Northern gasline route is free market choice

Politics aside, H. Sterling Burnett of the National Center for Policy Analysis says a single gas pipeline makes most sense

Steve Sutherlin

Petroleum News Associate Editor

Unfettered by politics, the northern route would be the free market's choice for an Alaska natural gas pipeline, says H. Sterling Burnett, Ph.D., a senior fellow with the National Center for Policy Analysis, in a report released April 10 by the Washington, D.C. based center.

The northern route, a single pipeline from the North Slope to North American markets, to carry both gas Alaska North Slope and northern Canada gas, makes the most sense, Burnett contends in the report.

The northern route is shorter and simpler, because it requires only a single pipeline from Prudhoe Bay to Canada's Mackenzie Delta, through the Mackenzie River valley, to Edmonton, Alberta, he says.

For more than 20 years, the northern route has vied for approval with a southern route for an Alaska gas line. The southern route actually is a two-pipeline route, he says. One line would run from the North Slope to Fairbanks, along the Alaska Highway to northeast British Columbia, and from there to Edmonton. A separate line would be needed to carry gas from the Mackenzie Delta to Edmonton.

The northern route would be less than 1,700 miles long, Burnett points out, as opposed to 3,500 miles of pipe in the dual lines of the southern route, which includes 900 miles of mountain crossings.

According to Burnett’s analysis, a pipeline over the northern route would be dramatically less expensive to construct, and wouldn’t require tax breaks and government incentives to be economically viable.

The northern route would cost an estimated $8 billion to construct, he says, half the approximately $15 billion cost of the southern route. At current gas prices, the northern route could be expected to produce gross revenues of $20 billion to $25 billion and bring Alaska tax and royalty revenues of $5 billion over the life of the project, the report concludes.

Burnett says natural gas has many benefits over alternatives, and that Arctic gas is vital to the nation’s energy future.

“Estimated potential natural gas reserves in Alaska and the Canadian Arctic exceed 160 TCF, more than all current U.S. reserves combined,” he says in the report, adding that Congress and the Bush administration could expedite the delivery of Arctic gas by making the right choice in routes.

“At a time of rising national deficits, energy price fluctuations, supply shortages and fear of terrorist attacks on energy infrastructure, the national energy policy should endorse the route that is most likely to deliver natural gas supplies at the lowest cost, in the least amount of time, and in the most secure and environmentally prudent manner: the (northern) single-line route,” Burnett says.

Highway route tax subsidies opposed

In addition to its advantageous cost, the northern route delivers an environmental dividend, the report says.

“Because it requires fewer pipeline miles and avoids environmentally sensitive areas, the (northern) single-line route is environmentally preferable,” Burnett concludes.

Given the tax and environmental ramifications, subsidies to build an Alaska natural gas pipeline are opposed by politically diverse public interest groups, including the American Conservative Union, Taxpayers for Common Sense, and the National Environmental Trust, he says.

Burnett said Alaska legislators continue lobbying to have the national energy plan mandate the southern route, out of “concern for short-term job gains from pipeline construction, and despite the obvious advantages of the (northern) single-line route.”

ExxonMobil favors choice

“We don’t support incentives or subsidies,” Davis said. “We’ve been advocates for flexibility in routes.”

Davis said the company opposes legislation that precludes a northern route.