State keeps LNG pipeline on the table

By Eric Lidji

Petroleum News

Hoping to alleviate the concerns of those who favor an “all-Alaska” option for marketing North Slope natural gas, Gov. Sarah Palin on Aug. 20 signed an order directing her administration to continuing pursuing a liquefied natural gas project.

Although the administrative order outlines a simple framework for the Departments of Natural Resources and Revenue to work with project sponsors, the document is mostly meant to assure those who felt betrayed after the legislature gave TransCanada a license and matching grant to pursue an overland pipeline from Alaska to Alberta.

An LNG project, such as the one long proposed by the Alaska Gasline Port Authority, would involve a pipeline contained entirely within the boundaries of the state, and would ship LNG either to markets in East Asia or on the West Coast of the United States.

Testifying before state lawmakers recently, TransCanada promised to allow potential shippers to commit gas to a LNG project, as well as an overland route, during the first open season. With enough customers committing enough gas, TransCanada even promised to build a Y Line, a configuration combining the overland and LNG routes.

The new Administrative Order is “memorializing that same intent, that same attitude for the state,” according to Natural Resources Commissioner Tom Irwin.

“Everything comes back to the market conditions,” Irwin said. “If you a market for LNG only, we agree that will be built. If there’s only a market for the U.S through Canada, that will be built. If for both, both can get built.”

During legislative hearings, some experts questioned whether an LNG project would get Congressional approval to export domestic natural gas supplies to overseas markets, especially as energy security becomes an increasingly hot topic across the country.

Proponents, especially those at the Alaska Gasline Port Authority, say they already have the export license, and believe it will remain valid if the project moves into development.

Others now believe a Y Line could relieve some pressure by addressing domestic demand, while also giving the state diversity through overseas markets.

“It helps us deal with a lot of that concern,” said Sen. Gene Therriault, R-North Pole, a proponent of an all-Alaska line who also voted to give TransCanada the state license.

Voters in three municipalities created the Alaska Gasline Port Authority by an overwhelming majority nearly a decade ago, and Palin supported the project during her 2006 run for governor, but the agency failed to submit a conforming application to the Alaska Gasline Inducement Act, and spent much of the past year struggling to remain in front of the public.