Knowles still bullish on Alaska gas prospects
Date: 02-Nov-01
Country: USA
Author: Yereth Rosen
"At a time when we are talking about security, about access to energy, this could not be a more timely project," he told a council he appointed to investigate the issues surrounding construction of the gas project.
Knowles, like other Alaska officials, is pushing for a 2,100-mile (3,400-km) gas pipeline to be built along the routes of the existing trans-Alaska oil pipeline and the Alaska Highway, to connect with gas pipelines starting in Alberta.
Others have advocated an 1,800-mile (2,900-km) pipeline route running east of Prudhoe Bay, offshore in the Arctic Ocean, to combine the North Slope's vast reserves with those in Canada's Mackenzie River Delta.
A task force formed by the three major producers - BP PLC, Phillips Petroleum Co. and Exxon Mobil - concluded in September that neither proposed route is economic yet. Building either pipeline system would cost up to $20 billion, they said.
But Knowles said he is encouraged by interest in the project that has been expressed by gas pipeline companies, such as Duke and Enron, which might wind up constructing the line if the oil companies do not.
"The fact that so many people are interested in it, I think, should give a pretty good signal that this is not only a commercially viable project, but also a very exciting one," he told the Alaska Highway Natural Gas Policy Council.
"I continue to be very optimistic about the project," he said.
An Alaska natural gas pipeline has been envisioned ever since the Prudhoe Bay oil field was discovered in 1968. Oil began flowing from the North Slope in the 1970s, but the abundant reserves of natural gas in the same fields has languished for lack of buyers.
Knowles is now seeking some federal tax incentives from Congress to help spur the giant gas project.
The governor's push for the highway route has been controversial in some quarters.
Some Canadian government officials have criticized him for trying to preclude the offshore route.
Alaskans oppose the northern or "over-the-top" route because it would largely bypass the state, cutting out opportunities for in-state jobs and use of the transported gas.
They also argue that the northern pipeline route would be more environmentally risky. A pipeline following existing, developed transportation corridors would cause fewer impacts to land and wildlife and would be easier to regulate, they say.
One member of Knowles' Alaska Highway Natural Gas Policy Council said this week that a northern pipeline route would be bad for Alaska for another reason - it could strand additional, yet-to-be discovered gas reserves.
A pipeline running south from Prudhoe Bay would offer opportunities for development of gas reserves that are believed to lie in the foothills of the Brooks Range and in Alaska's interior, said Ken Thompson, a former Arco Alaska Inc. president who is serving on the council.
Thompson said the pipeline planning should consider more than just the 35 trillion cubic feet of known natural gas on the North Slope.
"A lot of the reserves that may be discovered in the interior in the future would never make it to market unless the pipeline comes south," Thompson said.
An Alaska Highway pipeline could also be used to help launch value-added projects, such as one to deliver liquefied natural gas to tidewater for export to West Coast or Asian markets, he said.
"When the line goes north, that door is closed forever," he said.
Thompson and other council members presented draft recommendations for state policy concerning environmental oversight, fiscal regulation, labor management, community access and labor management.
