Gas line options outlined

Posted: Thursday, August 09, 2001

Various plans for North Slope natural gas were the topic at the Kenai Chamber of Commerce luncheon Wednesday.

Kasilof Sen. John Torgerson, chair of the Joint Committee on Natural Gas Pipelines, gave a brief history of efforts to bring the gas to market and detailed some of the plans being made today.

Two plans were floated in 1974 to bring the natural gas to the Lower 48 market, one across what is now the Arctic National Wildlife Refuge to Canada's Mackenzie River Delta and another to Valdez. In 1976, the Northwest Pipeline Company proposed a route to Fairbanks and then down the Alaska Highway through Canada.

All three options are under consideration still today. However, in 1977, then-President Jimmy Carter chose the Alaska Highway route and the U.S. Congress approved.

"That's the law that's in effect today," Torgerson said. "It hasn't been repealed."

The Alaska Highway route is also preferred by Gov. Tony Knowles, who has created a group to promote it.

Despite being in the planning stages for nearly 30 years, a plummet in world gas prices in the early and mid-80s stalled efforts to move gas out of the arctic. Recent high prices have renewed interest.

Currently, the "over the top" route being studied by a consortium of petroleum companies would bury a pipeline under the Beaufort Sea to Canada, where it would meet up with existing Canadian pipeline infrastructure at the Mackenzie River Delta. Companies looking at that route include Phillips, BP and Exxon Mobil.

The problem with that route is that Torgerson introduced Senate Bill 164 that would prohibit that route before one is built south. Knowles signed that into law earlier this year.

"The chances of the over the top plan are slim to none," the senator said. "There's nothing in it for Alaska."

An "under the top" plan would send the gas south of the Brooks Range and then east into Canada. Torgerson said this was first discussed years ago to avoid the environmental pitfalls on the North Slope.

"But it puts (the pipeline) right where the caribou hang out," he said.

Other plans include building a gas pipeline parallel to the trans-Alaska oil pipeline to Valdez and shipping liquefied natural gas to Asia, the U.S. West Coast and Mexico. A spur line to Cook Inlet is possible.

An alternate plan, proposed by the Cook Inlet Pipeline Terminus Group, would bring the main line to Cook Inlet -- and Nikiski's gas processing plants.

He said the Alaska Port Authority Group, made up of the city of Valdez and the North Slope and Fairbanks North Star boroughs, is alive and well and prepared to offer industry incentives to bring the line there. One advantage that group has is its clean air permits are already in place, which would ease the way for industry.

"They have a lot of details in place," Torgerson said.

Williams Petroleum, which has an oil refinery in Fairbanks, could be interested in building a petrochemical plant in Alaska, if it got the feed stock required.

"They started their study a couple of months ago," Torgerson said. "They'll be looking at a plant, and I suspect it would need to be on tidewater."

Gas-to-liquid technology is another way the gas can be moved. If GTL plants are built on the North Slope, they can transform natural gas into a synthetic crude oil that can be shipped down the trans-Alaska oil pipeline.

One last idea arose earlier this year, when a Lower 48 company called Nexticity proposed buying North Slope natural gas and using it to power generators for huge banks of computers based in the arctic to host World Wide Web sites.

"Their plan was great for them, but not for us," Torgerson said. "They offered 35 cents a cubic foot."

He said the current going price is $1.16 a cubic foot.

Added to all these choices are threats to moving North Slope natural gas at all. Alaska's reserves are minuscule compared with proven reserves worldwide. A slide Torgerson showed of North America showed the amount of gas on the North Slope as a tiny dot, while huge ovals of gas stretch through Canada east of the Rocky Mountains, through America's West and parts of the Midwest and into the Gulf of Mexico.

Torgerson said huge amounts of gas could even be shipped from Australia to America's West Coast.

"There's a lot of natural gas around. We're not the only ones with gas," he said.

Other threats include any form of alternative energy.

"A lot of people want to conserve rather than bring more fuel in," he said.

Torgerson said people on the Kenai Peninsula can help bring natural gas to Cook Inlet by supporting industry's expansion plans. Agrium is studying the feasibility of doubling the size of its fertilizer plant in Nikiski. And even though it's slated to be torn down in five years, BP's GTL plant could be the seed to build a full-size plant. But both depend on ample supplies of natural gas -- more than the 12- to 14-year supply suspected to be left in Cook Inlet.



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