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BP official says Alaska gas pipeline could be reality by 2011
If everything goes right, North Slope gas could be flowing through a gasline to Lower 48 markets by 2011, a top BP executive told the Senate Energy Committee Feb. 25 in Washington, D.C.
David Welch, president of BP's Alaska-Canada pipelines business, referred to the North Slope’s 35 trillion cubic feet of known gas reserves as a “world-class gas resource,” but warned that his 2011 prediction could only occur “if everything went right.”
Everything includes increasing demand for natural gas in the Lower 48 and some type of financial incentive from Congress to reduce the risk of building the $19 billion pipeline, Welch said.
Welch and three other energy experts testified on natural gas supply and prices. All four indicated that the North Slope was at the top of the list of gas production areas.( See related story on page7.)
BP and Conoco Phillips have proposed tax breaks that would kick in if the price for Alaska natural gas drops below a certain level, and which could be repaid when gas price levels rise.
Welch said that 20-30 percent of U.S. gas production benefited from some type of government incentive.
Bush administration remains opposed The Bush administration and several lawmakers have spoken out against that kind of tax incentive, although both the president and most lawmakers support the construction of an Alaska Highway gas pipeline to bring North Slope gas to Lower 48 markets. The differences emerge on what the federal government should do to encourage private industry to build a line.
The Bush administration reconfirmed its opposition to the tax credits, which it considers a subsidy, when members of the Bush administration met with Alaska Gov. Frank Murkowski in Washington the week of Feb. 23. Following the meeting the governor said president was open to other types of incentives.
The Associated Press reported that at an earlier hearing Sen. Lisa Murkowski, R-Alaska, asked Energy Secretary Spencer Abraham about the possibility of “fiscal enablers” for the Alaska project.
He said the Bush administration doesn't oppose all incentives, although he reiterated that it did oppose the “very substantial, robust support in the form of essentially putting a floor on price” that was proposed last year by ConocoPhillips and supported by BP.
“We haven't ruled support totally off the table,” he said. “We are just trying to find what we think is an appropriate level of taxpayer incentives here that we think is justified in the circumstance.''
“We've got to figure out if we can meet in the middle,” Sen. Murkowski said after the hearing.
She told reporters, “If in fact the project's not going to happen without the incentives, how far does that support go?”
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