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Competing Gas Pipeline Projects Prepare Their Pitches
Tuesday, November 03, 2009 1:53 PM


(Source: Anchorage Daily News)trackingBy Elizabeth Bluemink, Anchorage Daily News, Alaska

Nov. 3--Energy industry giants are winding up their pitches for a North Slope gas pipeline next year, but the state and its critics remain at war over whether any of the hundreds of millions being spent now will result in a successful project.

Citing the flurry of activity, state officials say Alaska is closer than it has ever been to obtaining a gas line. The multibillion-dollar project would pipe North Slope gas to a major hub in Canada, a project that is considered critical to the state's future economy, since most North Slope oil fields -- the state's principal source of revenue -- are long past their peaks.

Two competing gas pipeline projects -- one licensed by the state and the other advanced by North Slope producers BP and Conoco Phillips -- are in early stages but are working to publish cost estimates and find customers to commit their gas next year.

"All of a sudden, we are going from the abstract to the real," said Mark Myers, a state official overseeing the project of TransCanada Corp., the Canadian pipeline company that won the state's license. In June, TransCanada began working with Exxon Mobil, the third major North Slope producer, on its project.

Critics of the state's approach, however, predict that no one will commit their gas next year and that millions of dollars in public money will be wasted over the next few years to reimburse a portion of TransCanada's spending.

Last year, the Legislature approved covering up to $500 million of TransCanada's costs.

The state's pipeline project works against the interests of the North Slope leaseholders who would need to commit trillions of cubic feet of gas to the project, wrote former state petroleum economist Roger Marks in a recent paper titled "Why America May Not See Alaska Natural Gas Soon" for a peer-reviewed academic journal.

Marks detailed a series of potential flaws that he and other skeptics -- including North Slope producers -- have raised ever since 2007 when former Gov. Sarah Palin kicked off plans to make energy companies compete for a license to build the pipeline. Marks retired from the state last February, having never been involved in the Palin gas-line effort. He was, however, directly involved in former Gov. Frank Murkowski's three-year attempt for a gas-line deal, an effort that died in 2006.

State officials discount Marks' analysis. Myers said it is likely the North Slope lease holders will commit their gas next year, but with conditions attached.

One likely condition would be a revised state tax policy on gas production.




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