No one who knows natural gas pipelines disagrees with this point: a line that delivers a vastly higher volume of gas does it more efficiently, for less cost. Alaska is in the middle of a shell game with a lot of potential, but not perfect, pipeline prospects. Some people say "just pick something." Here's why that's not so easy, and picking the wrong project can harm the state with high natural gas prices.
The proposed big gas pipeline, potentially from the North Slope oil and gas fields to the deepwater port of Valdez, will get us by far the cheapest in-state gas and -- get this -- actually make our power costs low enough that we can have affordable heat and electricity and attract business to move to Alaska. But, as you know, that project is stuck in negotiations, and the silent, unreported threat from oil companies that they will not put their vast reserves of North Slope gas into a pipeline unless they get what they want in oil and natural gas tax concessions. They don't say that publicly. They do say that privately. And to be fair, I have always supported a large gas-line option if we can pull it off, and agree with Gov. Sean Parnell's efforts to move that project forward.
Why? Not only because it produces the cheapest gas, but because it would produce revenue for the state. We use a little less than a quarter of a billion cubic feet (bcf) a day of natural gas in Alaska. A big line will provide for in-state use while also exporting another two to three bcf per day to Asia, providing state revenue. The prices in Asia for liquefied natural gas are good now and seem to make the project economic.
Because the large-volume line requires so much gas, it will require new exploration and jobs on the North Slope. And when companies find natural gas, they'll find oil too. Oil that might not be economic to produce on its own can very likely be economic to produce if it is in a gas field that gets developed. That is, a big gas pipeline might be the best way to get new oil into the existing trans-Alaska oil pipeline.
Don't take my word. That's been the expert testimony backing this idea, at least when the state used to hire stronger experts who weren't just trying to push Parnell's $1 billion- to $1.5 billion-a-year oil tax giveaway (the governor has kept the better experts on contract, but kept them from speaking to legislators in an effort to push his oil tax bill through the Alaska Legislature).
Can we wait? Well, studies show there are great stores of natural gas in Cook Inlet -- but no one explores for it unless gas contracts are coming due -- so we never know what will be found when we need it. Why? No one will explore for natural gas until they know they have a customer.
But Cook Inlet and a new plan we have to truck natural gas from the North Slope to the Interior to solve that region's energy issues can buy us time to try to see if the big line will work. If we give the governor some negotiation time and that fails, then we have to move to worse options.
There is also a bill in the Legislature to deliver a small fraction of the amount of gas the big pipeline will deliver. That makes sense if all of our better options fail. But it contains some big negatives that need to be fixed.
First, the proponents who are writing it demand that once we vote for it this year, if we do, the Legislature never gets to review the project again to see what the price of natural gas is that will be delivered to Alaskans. It could be double what we pay now. It could be double what a big line will produce for Alaskans. And, in case you didn't know it, you as a consumer will be bound to that high price for 25 to 30 years -- the standard term a pipeline owner requires from consumers in order to get them to build a pipeline. Before signing you up for a gas-line, I want to make to make sure you get affordable gas, and that you don't have cheaper, better options. Blindly moving ahead and abdicating the Legislature's role to review the project for whether it meets the public interest isn't a good move.
Also, the bill says the pipeline owner and gas producers (ConocoPhillips, BP and Exxon Mobil) will be exempted from the normal rule that requires the state regulatory commission to regulate the price the pipeline can charge to ship gas -- an important consumer protection. Pipelines are entitled to reasonable profits, not excessive ones that get passed on as higher prices to consumers.
There are other problems with the bill. Three years ago it came with an estimate that its gas would cost three times what we pay now, and then last year came with a smaller (but high) price estimate for delivered gas. This year, for essentially the same pipeline capacity (a half bcf to quarter bcf of gas per day), the bill comes with a much smaller price. That all seems suspicious, and those prices are all early, unreliable estimates. In the end, I cannot sign on to a bill that lets corporations, not the Legislature, determine whether the price of gas for a pipeline serves the public's interest.
I want planning for this project to move forward, as well as negotiations for a preferable big pipeline to move forward. But I don't want the poison pill provisions in the small pipeline project. Moving ahead on all options will get us to a place where we have a clear picture of what options will best serve Alaskans.
State Rep. Les Gara is an Anchorage Democrat. He represents Downtown, Fairview, Government Hill and Eastridge.
The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch, which welcomes a broad range of viewpoints. To submit a piece for consideration, e-mail commentary(at)alaskadispatch.com.