Any gasline needs a major buyer first

No matter how many directions or projects people discuss when they talk about building a natural gas pipeline, they all agree on one thing: We’re going to need an anchor tenant.

Those thousands of jobs and dollars churning through the economy with the construction and operation of a large- or small-diameter gasline we always hear being discussed. It quite possibly won’t ever become a reality without a customer capable of buying large quantities of gas to help offset the tariff for everyday, average consumers like you and me who hope to take advantage of the gas to heat our homes and businesses.

I’ve made finding and facilitating an anchor tenant my priority since coming back to Juneau last January. We’ve put gas-to-liquids provisions in the energy policy bill passed by the House. GTL provisions are also in the works for the omnibus energy bills in the House and Senate. Recently there was even more good news for Alaska in that department.

An agency within the U.S. Department of Defense has partnered with the Air Transport Association (ATA), signing a working agreement to identify locations suitable to develop alternative aviation fuels. Alaska has been mentioned prominently as a potential host and feedstock provider. The Defense Energy Support Center (DESC) has already secured more than 700,000 gallons of synthetic aviation fuel, with the goal of a 50-50 blend for testing all of their airplanes and weapons platforms. Together, they’ve joined in with the Commercial Aviation Alternative Fuels Initiative (CAAFI), in hopes of lightening carbon emissions and finding cleaner-burning, less oil-reliant aviation fuel for all of America’s air carriers.

The last paragraph can be read as acronym soup, but the most important thing to remember is that within a year, if the state gets an economic development plan in place, we could reach an agreement with two major users to build a gas-to-liquids plant in Alaska. That commitment is vital to the prospects of any gasline project, because without an anchor tenant — someone who commits to receiving large volumes of gas for manufacture and production, like the Kenai LNG plant, or the now-dormant Agrium fertilizer plant in Nikiski — any gasline is uneconomical.

We need a volume buyer to cut down the tariff, which is the cost to transport and offtake the gas at various points along a line. We also need to strengthen and diversify our economy, and not miss the chance to develop new industries a gasline’s construction will allow. Recent talk in the legislature, and with fiscal groups across the state, has highlighted the need to prepare for a day when the oil flowing through the Trans Alaska Pipeline System can’t sustain spending. Any gasline, in-state or to Canada, won’t replace oil, but it will provide thousands of family sustaining jobs for Alaskans and lessen the calls for levying new taxes or severely cutting back on essential services.

We need to make Alaska more attractive to the value-added industry and take advantage of our strengths: gas to market, a strong push and support for vocational training and education, and policy leaders willing to work with industry to provide avenues for success and project support.

The DESC heralded a proposed study on developing a gas-to-liquids plant in Alaska that I have been working on over the past eight months, mentioning this in their partnership announcement with the ATA March 19, showing serious interest and support for bringing an anchor tenant and next-generation fuel producer up here, should we continue to move forward.

DESC, ATA and CAAFI plan to hold an industry forum in May to focus on alternative aviation fuels and identify and discuss Alaska as a viable location.

Alaskans need to know that despite all the talk lately about varying pipeline projects, there are still many legislators, officials from the DESC and ATA, and myself, focused on finding ways to add value to the state’s gas, and provide jobs and opportunities to Alaskans and their families.

Mark Neuman is in his third term representing the Susitna Valley, District 15, in the Alaska State House.