Spur line a must for gas pipeline project

Posted: Sunday, December 19, 2004

In what may turn out to be the biggest Alaska story of the year, the "big three" oil and gas producers —ConocoPhillips, ExxonMobil and British Petroleum —have come to the negotiating table with a proposal to build a North Slope natural gas pipeline.

A gas line will be a boon to the Alaska economy, and this project will bring with it thousands of construction jobs and hundreds of millions of dollars in royalties to state coffers. Undoubtedly, when a pipeline is built, it will be a good thing for the state as a whole.

But just building a pipeline isn't enough.

Southcentral Alaska is home to a majority of the state's population and has become the economic, political and cultural center of the state. The population in this area is growing rapidly, as is the need for affordable energy.

Unfortunately, the supply of natural gas in the region —something we've depended on for cheap heat and electricity for decades —is beginning to run out. And although some untapped potential sources in the Cook Inlet basin remain, the best chance for long-term gas in the region probably depends on tapping into the vast reserves of gas that lie beneath the North Slope.

As negotiations between the state and petroleum companies go forward, it's a certainty that bringing some sort of spur line to Southcentral will be a priority on the state's side. In fact, the oil companies might use the spur line as a negotiating opportunity to make gains in tax breaks or royalties.

This, of course, is how business is done; and since negotiations are still in their infancy, it's difficult to speculate on how things will go.

No one wants the state to give up the farm when it comes to cash flow once the pipeline is completed; yet it's also imperative that provisions are made to get gas to the state's population center.

We don't envy the negotiators. It's going to be a long and difficult process to finally ink a deal that will keep everyone happy. But because of the scope of this project and the enormous potential it brings to benefit the state in a number of ways, the chances for such a deal are looking better today than they ever have.

Unfortunately for our area, a North Slope pipeline won't do much to help out industrial consumers on the Kenai Peninsula right now, since the permitting and construction process is estimated to take more than a decade from the time a deal is agreed upon.

However, no matter what industries sustain us 20 years from now, the long-term economic stability of this region will depend on keeping energy prices low. And that means getting a spur line built.

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