Independent oil and gas analyst Pedro Van Meurs is no stranger to trying to help Alaska get its huge reserves of natural gas to market.
He's been trekking north for about 15 years now. He's worked for two governors and has sat through hours upon hours of legislative committees, listening to the seemingly endless partisan bickering over Alaska's taxation policy. The pinnacle may have come in 2005-06, when then-Gov. Frank Murkowski, with Van Meurs's help, introduced a plan to get Alaska gas to market that involved locking in oil taxes for up to 45 years.
Among the results of that push: a monumental federal investigation into Alaska political corruption and the ascension of Sarah Palin.
In short, Van Meurs has been a key player in one of the most tumultuous chapters in Alaska's young history.
Despite all of that, Alaska's vast natural gas reserves still remain buried under the Arctic tundra, thousands of miles from any market. And, according to Van Meurs, that's where the gas likely will stay.
A dead duck?
Unless Alaska takes "extraordinary methods" -- steps that Van Meurs doesn't think Alaskans have "the stomach for" -- the decades-old dream of a large diameter pipeline running from the state's North Slope south to tidewater or into Canada is, in his words, "a dead duck."
He said this on Dec. 7 at a meeting of the Anchorage Chapter of the United States Association for Energy Economics, where Van Meurs gave a truncated version of a two-day legislative seminar he had earlier provided to Alaska lawmakers.
Van Meurs has much to say about Alaska’s tax scheme -- namely that it needs to be revamped -- best explained by Dermot Cole in the Fairbanks Daily News-Miner. But his death-of-the-gasline pronouncement last Wednesday was perhaps the most dramatic point.
He said the market in the Lower 48 will be flooded with shale gas. And before long, the Asian market, which Gov. Sean Parnell recently said Alaska should exploit, will be flooded with gas from Russia, Australia and Canada.
"I can't believe that any country would be crazy enough," to commit to buy Alaska's gas at the price it will need to make it to market through a large-diameter pipeline, Van Meurs said, adding that at least 15 other liquefied natural gas (LNG) projects were vying for Asian markets.
Unless Alaska taxpayers were willing to largely subsidize a line -- or take other extraordinary methods -- the state simply cannot compete with other markets, he said.
Van Meurs does see one possibility, however: Alaska, or one of the oil producers, could invest in a liquefaction plant on the North Slope, where the gas would then be sent out on Arctic tankers bound for Asia. "That's the only rational option I see," he said. If not that, then the idea of bringing Alaska gas to market is "finished."
Not everyone agrees with the Van Meurs message, however. Larry Persily, the federal coordinator for Alaska's natural gas pipeline project, was particularly disturbed by what Van Meurs said.
For one, he said, bringing tankers to the North Slope, where it's relatively shallow, would require building either a long dock, or dredging a channel through the seabed floor. "I couldn't conceive that you could get permits to build those things," he said. Moreover, he called the Van Meurs view "simplistic."
"For Pedro, it's unusually short-sighted and almost irresponsible," Persily said, referring to ever-changing markets and a recent EPA finding that linked natural gas hydraulic fracturing (fracking) to water pollution.
Dan Sullivan, the Alaska Department of Natural Resources commissioner, is too political to take it as far as Persily did. Sullivan did say, however, that one of the many things he's learned on the job, so far, is that when people speak in "absolute truths," those truths should be taken with a grain of caution.
Besides, Sullivan spent a few days in mid November meeting with a long line of government and industry officials in China. Sullivan knows China. He served as an undersecretary of economic, energy and business affairs for the State Department under President George W. Bush. And prior to that, he worked on the Asia Pacific Economic Cooperation (APEC) for the White House. He traveled to China often, and still has many connections there.
So when Sullivan says China is very interested in Alaska's natural gas, there's a good possibility he knows what he's talking about.
"Alaska has a long-standing tradition of exporting to Asia, we've got a very stable investment and political environment" and Alaska has a "huge resource base." China needs those resources and understands that other Asian energy exporters like Russia and Qatar aren't necessarily the most stable business partners.
Parnell would only say, through his spokesperson: "The state is seeking a project that gets Alaska's gas to Alaskans first and then points beyond."
'If the Russians can do it, why can’t Alaska?'
Still, looking at a map it's easy to understand why Van Meurs would think that shipping gas from the North Slope makes more sense than building a $40 billion-plus pipeline -- a pipeline that might not be finished for a decade, maybe longer.
Harold Heinze, the former ARCO Alaska president and executive director of the Alaska Natural Gas Development Association (now headed to Matanuska Electric Association), has spent years looking at that map and considering the possibilities. Heinze, though, is a visionary and will often say things others won't.
In this case, he said that he would neither pursue nor abandon a project "just because Pedro told me to." However, he does believe that Alaska needs to expand its thinking and be prepared to kill the sacred cows, like the gas line.
"Why not at least think about it? Why not at least try?" he said.
Taking a dig at Parnell's "Roads to Resources" program, Heinze said, “If I had the courage to talk about building a road to Nome, I'd certainly have the courage to talk about spending $10 million to figure out how to a maneuver through the ice up there."
Van Meurs put it more simply: "If the Russians can do it, why can't Alaska?"
Contact Amanda Coyne at amanda(at)alaskadispatch.com