In the first meeting of the newly-formed Alaska Highway NaturalGas Policy Council (AHNGPC) last week, Alaska Gov. Tony Knowlescharged the 28-member panel of community, business and laborleaders with the task of looking into public policy questionssurrounding the development and transportation of natural gas inthe North Slope.

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

One of the reasons Knowles created the council is to figure outthe best way to move the estimated 100 Tcf of gas that is believedto be held beneath the North Slope (see Daily GPI, Jan.11). Thegovernor said he thinks the best way to develop Alaska’s gas is viaa pipeline along the Alaska highway, which would deliver gas todomestic energy markets and the lower 48 states.

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

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

Knowles said the Alaska Highway route also brings gas far closerto markets in the South central region should Cook Inlet reservesever prove inadequate to meet demand. He said that the highwayroute even complements development of Canadian gas in the MackenzieValley.

“Our mission is to promote the Alaska Highway Natural GasPipeline project to North America that enables creation of anatural gas industry in Alaska,” Knowles concluded. “My charge toyou is to help synthesize the views and suggestions of Alaskans andhelp resolve the many policy issues tied to gas development.”

Of the new council, Knowles appointed former ARCO Alaskaexecutive Frank Brown and former Fairbanks Mayor Jim Sampson asco-chairs. Members of the governor’s Natural Gas Cabinet will serveas ex-officio members of the council, along with Lt. Gov. FranUlmer.

Last week, the National Governor’s Association (NGA) unanimouslypassed a resolution to support the responsible development ofAlaska natural gas. The resolution also supported the developmentof the Alaska Highway pipeline project.

“This is the first national forum that is bi-partisan andrepresents all 50 states, that is solidly behind not just thetransportation of Alaska natural gas but selecting the route that’sin the national interest,” said Knowles, who sponsored theresolution. “This is an important step forward and will answerquestions about the broad base of support that we have,particularly in that it designated the Alaska Highway as thepreferred route.”

The projected route would run parallel to the existing AlcanHighway, and would not cross any national conservation systemunits. Knowles said that key rights-of-way and regulatory approvalsfor the project are still valid from an agreement made in the1970’s with Canada for just such a project.

“Alaskans understand that if we are to meet the American marketdemand, where the need is the greatest and it is economically inour advantage, then the Alaska Highway is the right route,” Knowlessaid. “Construction of the Alaska Highway natural gas pipeline alsoopens other opportunities for the use of our gas, whethergas-to-liquids or liquefied natural gas. This pipeline does notoppose other alternatives, but in fact helps them.”

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

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