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Researchers forecast outlook for Alaska gas

Posted: Thursday, July 11, 2002

FAIRBANKS (AP) -- An upcoming North American gas study will offer four scenarios under which Alaska natural gas might be developed, according to state Sen. John Torgerson.

The worst-case scenario -- and the most likely of the four -- forecasts that North Slope gas will not enter the market until after 2020, Torgerson said, citing a preview of a Cambridge Energy Research Associates study.

''This is hot off the press,'' Torgerson, R-Kasilof, told the Greater Fairbanks Chamber of Commerce.

Torgerson is chairman of the Senate Resources Committee. His remarks came nearly a month after BP head John Browne said that an Alaska gas project is not viable under current regulatory and economic conditions.

Torgerson drew his review from a memo written by Larry Persily, deputy commissioner of the Department of Revenue. Persily attended a Houston meeting with Cambridge staff and 70 industry representatives in late June.

The report looks at North America natural gas supply and demand through 2020 and makes no projections past that year. Cambridge's full report will be released in September. The state is one subscriber to the report.

Among the factors the research group considered were economic slowdown, economic rebound, terrorist attacks and stricter environmental emission regulations.

Persily's memo summarized four possible scenarios:

-- In the most likely of the four, Cambridge assumes that the U.S. has a slow economic recovery with a disappointing gas supply from western Canada and the Gulf Coast. Coal maintains its position in energy production. The Northwest Territories' Mackenzie Delta gas goes online in 2009 with Alaska gas entering sometime after 2020.

-- In a second scenario, the world economy rebounds and there's a surge of new technology, including the ability to find more gas. Governments let the market define the natural gas business climate and all is well with the world. Mackenzie gas is not needed until 2015 and no Alaska gas is offered until after 2020.

-- In a third scenario, environmental concerns fill the world and carbon emissions are greatly curtailed. President Bush supports the Kyoto Accord, coal loses ground, and natural gas becomes more highly desired because it burns clean. Under the scenario, Mackenzie gas comes in 2013 and Alaska gas follows in 2017.

-- Finally, in a fourth possibility, more terrorism acts cause upheaval in U.S. and world markets. In the midst of economic downturn, Americans focus on security issues. To help reduce dependence on foreign oil, gas-to-liquid becomes king. A large scale GTL plant is built and is producing in Alaska by 2009. Mackenzie gas goes to market in 2013.

Cambridge is a highly respected consultant, Persily said.

''I'd like to say, 'Gee, maybe they're wrong,''' he told the Fairbanks Daily News-Miner. ''We still believe Alaska's time will come, but it won't be as soon as we like.''

Persily said that the scenarios would be changed if Congress approves tax-break legislation now pending.

Torgerson said passage was most important for a multi-billion dollar Alaska gas pipeline project.

''Without the fixed price, there will be no pipeline,'' he said.

The Cambridge report is just one of many reports and pronouncements circulating about an Alaska natural gas pipeline project, Torgerson said.

Torgerson said Alaskans can encourage an Alaska project by supporting a good business climate and stable fiscal regime. The producers have been saying that for months, most recently by John Browne, BP's chief executive officer.



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