Gov. Knowles Discusses Tapping and Piping North Slope Gas

In the first meeting of the newly-formed Alaska Highway Natural Gas Policy Council (AHNGPC) last week, Alaska Gov. Tony Knowles charged the 28-member panel of community, business and labor leaders with the task of looking into public policy questions surrounding the development and transportation of natural gas in the North Slope.

"I created this council for one important reason: to ensure that the interests of Alaskans are protected as we develop our North Slope natural gas," Knowles said. "This means making sure that Alaskans are hired to build and operate the gas pipeline and that Alaska businesses and products are used. It means making sure that Alaska communities have access to gas. And it means ensuring that Alaskans receive a fair share of the revenues generated on this resource which belongs to all of us."

One of the reasons Knowles created the council is to figure out the best way to move the estimated 100 Tcf of gas that is believed to be held beneath the North Slope (see NGI, Jan.15). The governor said he thinks the best way to develop Alaska's gas is via a pipeline along the Alaska highway, which would deliver gas to domestic energy markets and the lower 48 states.

"This is based on three facts: first, the consensus of the energy world is that the only market today for financing a pipeline and the best economic return to Alaska is in the United States," Knowles said. "Second, Alaska must act with a high sense of urgency in supplying this market. The energy gap created by this opportunity will be filled, and should be filled by Alaska gas. Third, a project of this size and scope must have national and Canadian support.

"There's a single hard, cold reality when it comes to our gas development: it won't happen unless it's commercially viable," Knowles added. "As many of you know, we've been dreaming and scheming about Alaska gas development for a generation. Yet it hasn't happened because it hasn't met the key market test. An Alaska Highway gasline does not exclude other projects. In fact, the consensus of experts is that it makes other types of gas projects, including a future LNG line, more economic."

Knowles said the Alaska Highway route also brings gas far closer to markets in the South central region should Cook Inlet reserves ever prove inadequate to meet demand. He said that the highway route even complements development of Canadian gas in the Mackenzie Valley.

"Our mission is to promote the Alaska Highway Natural Gas Pipeline project to North America that enables creation of a natural gas industry in Alaska," Knowles concluded. "My charge to you is to help synthesize the views and suggestions of Alaskans and help resolve the many policy issues tied to gas development."

Of the new council, Knowles appointed former ARCO Alaska executive Frank Brown and former Fairbanks Mayor Jim Sampson as co-chairs. Members of the governor's Natural Gas Cabinet will serve as ex-officio members of the council, along with Lt. Gov. Fran Ulmer.

Last week, the National Governor's Association (NGA) unanimously passed a resolution to support the responsible development of Alaska natural gas. The resolution also supported the development of the Alaska Highway pipeline project.

"This is the first national forum that is bi-partisan and represents all 50 states, that is solidly behind not just the transportation of Alaska natural gas but selecting the route that's in the national interest," said Knowles, who sponsored the resolution. "This is an important step forward and will answer questions about the broad base of support that we have, particularly in that it designated the Alaska Highway as the preferred route."

The projected route would run parallel to the existing Alcan Highway, and would not cross any national conservation system units. Knowles said that key rights-of-way and regulatory approvals for the project are still valid from an agreement made in the 1970's with Canada for just such a project.

"Alaskans understand that if we are to meet the American market demand, where the need is the greatest and it is economically in our advantage, then the Alaska Highway is the right route," Knowles said. "Construction of the Alaska Highway natural gas pipeline also opens other opportunities for the use of our gas, whether gas-to-liquids or liquefied natural gas. This pipeline does not oppose other alternatives, but in fact helps them."

The governor said that it is likely that more issues will rise between now and the Nov. 30 deadline he set for the AHNGPC to have its report ready.

Alex Steis

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