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ANGDA head says Kenai Peninsula spur line is being studied

Posted: Thursday, October 21, 2004

 

  Dwindling natural gas supplies threaten Kenai Peninsula industries but help could come from the north slope according Harold Heinze of the Alaska Natural Gas Development Authority. Photo by M. Scott Moon

Dwindling natural gas supplies threaten Kenai Peninsula industries but help could come from the north slope according Harold Heinze of the Alaska Natural Gas Development Authority.

Photo by M. Scott Moon

Harold Heinze, chief executive officer of the Alaska Natural Gas Development Authority, had good news and words of warning for members of the local chapter of Support Industry Alliance who attended his presentation Tuesday in Kenai.

After a year of studying whether a liquefied natural gas pipeline project that would tap into the North Slope's gas reserves is feasible, ANGDA has concluded it is, Heinze said. However, if industry representatives and residents of the Kenai Peninsula want to see any of that gas in its neck of the state, they had better start hollering for it now.

"If this area doesn't raise a very loud voice as to the need and want of gas in this area, it's not going to happen," Heinze said during the Alliance's meeting at noon at Paradisos. "This area has more at stake than any other part of Alaska," as far as an industrial need for natural gas.

Gas reserves in Cook Inlet are dwindling. Unless more gas is found and developed in the inlet, current reserves aren't expected to last 10 years. But exploration is a costly risk, since developers can't know for sure how much gas they'd find or how much it would cost to find that gas, Heinze said. This situation makes North Slope gas more and more attractive to the peninsula.

"You don't bet on exploration," Heinze said. "You hope for it, but you don't bet on it."

Heinze presented highlights from ANGDA's recently re-leased report about its study on developing an all-Alaska LNG pipeline project from the North Slope to Valdez and a spur line to Cook Inlet and answered questions from the audience. He said ANGDA had been looking at broad issues in the past year and now is ready to focus its study on more defined projects.

According to the report, the challenge for ANGDA, which was created by a vote in the 2002 general election, is to define not just a viable gas pipeline project, but to understand and determine what the best and most doable project for Alaska is.

To complete that goal, ANGDA is focusing its study in four areas in upcoming months. One is studying how the proposed all-Alaska LNG project and the projects proposed by North Slope producers and Canadian companies could tie in with each other. The gas pipeline projects envisioned by private companies would travel from Prudhoe Bay to Delta Junction as would the proposed all-Alaska LNG project before traveling through Canada to the Lower 48. ANGDA also will study the possibility of scaling back the originally planned size of the all-Alaska LNG project to see if constructing a smaller pipeline would be more cost-efficient and beneficial for the state.

The other two areas of study involve getting gas to Cook Inlet. One calls for defining a route and conceptual design for a spur line to the inlet if a large gas pipeline is brought through the interior of the state. The other focuses on the feasibility of constructing a small diameter bullet line from the North Slope through Fairbanks to the inlet to address the area's gas needs.

Heinze spoke in glowing terms of federal legislation passed Oct. 10 that included tax incentives and loan guarantees for constructing an Alaska gas pipeline. The incentives will positively affect any of the proposed gas line projects, he said.

"It's probably one of the most significant federal steps ever taken on resource development up here," Heinze said. "It's far and away beyond the furthest we've ever gotten with the federal government in the last 30 years."

The state needs to capitalize on the federal government's forward momentum, Heinze said, but there's also issues the state needs to consider. For instance, Heinze spoke of comments Gov. Frank Murkowski made last week to the Legislative Budget and Audit Committee suggesting the state should to take an ownership role in constructing a gas pipeline to share the risks and profits developers would face. (See story, page A-1.)

Heinze said now is the time to be studying issues such as state ownership of a privately built gas pipeline and the specifics of an all-Alaska gas pipeline line so when the time does come to make a decision, the facts have already been gathered. Heinze cautioned that the biggest threat Alaska faces to the future of its gas reserves is to do nothing.

"If we don't cash in on this and cash in pretty quick it's gone and Alaska doesn't have many other hold cards," he said. "We better decide how we want to play this game and what we are willing to risk and not risk."

Heinze said results from the studies ANGDA now is having done should be ready within another year. The full report on its all-Alaska LNG project is available online at www.all-alaskalng.com.

"We're going to set it up so six, nine months for now you as Alaskans have the information to decide what you want to do, what risks you want to take."



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