Aboard the First Lady, en route to Wrangell -- It was a forgone conclusion that the Denali project was doomed once the economics of the gas line changed. Natural gas prices dropped from more than $6/Mcf to less than $4/Mcf due to the large resource of shale gas in the lower 48 as well as new recovery technologies.
In 2006, my administration reached an agreement to have the state join with the producers Conoco Phillips, BP and Exxon to build and own a gas line from the North Slope to Alberta
Unfortunately, some in the legislature felt the time was not right and chose to delay legislative action in the closing days of that session. It was a classic case of passing over the opportunity of a gas line when the economics were favorable. The new Palin administration chose to dismiss the agreement with the producers and put the project out for competitive bids. The result was one qualifying bid from TransCanada, a company that has yet to contract for a gas supply.
Further, the TransCanada agreement put at risk to the state some 500 million dollars with no assurance that their proposal would ever be built. Unfortunately, the actions of the Palin administration in its gas line efforts displayed a measure of ineptness which will likely result in grave consequences to the economy of our state.
Senior energy analysts now estimate that the price of natural gas will have to be in the $7-8/Mcf range for the Alaska gas line project to again be economic. So much for lost opportunities.
Frank Murkowski is a former Alaska governor and U.S. senator. The views expressed here are the writer's own and are not endorsed by Alaska Dispatch. Alaska Dispatch welcomes a broad range of viewpoints. To submit a piece for consideration, e-mail commentary(at)alaskadispatch.com.