In the final stages of the governor's race we see a tendency for increased negativity rather than focused attention on the candidates' expertise, direction and leadership. As senior officials who have managed oil and gas development issues on behalf of the past five governors and the state of Alaska, we would like to highlight what the Bill Walker/Byron Mallott team offers with respect to an integrated and effective approach to managing Alaska's vast energy resources. We believe their policy positions and past actions shows they will provide the stewardship necessary to protect Alaska's interests, and to increase the exploration and develop opportunities needed to successfully grow our energy industry.
Bill Walker has demonstrated he will strongly protect Alaska's interest to ensure our oil and gas fields are properly developed. The Point Thomson settlement negotiated in secret by the current administration discounted or ignored much of the advice provided by the state's internal experts and consultants; was not shared with the Legislature before it was signed; provided development paths that could result in leaving millions of barrels of economic oil in the ground, and stripped the Department of Natural Resources of its statutory authority to manage Alaska's ownership of Point Thomson.
Walker is an experienced oil and gas attorney. His approach to Point Thomson illustrates that he has the technological knowledge, experience and negotiating skills to assure that development occurs in a way that is fair to the producers and protects the interests of Alaskans.
Bill and Byron intend to move the large diameter LNG gas line project forward but in a way that increases public transparency and state leadership. Walker has been steadfast in the need for an LNG project for more than a decade even when many of us, including the leadership of the current administration, believed that a pipeline through Canada would be successful.
Bill and Byron recognize Alaska should terminate the wasteful and commercially non-viable bullet line. According to a federal coordinator study, in order for a small pipeline to provide gas from the North Slope to Cook Inlet at an equivalent cost to what consumers in Anchorage now pay, the state would have to subsidize the project in the amount of $4.2 billion, which is more than half of the total $7.4 billion estimated cost. To put this subsidy into perspective it would be equal to 48 times the total grants and tax credits made available by the state for the Fairbanks gas trucking project.
Furthermore, the needed subsidy is likely understated because the study makes highly optimistic assumptions about the purchase price of gas at the wellhead and the immediate market demand for North Slope gas volumes given Cook Inlet fields are now meeting the Southcentral demand. No reasonable commercial case exists for this low-volume project and terminating it as soon as possible will save much of the current $330 million of state funding appropriated to that effort.
Accelerating the efforts to provide gas to Fairbanks at lower costs by shipping LNG via railroad from the Cook Inlet to the Interior would avoid the high cost of a small-scale liquefaction plant on the North Slope that would become immediately obsolete following completion of the large diameter LNG pipeline. Instead, capital funds could be used to build out the Fairbanks gas distribution network. Even with substantial state funding the current North Slope-to-Fairbanks gas project lacks adequate funding for reaching much of Fairbanks area. A Cook Inlet-to-Fairbanks project considered by Walker/Mallott will focus on getting the distribution network built within Fairbanks rather than paying for North Slope infrastructure that will be obsolete shortly after being built.
A realistic approach to a gas pipeline and immediate low-cost gas in Fairbanks complements their philosophy of focusing on the rapid integration of renewable energy, new energy storage technology, micro-grids and traditional diesel energy in rural Alaska. Using locally available renewables including hydrokinetic, wind, and biofuels to offset the high-priced diesel fuel sources will be a game-changer in rural Alaska.
It is clear Walker/Mallott will strive to increase competition among exploration and production companies to encourage new companies to invest and drill. Empowering new companies to develop our oil and gas resources on the North Slope and throughout Alaska is the key to the next generation of development.
In summary, the Walker/Mallot team has a carefully constructed and holistic plan to develop Alaska's oil and gas resources that puts Alaska first and strategically integrates in-state and export energy projects.
Mark Myers served as the state director of oil and gas from 2001-2005 under Govs. Knowles and Murkowski, director of the U.S. Geological Survey for President Bush, and the AGIA coordinator in the Palin and Parnell Administrations. Kevin Banks recently retired after 23 years with the Alaska Department of Natural Resources as a petroleum economist and commercial analyst. He served as director of the Division of Oil and Gas under Govs. Palin and Parnell from 2006-2010. Marty Rutherford was the deputy commissioner for DNR responsible for overseeing the Division of Oil and Gas, State Geological Survey and the Joint Pipeline Office under Govs. Hickel, Knowles, Murkowski, Palin and Parnell.
The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, e-mail commentary(at)alaskadispatch.com
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