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August 10: Fairbanks Daily News-Miner on shrinking gas pipeline costs:

Posted: Monday, August 14, 2000

Price tags mentioned by gas pipeline promoters of late are enough to stun Alaskans who've tracked such projects through the years.

Cost estimates for the tantalizing mega-project are down.

Way down.

Estimates for the infrastructure needed to move North Slope gas to market have tumbled from the $12 billion to $15 billion range to the order of $7 billion to $9 billion.

Is this pure fantasy? Are the figures being quoted, perhaps, part of some shady ploy to drum up new investors? Could it be that the engineers and accountants studying the feasibility of a gas pipeline have, after all these years, come up with some new approach?

Answers coming from the industry are encouraging.

There have been significant reductions in the size of the projects under discussion by both the Sponsor's Group, the oil company consortium studying gas commercialization, and Yukon Pacific Corporation, the holder of permits needed for a gas pipeline to Valdez. This in itself is a positive step, because the huge volumes of North Slope gas necessary to support earlier versions of the project threatened to swamp the world market.

Lining-up customers for a smaller chunk of Liquefied Natural Gas is less of a challenge, making the timing of a project to catch opening market windows less critical.

A project involving less gas requires a smaller investment in processing and liquefaction capacity, and fewer ships to deliver the resulting product.

Pipeline technology has also advanced quite a bit since companies first began looking at North Slope gas commercialization.

All of these factors combine to bring the price tag down.

That's good news for Fairbanks, because the pipeline routes receiving serious consideration -- delivering natural gas to Valdez or Nikiski -- share the benefit of providing the Interior with a new source of clean-burning energy.



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