Barriers to natural gas pipeline are falling

COMPASS: Other points of view

May 10, 2012 

Last fall I charted a new course to build a natural gas pipeline and deliver our resource to Alaska homes and a global market.

This new road map to a gas line established benchmarks that have been met and backstop our progress toward marketing Alaska's gas.

Today, we have identifiable success measured by an alignment among North Slope leaseholders and a world-class pipeline company, and a resolution over Alaska's largest undeveloped oil and gas field.

I noted that if a market's call for gas has undergone a measurable shift away from the Lower 48 and toward Asian markets, then Alaska must be willing to move. We must be nimble -- and we are.

We recently approved TC-Alaska's request to amend its project plan under the Alaska Gasline Inducement Act to move to an all-Alaska line.

The company along with the producers are hardening their numbers on a large-diameter line going from the North Slope to tidewater.

The North Slope, which holds 35 trillion cubic feet of known reserves, will supply a line for in-state use, liquefaction and export to Asian markets.

Recent market studies by the U.S. Department of Energy and long-term energy outlooks by the oil industry support this route.

The U.S. Energy Information Administration (EIA) Annual Outlook predicts the United States will become a net exporter of LNG by 2016 and an overall net natural gas exporter five years later.

In a separate report, the EIA cites current prices -- ranging from $4 per million British thermal units (MMBtu) in the U.S. to $16 per MMBtu in Asia -- as another driver of a burgeoning LNG export market.

We gained traction in January during a meeting I convened with CEOs Rex Tillerson of Exxon Mobil, Jim Mulva of Conoco Phillips and Bob Dudley of BP. Not long ago, these companies were on separate paths to building a gas line. Now, they stand aligned, willing to work on a line to an LNG export facility preparing gas for Asian markets. These countries not only need gas but they need Alaska's gas.

Alaska already has a four-decade-long track record of safely and reliably exporting natural gas to Asia. We can also deliver gas to certain Asian countries faster than other regions. For example, shipments from Alaska could reach Japan twice as fast as those coming from the Gulf of Mexico through the Panama Canal.

As this alignment of key parties began gelling, the state resolved long-standing litigation over Point Thomson.

For years, all that Alaskans heard about Point Thomson gas was an update on the next court hearing. The recent agreement not only brings an end to litigation, it creates momentum to unlock our state's resources for Alaskans' benefit.

It means billions of dollars in new investment, work commitments from the oil companies and more oil in the Trans-Alaska Pipeline System. And if the required work goes unfinished, the companies must surrender acreage back to the state.

Without the Point Thomson settlement, Alaska had no chance at building a large-diameter pipeline -- a decades-long dream for many Alaskans.

Nearly one-fourth of known reserves would have remained in the ground, costing Alaska a chance to monetize and use its own gas, put money in the state treasury, provide affordable energy and put Alaskans to work.

Point Thomson also contains more than 400 million barrels of oil and gas liquids, making it Alaska's largest undeveloped oil and gas field.

The settlement requires a commitment to develop a separate oil reservoir, starting with construction of a 70,000-barrel-a-day-capacity pipeline connecting to TAPS.

Resolving the Point Thomson dispute brings us closer to fulfilling our constitutional duty under Article 8, Section 1 that calls for resource development to the "maximum use consistent with the public interest."

More work lies ahead but make no mistake: Our state is much closer to delivering gas to Alaskans and emerging markets than ever before.

Sean Parnell has served as governor of Alaska since 2009.

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