Ted Stevens calls for priority on in-state gas pipeline

Stevens, giving an Anchorage speech before the public policy group Commonweath North, called for the state to invest half the money it would take to build a multi-billion dollar natural gas pipeline from the North Slope to the Kenai Peninsula. Gas not needed for use in Alaska could be liquefied at an existing plant there, Stevens said, shipped in tankers to countries such as Japan, China, India and South Korea, where he said there's a better market than in the U.S.

Stevens said a bigger pipeline should go to Valdez, long promoted as a potential port for export of liquefied natural gas to Asia. He called on the state to give "emergency power" to an official dedicated to work on making it happen.

The 86-year-old Stevens has made few public appearances since he lost his re-election bid in 2008, shortly after his conviction on federal charges of not properly reporting gifts. The conviction was subsequently overturned by a federal judge.

Stevens told the Commonwealth North luncheon crowd that he asked to come and talk about why he's changed his mind on the gas pipeline project. While in office, he championed the proposed gas pipeline through Canada and helped pass $20 billion in federal loan guarantees meant to help bring Alaska gas to the Lower 48.

"It's only in the last six months that the realization has come about that's not the market our gas can take," Stevens said.

He spoke of the large new supplies of natural gas in shale rocks in the Lower 48, and said demand there isn't rising as much as previously predicted. The supply will likely more than meet demand through 2030, Stevens said. But forecasts show the natural gas demand in Asia badly outstripping supply in three years, Stevens said, giving Alaska a short window to come in and meet the demand.

Stevens called it a magnificent opportunity and said "this is something we should put every talent we've got in the state on." Stevens refused to answer when a reporter after his speech attempted to ask him about the details of his proposal, and the economics of building gas pipelines to both Kenai and Valdez.

Larry Persily, confirmed by the U.S. Senate this week as the federal coordinator for the Alaska gas pipeline project, said there's a lot of competition to supply natural gas to Asia.

"I respect his knowledge and experience, I just disagree," he said. "I think there's still a way to make it work to serve the North America market, which is a much larger market in terms of how much gas they consume every day."

Persily said the government can't dictate that Alaskan gas goes to Asia. "It's important to let the market have a vote," said Persily, who currently works for Anchorage Republican Rep. Mike Hawker, advising state legislators on oil and gas.

TransCanada, working with the state under the Alaska Gasline Inducement Act, expects to begin an "open season" in May, during which it will gauge the industry interest in both a project to the Lower 48 and the potential of a pipeline to Valdez for Asia markets. TransCanada will ask the oil companies to commit to be its customers and ship the North Slope natural gas they produce.

The oil companies BP and Conoco Phillips have been working on their own Alaska natural gas pipeline project called Denali, which will hold its own open season this summer. That project is focused solely on building a pipeline to the Lower 48. Denali President Bud Fackrell was at Steven's speech and said afterward the market is volatile right now and it is too soon to predict a result.

Stevens said he let Gov. Sean Parnell know he was abandoning support for the pipeline through Canada. Parnell spokeswoman Sharon Leighow said he still thinks a pipeline to the Lower 48 is the "best and fastest" way to develop the state's North Slope natural gas reserves. She said he's also working toward the possibility of a smaller in-state natural gas pipeline to serve the Alaska markets.

Stevens said the state should "put aside" its Alaska Gasline Inducement Act effort with TransCanada and get hopping on pipelines to both Kenai and Valdez.

"The money for us is in the Pacific Rim" said Stevens, who was also enthused about the possibility of technology to turn Alaskan coal to natural gas.

Parnell's opponents in the Republican primary for governor pounced on Stevens' remarks. Anchorage attorney Bill Walker said Stevens is right about the Lower 48 market. He issued a statement saying "Alaska is headed for an economic cliff and Governor Parnell refuses to change course." Walker, a former Valdez city attorney, is a longtime proponent of a pipeline to Valdez with gas exported to Asia.

Former legislator Ralph Samuels, another Parnell opponent, agreed that shale gas has transformed the market in the Lower 48. He said the state needs to focus now on a single small in-state "bullet line." That could include some export to Asia, he said, but still allow a larger pipeline to come if Lower 48 markets change.

Find Sean Cockerham online at adn.com/contact/scockerham or call him at 257-4344.