Natural gas bullet line headed in the right direction

Posted: Friday, July 11, 2008

Like many folks around the Kenai Peninsula, Gov. Sarah Palin's natural gas bullet line proposal initially had us scratching our heads. Specifically, isn't it going the wrong way?

For several years, we've been concerned about dwindling gas reserves in the Cook Inlet basin. Agrium closed because it couldn't secure enough gas. Enstar has concerns about meeting consumer demand a few years down the road. Why would we even think about sending what gas we have left north? Shouldn't we be looking for a way to send North Slope gas south?

As it turns out, north is still the way to the future. The administration's proposal is just the sort of long-term plan we've been clamoring for here on the peninsula.

While it's true our proven natural gas reserves are dwindling -- 1.68 trillion cubic feet, according to a 2007 state Division of Oil and Gas study -- it's also true that Cook Inlet holds plenty of undiscovered gas -- between 13 and 17 trillion cubic feet, according to a 2004 U.S. Department of Energy study.

Exploration and development of that gas would cost in the neighborhood of $5 billion, and the industry has balked at making that investment without a market larger than what Southcentral Alaska offers. Put Interior Alaska on the table, along with the potential to ship gas to markets in the Lower 48, and all of the sudden, investing in Cook Inlet exploration becomes much more economically attractive. What's more, the open pipeline access the administration requires would encourage smaller companies to explore, meaning we wouldn't be dependent on the whims of the big North Slope producers.

Yes, a bullet line from the North Slope would be a quick fix for our energy needs. But shipping Cook Inlet gas north -- and perhaps south to the Lower 48 through one of the proposed pipelines -- might be just the thing we need to stimulate new exploration and development in the Cook Inlet basin. That's something North Slope gas can't do, and it would be a tremendous boost to our local economy. It would mean new revenue, good jobs, and energy security for our region for years to come.

There are a lot of pieces to this puzzle, and there's a long way to go before an in-state bullet line becomes reality. This plan has the potential to do more than just deliver gas. It encourages long-term economic development, and that's a concept we support whole-heartedly.

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