Alaska gas not being counted on to help meet rising gas need

Posted: Wednesday, March 13, 2002

ANCHORAGE (AP) -- Gas consumption in the United States is likely to rise 48 percent by 2020, but Alaska gas isn't being counted on to help meet that demand, according to a senior official with the U.S. Energy Information Administration.

The EIA's annual energy outlook doesn't factor in a proposed pipeline from Alaska's North Slope unless gas prices rise substantially, said James Kendall, director of the EIA's oil and gas forecasting and analysis division.

He told a conference in Calgary, Canada, earlier this month that the EIA assumes gas prices will have to reach $3.50 per thousand cubic feet, and remain there for three to four years to make an Alaska Highway pipeline viable.

''The pattern of pricing is really crucial,'' Kendall said.

The EIA expects demand will rise by 2 percent a year, despite last year's slump of 4.8 percent due to the economic slowdown.

The bulk of the new supplies will come from the Gulf of Mexico and non-conventional sources, such as coalbed methane, Kendall said, adding that Canada is expected to meet about 15 percent of U.S. consumption, the same level as in 2000.

Robert Daniels, president of Anadarko Canada Corp., said he expects demand to grow and support higher prices.

''We think gas prices will stabilize in the $3 range,'' he told the conference.

Ken Thompson, the former president of ARCO Alaska Inc., told Petroleum News Alaska, that if economic growth in the United States is slightly higher, the forecast would increase to $3.65.

He said he believes that the U.S. Energy Information Administration is not using the right numbers to determine the viability of marketing North Slope gas to the Lower 48.

''I believe the EIA likely used the (North Slope) producers' capital cost estimates for determining the viability of North Slope gas as they have in the past and assumed a new, expensive line from Alberta to Chicago in the total project,'' Thompson said.

He said a North Slope gas project could be brought on stream now with lower capital costs'' estimated by the pipeline companies, he said.

The biggest cost reduction would come from TransCanada PipeLines Ltd.'s plans to expand existing gas pipelines to Chicago, California and the Pacific Northwest, rather than to build a brand new line from Alberta to Chicago.

''I doubt the expansion alternative was considered by the EIA,'' Thompson said.

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