Compass: Alaska should build an in-state gas line

By BILL SHEFFIELDNovember 23, 2012 

The State of Alaska was granted statehood because we convinced Congress we had resources and could take care of ourselves. We are now at a crucial time that demands we make decisions about state infrastructure to keep that commitment. If we keep studying things instead of making decisions, in the next five or six years we could easily find that we have spent all of the surplus money from oil revenue like a wisp in the wind, with nothing to show for it. I'm not talking about the Permanent Fund; I'm talking about the money in other state savings accounts, about $15 billion.

Consider these scenarios:

A state corporation, the Alaska Gasline Development Corp., is working on an in-state, 24-inch diameter gas line from the North Slope through Fairbanks and down to Southcentral Alaska, ending on the Kenai Peninsula, as a fall-back in case a big gas pipeline doesn't get built. With the new technology flooding the market with natural gas we could spend decades before a large gas line ever becomes practical here.

We have waited long enough, more than 30 years, so let's quit talking about it and build a smaller, less expensive in-state gas pipeline. The state should contract to have it built for $7.5-$8 billion, and I don't believe we should pass that cost to our people as a tax burden.

Lots of really positive economic things will happen if we decide to go for this.

The project would create many jobs to build the line, and then would provide permanent jobs for operations. The 24-inch line is too large for us to use all its capacity for heating our homes and generating power, so we could sell some of it to Asia through the existing liquefied natural gas plant in Kenai, as we have for more than 50 years. We also could send gas to the planned Donlin Creek Mine, which is struggling to come up with an economic energy solution, and possibly even to Bethel, only one hundred miles further and the hub of a region where some 20,000 people live.

Flint Hills refinery in Fairbanks could go back to full operation and provide more jet fuel (now imported) and exports of refined products. More than likely, the Agrium fertilizer plant would reopen on the Kenai with up to 300 good-paying jobs. If the state pays for construction of the pipeline and doesn't seek repayment, there would be no tariff. So the net result would be affordable and reliable energy for at least 550,000 Alaskans in the Interior and Southcentral, and potentially much of rural Alaska.

Southeast Alaska asks, "What about us?" Southeast could get a grid that ties all the region's hydroelectric resources together, and that would help immensely with available power and reduce its cost. In the far north, we will need to keep whittling away at providing less expensive energy, through either natural gas or coal.

Although this project is not comprehensive, undoubtedly it would help many Alaskans. It would provide good jobs. It would lower the cost of living. It would give Fairbanks lower utility costs, and would provide Southcentral with reliable and abundant energy for the future. And decisions made in tandem could also provide reliable, less expensive energy for Southeast and rural villages. Whatever our utilities cost in Anchorage, it costs three to four times that amount in Fairbanks, and exponentially more to keep a house warm in the villages.

The state gets its money back over a long period of time when it invests in itself. With more affordable energy, companies will invest and use the gas to build all types of projects, thus diversifying our economy. What this gas line also would provide are value-added resources, such as clean diesel made from natural gas or fertilizers. We will add the value and sell Alaskan-made products, and then there will be more jobs, and ongoing economic vitality.

The governor can and must provide the leadership to make this happen. That would be a victory for all Alaskans.

Bill Sheffield was Alaska's governor from 1982 to 1986.

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