Bill Walker's gas pipeline to Valdez is much more than just a pipe dream. It is a game changer for resource development in Alaska.
Resource development in Alaska has largely been a policy of resource extraction. Rarely has there been any effort on the part of our State government to encourage industry to process the raw materials in-state, thereby creating additional industry and jobs beyond just the extraction of the resource.
Since 1978, North Slope crude oil has exited the State beginning at 1.2 million barrels per day, now down to 600,000 bpd and declining at a rate of 6 percent per year. TAPS continues to gush oil into supertankers that carry it to refineries along the West Coast, and, over the course of the history of TAPS, as far away as Japan. Obviously, 20 billion barrels of oil were not processed within the borders of Alaska, thereby denying Alaskans jobs and industry.
Yearly, at least $432 million in wages hemorrhage from the State of Alaska to the Outside from our migrant oil workers on the North Slope. Even after 40 years of training programs, UAA engineering programs, vocational school programs, all to serve the North Slope oil industry's demand for "trained workers."
Only in the Cook Inlet oil and gas fields has there been some degree of value-added resource development of our hydrocarbon resources, beyond local use of fuels from our two small refineries. The fertilizer plant at Nikiski was an outstanding example of value added resource development. Unfortunately, the Nikiski plant closed due to the fluctuating gas supply situation in the Cook Inlet gas fields. Yet, it served notice that in-state value-added resource development of our hydrocarbon resources was possible.
The paradigm change in Walker's pipeline is the intent to separate the gas liquids for use in Alaska. The gas liquids will provide plastic feed stock for industry and additional fuels for local and Bush use on an industrial scale. The industry that will arise from in-state separation of the gas liquids will result in year-round industry creating new non-government, well paying jobs. Walker's pipeline will provide the basis for an expansion of the private sector.
Gas will also be pulled off to fuel Fairbanks heat and power needs and be extended to those communities along the Richardson Highway.
From Glennallen 250 million cubic feet per day of the gas will flow to Palmer to bolster the supply of natural gas from Cook Inlet.
Additional exploration and development in Cook Inlet will then have the time to provide more than enough gas to allow export to Asia through Kenai. That export, coupled with more than 3 bcf/d exported from Valdez should prevent a total calamity when the oil revenues that comprise 90 percent of the state budget cease when TAPS reaches 300,000 bpd.
It is not unreasonable to believe that with further exploration and development on the North Slope, both on shore and off shore, including ANWR, maybe TAPS will be refilled with oil. Hopefully, it will not be oil that flows into supertankers. Maybe, with foresight and the right attitude on the part of our State government and industry, we will see a large refinery complex built in Fairbanks and Big Delta. Alaska may one day export refined fuels, with the fractions used for industry fueling further expansion of an in-state petrochemical industry arising from the use of the gas liquids in-state under Walker's plan.
What of the argument of the producers not having to provide the gas even if a pipeline is built to Valdez? Specious.
Article 8 Section 2 of the Constitution of the State of Alaska governed the drafting of the leases. The producers have no choice. If they fail to provide the gas based upon a reasonable expectation of profit, they will be in breach of their leases.
It is time we stopped listening to "can't" and started doing.
Larry Wood is a 56-year resident of Alaska and a businessman living in Palmer, Alaska.
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