Anchorage Daily News

Of the things that could get in the way of an Alaska gas pipeline happening this time around some can be managed or will be taken care of by the markets, the federal coordinator for a gas pipeline project said recently.

But one thing that could kill the project is under the state's control -- needed infrastructure upgrades, said Drue Pearce, who heads the Office of the Federal Coordinator for Alaska Natural Gas Transportation Projects.

The former Alaska lawmaker told the Resource Development Council conference in Anchorage that she has "become a student of the previous failures on the pipeline," including delays, cost overruns, natural gas demand dropping and prices tanking.

What it comes down to, she said, is that "pretty much any sector can stop this project."

She said it isn't unusual to have two projects competing at this stage. The competition between Denali -- a venture of BP and Conoco Phillips -- and TransCanada -- a state-sanctioned project of a Canadian pipeline company -- "is a positive indication of serious interest by major industry players, which should be resolved ultimately in the energy and financial marketplace," she said.

Competing projects can be a challenge for federal regulators. The Federal Energy Regulatory Commission, which will decide what fees a pipeline owners can charge shippers, would "tell you that it's their worst nightmare to be dealing with two applicants and two EISs, because of the enormous amount of resources that they're going to have to put forward."

But the good news is that two owners of North Slope natural gas and the largest North American pipeline company are both involved: "We have all the right people in the room to make this project happen now." Pearce said she is encouraging the applicants to work together when possible "with the shared objective of getting the project built."

On the regulatory side she said she would do what she can "to ensure that regulatory stipulations, mitigation requirements and other things in control of the federal government don't pile on costs to the point where the project is too expensive to build."

BETTER ROADS, BRIDGES

"But there's a bigger issue," Pearce said. Roads, bridges, ports and perhaps the railroad will need to be improved early so that construction materials can be stages along the pipeline route, she said.

Frank Richards, deputy commissioner of the state Department of Transportation, told legislators in June that $2 billion would be required for infrastructure work to prepare for gas pipeline construction.

Last month, Richards stressed that there are only six construction seasons, including the current budget year that ends June 30, until gas pipeline construction starts -- too much work to be compressed into a two- to three-year construction window.

He also stressed that bad roads will slow gas line construction and add to construction costs for the line. The Dalton-Elliott highway corridor to the North Slope has the highest cost, $1 billion, and includes 32 projects along 415 miles.

The Elliott Highway portion, the first 73 miles out of Fairbanks, includes four projects at a cost of $94.3 million.

The 95 miles of the Richardson Highway from Fairbanks to Delta Junction includes 17 projects at a cost of $300 million.

The Alaska Highway from Delta Junction to the Canadian border -- a 200 mile stretch -- includes 22 projects costing $600 million.

In addition, there are routes that could be used to move pipe, freight, people and modules: the Parks Highway from Wasilla to Fairbanks, five projects at $384 million; the Glenn Highway from Anchorage to Glennallen, six projects for $67.5 million; the Haines Highway, two projects at $85 million; and the Klondike Highway, three projects at $46.2 million. The projects along the logistical routes total $583 million. Combined with the work along the gas line route, the total is a hefty $2.58 billion.

Pearce drummed home some of the same points. "The lead time for material to begin to arrive is a lot shorter than some of us recognize: It's as little as six years."

She said that for projects to begin before the first gas line trucks start to roll means infrastructure construction needs to get under way next summer.

"Every day, week, month or year that we wait to complete the infrastructure ... will add cost to the project and could in fact be the main reason that this project doesn't get built," Pearce said.

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