BP official says northern gas line route is probably cheaper

Posted: Thursday, July 19, 2001

ANCHORAGE (AP) -- A proposed natural gas pipeline from the North Slope through the Beaufort Sea would likely be cheaper to build and cost less to operate than a pipeline that follows the trans-Alaska oil pipeline, a BP executive said Wednesday.

''Analysis so far indicates that the northern route appears more cost efficient than a southern route,'' Ken Konrad told a joint legislative committee Wednesday.

The difference amounts to ''a few dimes'' on transportation costs per thousand British thermal units. Those savings come from lower investment costs of building the shorter pipeline and lower operating costs. Konrad also noted that the Beaufort line could pick up gas in Canada's Mackenzie River delta.

An economist called the savings ''very significant.''

Roger Marks, a state oil and gas economist who has evaluated the proposed gas projects, said the Beaufort route is 200 miles shorter than the Alaska Highway route and may cost about $2 billion less. Konrad estimates total construction costs for the pipeline project range from $15 billion to $20 billion.

''Several dimes from your transportation costs could remove a lot of risks,'' Marks said.

Konrad's comments come as no surprise to those following the pipeline route debate. Since they came together to study a massive project to ship Alaska's North Slope gas reserves to the Lower 48, Alaska's big natural gas owners, Exxon Mobil, BP and Phillips, have indicated that the shorter Beaufort route would cost less and be more profitable.

Alaska's political leaders oppose the Beaufort route. They back the Alaska Highway route, citing jobs, in-state investment and the natural gas the project would bring to the state.

Joe Maruschack, Phillips natural gas pipeline chief, suggested that if the companies sought to build the Beaufort line, they would also explore some means to bring gas to Alaska's residents south of the North Slope.

An offering of natural gas for local use may not appease political opposition. Gov. Tony Knowles deeply opposes the Arctic route. The Legislature this year passed a law which would prevent construction of a Beaufort pipeline.

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