gas hydrates the goal Stevens said he thinks the importance of a gas pipeline from Alaska’s North Slope is not what Alaskans get out of it as individuals, or what the state gets out of it.
Building that line to transport the known 35 tcf of gas is going to prove we can transport gas, he said, and “it will lead people to putting money into the commercialization process” for gas hydrates, of which thousands of trillions of cubic feet are estimated to exist on the North Slope. That by itself would be a 50-year supply of energy for the U.S. Stevens said, “but the technology to make that available to the country is going to be so expensive no one’s going to take it on unless there is a transportation system for the gas” hydrate as it is slowly commercialized.
“So I urge you to think about the pipeline as an avenue for future use,” Stevens said, “not just for this 35 trillion cubic feet.” Don’t focus on what a gas pipeline could do for this generation, he said. “Think what it’s going to do for the future generations to have that incentive to go after the fantastic supplies.”
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