U.S. natural gas consumers could save as much as $16 billion (in 2001 dollars) on gas purchases over a 15-year period if a long-line pipeline from the Alaska North Slope to the Lower 48 states is constructed and placed into service by 2010.

The analysis of the proposed national energy bill — which would authorize pipeline construction — by the Energy Information Administration (EIA) said that while consumers would see savings, the pipeline would cost Lower 48 producers and the U.S. Treasury considerable amounts.

Lower-48 producers would suffer a revenue loss of about $60 billion between 2010 and 2025 due to the displacement of demand for their gas caused by deliveries from Alaska, the Department of Energy (DOE) agency said in its 68-page review of selected provisions of the energy bill, which currently is being negotiated on Capitol Hill.

The EIA also estimated the energy bill’s production tax credit and possible loan guarantees intended to spur construction of the Alaska line on an early timeline would cost the U.S. Treasury approximately $14 billion over the 15-year period.

The DOE agency believes the proposed production tax credit will be large enough to “induce” construction of the Alaska gas line, and that the pipeline could be finished in seven years and ready for service by 2010. But the three major North Slope producers aren’t as optimistic and estimate it would take nine to 10 years to complete the line, the EIA noted.

The seven-year timetable for the construction of the pipeline is a “pretty aggressive assumption,” acknowledged James Kendell, director of the oil and gas division in the EIA’s Office of Integrated Analysis and Forecasting. He oversaw the EIA’s analysis of the oil and gas provisions of the comprehensive energy legislation.

The EIA undertook the “quantitative analysis” of the broad energy bill at the urging of Sen. Byron L. Dorgan (D-ND), who asked the agency in July to review the provisions that had the largest potential to influence energy consumption and supply.

A recent discussion draft of the energy bill proposed the construction of an Alaska gas pipeline along the Alaska Highway route. But it did not tackle the issue of a production tax credit or construction loan guarantees. It’s expected that these will be addressed in the tax title of the legislation, which is being thrashed out by the House Ways and Means Committee and the Senate Finance Committee.

Without the tax credit, the Alaska gas pipeline would probably not begin operation until 2020, and would have an initial delivery capacity of 4.5 Bcf/d, according to the EIA analysis. The agency estimates that cumulative gas production in Alaska due to early introduction of the pipeline would increase 24.4 Tcf to a total of 43.6 Tcf over the 15-year period. Alaska gas production would be significantly less (total of 19.25 Tcf) during the same time frame if the pipeline went into service later.

Of the projected 24.4 Tcf growth in Alaska production attributed to the pipeline, “27% represents increased consumption, 31% displaces Lower 48 production [and] 41% displaces imports,” the EIA analysis noted.

The anticipated increase in Alaska production would likely cumulatively displace 7.7 Tcf of Lower 48 production between 2010 and 2025, and an anticipated 10.14 Tcf of net gas imports, according to the agency review. About 6.64 Tcf of the production growth would be used to meet higher consumption during the same period, it said.

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