Natural gas pipeline is too risky

To the editor:

The Fairbanks Pipeline Company is on the record in the Anchorage Daily News in May 2011, saying “Time to face reality about Alaska’s pipedreams” saying, “natural gas futures have historically traded between ... $4 to $8/mmBTU, well below the $11.26 price necessary to recoup capital investments required for a large-scale export project within a 20-year period.”

According to this analysis, now that the price has dropped to about $2.68/mmBTU and continues to decline toward $2/mmBTU, the time that would be needed to recoup capital investment in a large diameter North Slope natural gas pipeline to southcentral Alaska explodes to at least 100 years! [I say, “at least 100 years,” because that is assuming no cost overruns, and no corruption.] Since such a pipe would never last that long, and since we have no basis to forecast that the price will ever go back up to even $5/mmBTU, such a project is not feasible, in my view.

Most people know the risks of a sustained depressed natural gas price inflation, construction cost overruns and corruption, but few seem to be aware of the risk that export customers may choose to switch to a green renewable alternative or (like Japan) switch to nuclear power in the near future. This could cause a potential export market to vanish! There is also a reasonable chance that a breakthrough may be discovered in making and storing hydrogen within the next decade, which will cause natural gas to be unacceptable to burn, because hydrogen burning emits only water vapor, and because of its limitless supply, and because it has many times more energy per unit weight than natural gas. There are also unforseen risks, since we cannot predict the future. Therefore, the Alaskan people should never gamble their future on such a high-stakes, high-risk, long-term project.

Daniel N. Russell

Willow