For more than a decade, every proposal for selling North Slope natural gas has hinged on the presence, or lack of, or timing necessary to meet a market window in the Pacific Rim.
Market timing has been seen as a necessity owing to the sheer cost of a project to bring North Slope to tidewater, liquefy it for transport, and ship it to customers aboard special tankers. The investment that infrastructure required an economy of size, placing a monstrous volume of product on the targeted market in one fell swoop.
Supporters of an Alaska gas project took aim at catching the window of 1997, then it was 2003, now 2005 and beyond. Rival projects have seen concrete poured while Alaska's targeted window repeatedly slipped forward.
The surge in natural gas prices within the Lower 48 has recently shifted attention from shipping liquefied natural gas from Valdez, toward pipeline proposals aimed at delivering Alaska gas to the Midwest, with the Alaska Highway corridor emerging as a preferred route. Still, project boosters are wrestling with the demand window, fearful the delivery of Alaska's gas might flood that emerging Lower 48 market, sending prices tumbling below the level needed to make sales profitable.
Backers of the Gasline Port Authority have been sharpening their pencils, checking financial projections using pipeline designs from the Bechtel Group, with an eye toward feeding North Slope gas to several markets at once.
The concept calls for a 56-inch diameter pipeline from Prudhoe to Delta Junction. From there, two smaller pipelines would split off, delivering gas to both a trans-Canada pipeline and LNG processing facilities in Valdez. The economy of scale realized by the dual gas-sale outlets makes both alternatives more attractive to financiers, the port authority's lawyers say.
Volumes of gas reaching either markets, meanwhile, are smaller and, thus, more manageable.
The investment required to get the project off the ground is immense: on the order of $25 billion.
Port Authority officials maintain their revenue projections and the federal tax advantages of municipal ownership are enough to entice investors to foot the entire bill.
Will it happen? We can't say.
But the potential return for Alaska is vast, with both revenue and energy savings.
At this point, it would appear the mega-project outlined in what now seems great detail by the Port Authority rates serious attention from gas owners and the Knowles administration alike.
If the concept is flawed, let's hear about it. If the Port Authority's split gasline proposal is sound, then it's time to quit fretting about figurative market windows and start the permitting process.
Assuming the financial numbers are solid, Alaska has the welders and other tradesman needed to lay that overdue pipe.
-- Fairbanks Daily News-Miner
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