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Could state build a large-diameter gas pipeline?

Posted: July 25, 2012 - 8:22am

I wonder if anyone has really considered all aspects of the state building their own large diameter pipeline from the North Slope to tidewater?  

Costs of the project would probably run in the billions and the question of where the funds would be appropriated from, can they be recovered over a period of time, and the length of recovery time would be the first priority. A couple of things come to mind when pondering the initial costs associated with this idea: some of the money could be appropriated from the permanent fund and the remainder through the sales of bonds (the best scenario, I believe);  some from the permanent fund, some through the sales of bonds and the remainder through a partnership with the oil companies — my second priority. If this were feasible, the goal of implementation should be that the state hold the majority of control over the line.

Feeder lines off the main line would provide heating sources for homes and businesses within a reasonable distance from the main line.  Installation of those lines could be shared with the local utility companies and the state’s share of the local lines would be recovered over a period of time to be determined in a contract with the utilities. This would also provide part of the recoup of the initial investment.

Sales of gas to tidewater companies interested in liquefying it and reselling to Asian countries, for example, would provide another way to recover a portion of the initial expense.

Of course, a study of the entire project would have to be done to determine its “economic doability,” if it hasn’t already been done. The study would also identify the tidewater terminus location. As well, a commitment from the tidewater companies intending on liquefying the gas should be secured prior to starting the project

Finally, the state has apparent problems with its workers’ retirement fund; consequently, the operation of the pipeline, once up and running, would be contracted out by the state. That eliminates further retirement cost problems associated with the project down the road. Operational costs could be factored into the gas price, once the line is up and running.

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