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FERC: Prospects for Alaska Line 'More Remote' Than a Year Ago

The prospects for a major natural gas pipeline from Alaska's North Slope to the Lower 48 states are growing dimmer, FERC said in its third report on the project submitted to House and Senate leaders.

"The federal government is ready to act. However, no pipeline application has been developed, and the prospects of an application are more remote than a year ago," the Federal Energy Regulatory Commission said Wednesday in a report that was sent to Vice President Dick Cheney, president of the Senate, and House Speaker Nancy Pelosi (D-CA).

As a result, "the schedule for an Alaska gas pipeline has slipped considerably" over the past year, FERC noted in its update on the progress (or lack of progress) with the Alaska line, which it is required to submit to Congress every six months under the Energy Policy Act of 2005. The Commission filed its first report with Congress a year ago (see Daily GPI, Feb. 3, 2006).

"The main obstacle to progress on an Alaska gas pipeline is the failure to resolve state [Alaska] issues necessary before a project sponsor will commit to going forward," the FERC report noted. "The fresh competitive approach announced by the new governor [Sarah Palin] must be successful if Alaska gas is to be part of the nation's energy supply solution anytime in the coming years."

The Alaska pipeline project suffered several setbacks during the past six months, according to FERC. Probably the biggest came when the Alaska legislature failed to approve a draft contract that was negotiated between Alaska and North Slope producers ExxonMobil, BP and ConocoPhillips. Approval of the draft contract would have resolved key issues that are holding up producers' plans for an Alaska gas pipeline project. In addition, Gov. Frank Murkowski, a major proponent of an Alaska gas line, was defeated during the primary election in August.

The producer-sponsored Alaska pipeline project, which is considered the front-runner project, would add roughly 1,800 miles of pipe to already existing infrastructure for delivery of North Slope natural gas to markets in the Midwest and West. The overall length of the system, including the already constructed segments, would be about 3,500 miles and would flow about 4.5 Bcf/d. Two other Alaska gas projects have been proposed as well -- the Alaska Natural Gas Transportation System and the Trans-Alaska Gas System, a liquefied natural gas export project.

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