In a speech to the Alaska legislature Thursday, Sen. Lisa Murkowski (R-AK) urged state legislators to promptly act on legislation that would clear the way for construction of a long-haul natural gas pipeline from the North Slope region, saying that the need for agreement on the pipeline is "even more urgent" than a year ago.
"America will not wait on Alaska forever," she cautioned legislators. "I firmly believe that Alaska's window of opportunity is closing and action on a gas pipeline is needed now."
A report by the Federal Energy Regulatory Commission earlier this month updating Congress on the Alaska pipeline's progress said that the "prospects of an application are more remote than a year ago." (see Daily GPI, Feb. 5) "That concerns me and it should concern you," Murkowski said.
She warned that an Alaska gas pipeline could lose out to liquefied natural gas (LNG) imports. "Last summer the FERC noted that there is over 6,000 Tcf of natural gas awaiting sale worldwide. Alaska's 35 Tcf seems tiny by comparison. FERC this summer approved five new LNG terminals with another 18 LNG projects nearing approval. Companies are locking in 25- and 30-year contracts to import LNG from overseas," she said, adding that investments in coal-fired and nuclear plants are increasing as well.
"If the promise of Alaska's gas continues to remain in limbo, investors will look elsewhere for development opportunities, and consumers will look to other supply sources," Murkowski said.
"I'm not suggesting that Alaska should concede to any and all conditions put forward by the oil and gas industry in order to reach an agreement. Far from it. It is imperative that any pipeline deal benefit the state of Alaska and its citizens, but also [be] a deal that maintains Alaska's position as a state America can count on to provide a secure source of energy. I look forward to working with all of you and the Palin administration as we move forward on this critical issue," she said.
Gov. Sarah Palin departed for Washington, DC, Friday to try to convince Congress and regulators of her administration's resolve to move ahead with the natural gas pipeline, according to a news report by an NBC affiliate in Anchorage. Palin is expected to unveil her gas pipeline bill in about a week, which will offer incentives to companies to build a gas line.
"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," FERC said in its report. "The fresh competitive approach announced by the new governor [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.
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, an LNG export project.
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