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Governor says Alaskans could be manning the shovels for gasline construction within two years Administration will work with producers, Legislature, Canada, federal officials to help take Alaska natural gas to the Lower 48 through Fairbanks Kristen Nelson PNA News Editor
Lower 48 gasoline prices and shortages drove North Slope crude oil development in the 1970s and Lower 48 natural gas prices and shortages may be the driver today for North Slope natural gas development. And while the state won’t be ignoring opportunities to market its natural gas abroad, the market today is domestic and the opportunity to begin gas pipeline construction could come in the next two years, Gov. Tony Knowles told the Resource Development Council in Anchorage Aug. 22. And, Knowles said, he is dedicating the remaining two years of his administration to see that construction of a gas pipeline takes place.
The governor said three things now make a gasline from the North Slope viable:
“Today, what’s new for Alaska is a dramatically changed market for natural gas in the Lower 48,” he said. While the state’s focus has been on selling liquefied natural gas to the Far East — the administration and Legislature have even enacted a fiscal regime for an LNG project — Knowles said that there are six countries supplying the Asian market, all with an advantage over Alaska of proximity to market, and with supplies to meet projected needs well into the future.
But with higher Lower 48 natural gas prices and expanding demand, Knowles said, “The competitive advantage of proximity to market … now falls in Alaska’s favor.”
And in addition to demand and price, Knowles said: “The realignment of ownership at Prudhoe Bay means the oil versus gas development is a debate of the past.” What the state wants The governor referred to the post-oil pipeline bumper sticker which read along the lines of: ‘Lord, give me just one more chance and I promise…’ This time, he said, there are things Alaska wants out of a pipeline construction project: Alaska hire and use of Alaska businesses; Alaska access to gas; and revenue for Alaska.
While he didn’t specify a preferred pipeline route, Knowles did say: “It’s unacceptable for us to fuel America, or the world, while Alaskans freeze in the dark,” a clear indication the state wouldn’t favor a line entirely through Canada.
What it will take to get there Knowles said the state has three tasks to achieve the goal of breaking ground on a gas pipeline: rights of way; construction, financing and marketing agreements; and changes to Alaska’s fiscal system.
A gas pipeline will require both state and federal rights of way, the governor said, along with many other permits. “Several projects on the drawing board already have some of these permits,” he said. He estimated that updating federal environmental impact statements on any of the permits and updating state right of way could take 18 or 24 months, and pledged that his administration would work hard to keep that work on track. The second task, the agreements, would include labor agreements to hire and train Alaskans and use Alaska suppliers.
On the third, the fiscal system, Knowles said his administration is taking “a hard look at Alaska’s tax system to make sure it doesn’t discourage gas development.” And, the governor said, he will introduce legislation next session — comparable to that two years ago for an LNG project — to cover any so-called stranded gas project, including a gasline to the Lower 48 and a gas-to-liquids facility.
Both of Alaska’s U.S. Senators, Ted Stevens and Frank Murkowski, have said recently that a natural gas pipeline should be built in Alaska — not across the Beaufort Sea to Canada.
–The Associated Press contributed to this story
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