Alaska's choice

Alaska Gov. Tony Knowles said his state will push for construction of a gas pipeline from the North Slope to Albera, paralleling the oil pipeline and Alaska Highway.

Nov 24th, 2000

Alaska Gov. Tony Knowles said his state will push for construction of a gas pipeline from the North Slope to Albera, paralleling the oil pipeline and Alaska Highway.

He claimed the 1,800-mile line would be the largest private project in the nation's history.

Knowles said that state officials "will immediately initiate ways to facilitate this project, including a responsive federal approach to rights of way and permitting and possible review of the federal fiscal regime for a gas line."

He contends that now is the time to develop the 35 tcf of proved reserves in northern Alaska. Production could be 4 bcfd for 50-70 years.

Knowles observed that gas prices hit a record $6.32/Mcf recently at the Henry Hub, more than double the preceding 10-year average. He said estimates are that long-term prices would be more than enough to make a line economic.

The competing route would be from Prudhoe Bay field across the Beaufort Sea and then down the Mackenzie River delta to Alberta. Knowles said that route would be more expensive and time-consuming to build.

Benefits

Knowles said a gas pipeline would be more than a massive construction job.

It would mean billions of dollars for the Alaskan economy, provide gas to heat communities and businesses, and would create spin-off industries using liquids.

"All these create a staggering list of economic benefits and opportunities that will be available if the gas line follows the highway route."

The governor said, "With all of the permitting, international agreements, and environmental considerations already completed from the 1976 federal pipeline act, the Alaska Highway pipeline is clearly poised for immediate action."

On the other hand, he said the shorter Beaufort Sea project has no precedent and has formidable technical, environmental, and logistical challenges.

"The frontier areas both on land and sea are unknowns, and any cost estimate must include that factor. The technology of under-ocean [arctic] pipelines at untested pressure over never-achieved length of 400 miles is a major cost risk."

State actions

Knowles said in January he would ask the legislature to fund $4 million in programs promoting the line.

Alaska will work to help all potential project applicants, the governor noted: "We will initiate the studies and start collecting data that we know will be needed for permitting and right-of-way reviews to save time once an application is filed."

He said Alaska would work with Canadian government officials and groups to ensure a collaborative approach and would draft a plan to ensure the project creates jobs statewide.

Knowles plans to file a bill in January to amend the 1998 Stranded Gas Development Act to include a gas line or a gas-to-liquids project.

"When I worked with legislators on the original bill more than 2 years ago, most of us assumed that an LNG project was Alaska's best bet. The law does not cover a gas line or GTL project."

Finally, Knowles will use a Natural Gas Policy Council to explore how the state should use its 12.5% gas royalty and how it should plan for future LNG and GTL projects.

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