Knowles defends stance on highway route for gas pipeline

Posted: Sunday, February 18, 2001

ANCHORAGE (AP) -- Gov. Tony Knowles defended his policy Friday that backs building a natural gas pipeline along the Alaska Highway to Canada and the Lower 48.

Knowles fired back at legislators and backers of a proposal to sell liquefied Alaska natural gas to markets in Asia, who have criticized the governor for ruling out export to Asia too soon.

Knowles cited booming Lower 48 gas demand and the long history of broken hopes around a liquefied natural gas project, known as LNG, to the Asian gas market to justify backing the highway route.

''People have been studying LNG for 25 years,'' Knowles said. ''It's just not economically viable. How many times do you have to hear the word 'no'?''

But a Japanese official with a natural gas utility came to Alaska last week and challenged the Knowles assumption. Shigeru Muraki, general manager of gas resources of Tokyo Gas, said East Asia will likely need fresh sources of natural gas in coming years, including Alaska gas.

Muraki's views touched off criticism among legislators, who say the governor is backing a specific project before assessing all options.

''The governor has written off an LNG project just as it looks possible,'' said Rep. Eric Croft, D-Anchorage.

The North Slope has known reserves of 35 trillion cubic feet and possibly much more. Any project would cost at least several billion dollars and would mean thousands of construction jobs and scores of permanent full-time jobs.

An LNG project would mean more in-state investment. But high costs also could make the project too expensive.

The Lower 48 pipeline may be less expensive and, according to some analyses, may give the state more money for the gas it owns.

BP, Exxon Mobil and Phillips Petroleum, which own most of Alaska's gas, are spending $75 million to assess an export pipeline to Canada. The companies are studying two possible routes. One would go offshore from Prudhoe Bay to the Northwest Territories, bypassing Alaska. The other would go south to Fairbanks then into Canada via the Alaska Highway.

Knowles endorsed the Alaska Highway route in November because it would bring gas to Alaskans and would provide more jobs. Last month he introduced legislation appropriating money to begin permitting work.

''I think he's out ahead of the information curve,'' said Senate President Rick Halford, R-Chugiak. Halford said the Legislature needs more information before backing any project.

Halford also said the state must consider whether to become an owner of the pipeline.

Knowles said that his backing of an Alaska Highway pipeline does not preclude an Asia export project. A spur line could be built to carry natural gas from Fairbanks to an export site on the southern coast, such as Valdez.

''LNG stands a much better chance if another project could carry some of the costs,'' Knowles said.

One thing that Knowles and the Legislature agree on is that they oppose a shorter pipeline route offshore from Prudhoe Bay to Canada's Northwest Territories.

''As far as I am concerned there is no northern route,'' Knowles said.

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