Public expectations increase momentum for natural gas line

What others say

Posted: Tuesday, July 19, 2005

Public opinion is largely a side issue in current talks to reach a deal to move North Slope natural gas to market. Making a deal to finance, design, build and operate a $20 billion gas pipeline is hugely complex, hugely difficult, hugely important. Public sentiment, at least in Alaska, can't change the business calculations much.

But public opinion lurks in the background nonetheless. With energy prices (and profits) soaring and gas line talks accelerating, Alaskans are coming to expect a deal, and soon. Energy companies are flush, so now is a good time to pursue a gas line. There's roughly a nine-year lead time between the moment a deal is cut and the day a new pipeline starts delivering some of the North Slope's estimated 35 trillion cubic feet of gas to market. It's time to get started.

There are plenty of signals of rising public expectations. Alaskans at the ballot box created the Alaska Natural Gas Development Authority in an attempt to put the gas line on track. (It has not proved a viable vehicle but has come to focus on a spur line to supply gas to Southcentral markets.) The Alaska Gasline Port Authority hopes to find an all-Alaska solution. Talk of a reserves tax to increase the cost to the producers of leaving gas in the ground has accelerated, and a movement has formed to get enough signatures to put a reserves tax initiative on the ballot. Increased legislative attention to oil and gas taxation issues of fairness, progressivity and investment incentives draws partly from impatience over the pace of progress on a gas line.

Gov. Murkowski, who has devoted every available resource to negotiations for much of the past year, noted the public concern back in May: ''It's clearly out there, that discontent,'' he told an interviewer.

Granted, building a gas line is a tough proposition. Wishing will not make it happen. Whatever entity eventually builds a line will need enormous financial, political, technical, engineering, business and organizational capacities. It will need both committed sellers and committed buyers for the gas far in advance of actual delivery. It will need cooperation and permitting from state and federal governments and — unless a longshot all-Alaska route becomes feasible — Canadian partners, routes and permits. It almost certainly will need some alignment of the three major North Slope producers, whose own interests and strategies will differ.

Whatever deal may emerge, it probably will include the state of Alaska as an owner of the gas line and perhaps a shipper of the gas. That is a new role for the state but one that may be essential to getting a gas line project started.

Despite the difficulties, expectations continue to grow. Lawmakers and public have been anticipating a special legislative session in late fall to consider a deal that hopefully is being hammered out now. If that somehow can't happen this fall, expectations — or frustrations — will be that much higher in the election-year legislative session next spring.

So public ferment is a factor, if not a driver, in this summer's negotiations. Alaskans are restless for a gas line, for a good deal that makes the state a willing partner, and they'll keep agitating until something happens. Increasingly, it appears the economics will support a pipeline — and that puts the onus on all players to craft a deal that works.

— Anchorage Daily News ,

July 11

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