Over the past several months there has been a sea of change of support and acknowledgment that the best option for Alaska’s natural gas is in the form of light natural gas at tidewater, sold into the premium Asian markets on long-term contracts.

We have now heard this from Governor Sean Parnell, ExxonMobil CEO Rex Tillerson, ConocoPhillips CEO Jim Mulva and BP CEO Bob Dudley. They join the chorus of the 138,000 Alaskans who said the same thing at the polls in 2002 and in nearly every opinion poll since. And last November, the Alaska Municipal League, after reviewing all proposed gas line projects and hearing from their proponents, overwhelmingly passed a resolution supporting construction of the All Alaska Gas line from Prudhoe Bay to Valdez for LNG shipment to the Asian market. The Alaska Gas line Port Authority has recently released results of several studies. The “Alaskan LNG Exports Competitiveness Study,” conducted by world energy experts, Wood Mackenzie, concludes:

1. LNG from Alaska could be delivered into the Japanese market for $8.50 per thousand cubic feet (mcf) while other projects being developed elsewhere around the world and in the Lower 48, had much higher delivered cost to Japan, as high as $12.17/mcf.

2. Revenues to Alaska from the sale of LNG to the Asian market would be very significant and could generate between $220 billion and $419 billion for Alaska during a 30-year period. There also is enough gas in Alaska for this project to continue to operate for more than 100 years.

3. Given Alaska’s proximity to Asia, our LNG shipping costs are 80 percent cheaper than other LNG projects’ shipping costs.

The second study was performed by the PDC Harris Group to determine the magnitude of the reduction of cost of energy in Alaska from a large volume pipeline to Valdez with an export of excess gas not needed in Alaska. That study found, for example:

1. From the economy of scale of this large project, the cost of energy in Fairbanks would be reduced by 80 percent. The predicted total value of the fuel savings in the Fairbanks area is $2.4 billion during a 30-year period.

2. The cost of energy in Bethel would be reduced by as much as 65 percent by using LNG shipped out of Valdez. The fuel savings in Bethel would range from $229 million to $886 million during a 30-year period.

The third study, “Comparison of Current Alaska Gas Pipeline Proposals” by the McDowell Group, found that when the benefits to Alaskans from the small volume bullet line versus the All Alaska Gas line/LNG project to Valdez were compared, these are the results:

Pipeline tariff

 to Fairbanks:

• Bullet line = $7.75

• All Alaska line = $1.15

Jobs:

• Bullet line = 5,400 during construction

• All Alaska line = 21,000 during construction

Revenue to state:

• Bullet line = $3.75 billion to $4.57 billion during 20 years

• All Alaska line = $75 billion to $419 billion during 30 years

So there it is. This is the evidence needed to know which project brings the most benefits to the most Alaskans. The All Alaska Gas line is by far the superior option.

While it is encouraging to see all the parties lining up giving verbal acknowledgement of the best option, unless Alaska steps forward and takes control of this project through ownership of the infrastructure, nothing will change and we will continue to expend precious money and time chasing inferior projects.

Around the globe, inferior large-scale projects will be advanced while we continue to argue and study, which will only ensure that our massive reserves of high-grade gas will remain stranded. And like fools, residents and businesses of energy rich Alaska will continue to pay exorbitantly high energy prices.

Bill Walker is the owner of an Anchorage law firm with an oil and gas and municipal law practice and serves as general counsel for the Alaska Gasline Port Authority.



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