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Time to prepare for future without major players

Posted: Friday, December 17, 2004

The news earlier this week about the Agrium nitrogen plant that the company had settled its longstanding natural gas dispute with Unocal means the plant is guaranteed to remain open through October of next year. But it also means that beyond that, Unocal won't be obliged to supply Agrium with any more gas.

In a teleconference following the announcement, Gov. Frank Murkowski pledged to convene a special task force to look into all options for finding a new source to supply the 80 million cubic feet per day of natural gas needed to allow Agrium to stay in operation. We wish him and the task force all the best, but it's hard to imagine any new prospects that large suddenly appearing in the immediate future - especially considering how hard everyone's already been looking.

In addition to the likelihood that Agrium will not be in business past next year, there's a high probability that the ConocoPhillips LNG plant is also entering its last days. Because the plant's federal operating permit is contingent upon large, inexpensive sources of gas in the region, it's highly unlikely the permit will be renewed when it lapses in 2009.

There still is gas in Cook Inlet, but it doesn't appear as if there's nearly enough to keep either of these major industrial cornerstones of the peninsula's economy in business.

Of course, anything is possible; and the world of oil and gas exploration is, by its nature, a big unknown. In fact, this is all we've heard from industry representatives and government officials for the past couple years.

But there comes a time when rosy optimism begins to look like blindness. That day may well be here. How long can we continue to pretend that the natural gas industry in Cook Inlet has a bright future when the sun is obviously beginning to set?

Government officials and business leaders need to begin preparing for a future that does not include these two plants. That means making some difficult choices, choices that may include tax increases, budget cuts and layoffs for borough employees.

But it also means making a concerted effort to attract new employers and finding ways to build upon the industries that still remain.

Two good places to start are commercial fishing and tourism. Although oil and gas are finite resources, fish and scenery are not. If we remain good stewards of our land and water resources, the Kenai Peninsula will remain a world-class fishing and tourism location for many years to come.

Ideas like the Kenai Landing resort and the Kenai Wild salmon branding program are two excellent examples of how we can maximize the benefit from our existing resources. More needs to be done to encourage these types of forward-looking projects.

Additionally, maybe it's time to begin looking into other manufacturing industries. This area already has a built-in base of industrial workers and infrastructure that could be used in some other capacity. Alaska's position between the West Coast and Asia makes it an ideal location for shipping products Outside. Maybe there are industries which might want to bring their plants to an area that's ready-made for manufacturing.

Also, the prospects for an Alaska natural gas pipeline still look strong, and the oil and gas industry is anticipating a need for thousands of new workers over the next two decades. Training these new workers could become a major industry here on the central peninsula. That could mean expansion of the college, as well as new satellite training facilities that could turn this area into a major destination for petroleum industry professional training worldwide.

If Agrium does indeed depart, the impact on our area will be significant. We can either pretend as if things will magically get better, or we can begin to come to terms with the fact that the days when oil and gas drove our economy are coming to an end.

This won't be easy. But the sooner we open our eyes to what's happening around us, the sooner we can begin looking toward the future.

As this story unfolds, we - along with the entire peninsula - will be watching intently to see how things turn out.



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