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“My way is the highway” decree frustrates North Slope gas line group Thayer says preliminary numbers show “neither route is economical now;” group on track to decide by end of year if any pipeline to Lower 48 is feasible Kay Cashman PNA Publisher
A Channel 2 news report that aired Aug. 23 had Petroleum News • Alaska’s phone ringing the next morning with questions on whether or not the North Slope producers have backed out of building an ANS gas line because Alaskans didn’t want the northern route.
Curtis Thayer, the man interviewed by Channel 2 and spokesman for the Alaska Gas Producers Pipeline Team, told PNA Aug. 24 that “nothing has changed” since the producers announced in July that preliminary numbers showed “neither route is economical now” but the northern route was more economical to build than an Alaska Highway route.
Northern route 300 miles less “The northern route means 300 miles less pipe and that means a smaller environmental footprint and a higher net back to the state of Alaska,” Thayer said, explaining that the northern route would appear to require fewer tax breaks from the state and therefore generate more revenue to state coffers. It also has more synergies with Canada.
But neither route is economical yet, Thayer cautioned. “The purpose of our $100 million study was not to select a pipeline route but to see if a gas pipeline from the North Slope to the Lower 48 was economically feasible.
“We’re in the middle of that study now. We are still on track with making a decision at the end of the year on whether or not to build a gas line. Right now neither route is feasible.”
The three components needed to make a gas pipeline an economic proposition, he said, are construction costs of the line from the producers, which includes route consideration; legislation from Washington, D.C., that would give the pipeline owners an efficient permitting avenue, including one lead agency to deal with, expedited dispute resolution and an 18 month window for permitting; and, a guaranteed tax structure from the state of Alaska.
He stressed the importance of the regulatory window. “We need something that is not going to drag on five to 10 years. Time is money.”
Getting “cloudy” picture from Juneau, D.C. Fiscal clarity from state is also critical to determining if a gas pipeline from the North Slope is a viable proposition, he said.
“The state changed the taxation regime on TAPS something like 11 times from the time they decided to build TAPS until it was completed. We need fiscal certainty. We need to know up front that the rules are not going to change,” Thayer said.
Instead of certainty, he said, the producers are getting a “cloudy” picture from Juneau and Washington, D.C.
"They have decided on which line we're going to build. Where are their facts and figures? ... We're spending $100 million between two routes — to decide if we can build this line and, if so, which route is feasible. It's very frustrating. ...
“If our answer at the end of the year is that the northern route is the only economic route, then we won’t build a gas line because the state of Alaska doesn’t want a line built along that route,” he said.
What prompted Thayer’s comments Aug. 23, he said, was “the governor saying again that it’s our way or the highway.”
The gas group is “trying to stay very neutral. We’re not specifying a route. We’re looking for the best answer for not only the companies but the state of Alaska and getting so much resistance over a project that hasn’t even been given the go ahead. It’s very frustrating,” he said.
The gas group is a consortium of the three major North Slope gas owners — BP Exploration (Alaska) Inc., Phillips Alaska Inc. and ExxonMobil.
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