Alaskan Gas Pipeline: Would-Be Operators Vying For Routes, Funding

July 8, 2009

Even Sarah Palin quitting as governor of AK won't stop the proposed $20-40 billion natural gas pipeline which would transport natural gas over 2000 miles from AK's North Slope natural gas reserves to the Midwestern US. Considered a national priority by both Congress and the Obama administration, this huge project will have a significant impact on the consumers and the energy industry. Depending on its eventual route, the pipeline could end up having wildly different environmental, regional, national, and international effects.

If you cover energy issues or climate change, it's time to put this pipeline on your radar screen. Here's a roundup of key context, sources and resources to get started.
 

FUELING TAR SANDS DEVELOPMENT

The gas pipeline will almost certainly be routed to serve the controversial tar sands projects in Alberta, Canada – some of the dirtiest and energy-intensive energy resources on earth, from the perspective of waste, air and water pollution, and greenhouse gas emissions. While a portion of the Alaskan gas will most likely reach the lower 48 states, the environmental impact of continuing or expanding tar sands development should be considered in any coverage of the pipeline.

On June 29, the news site SolveClimate explored the connection between the gas pipeline and the tar sands.

When reviewing plans for the gas pipeline, keep in mind this map of the Alberta tar sands.

Writing for Huffington Post, Michael Brune, executive director of the Rainforest Action Network, recently blasted the pipeline project on environmental reasons related to the tar sands.

  • RAN press: Nell Greenberg (415-659-0557) or Margaret Swink (415-659-0541); email.
     

COMPETING PROPOSALS

Two corporate teams currently are vying for the right to build and run the pipeline:

DENALI PROJECT: Backed by BP and ConocoPhillips. "It will consist of a gas treatment plant on the North Slope, a pipeline approximately 2,000 miles long to Alberta, Canada, and if required, a 1,500-mile long pipeline from Alberta to Chicago."

 

TRANSCANADA-EXXONMOBIL PROJECT: "will stretch approximately 1,700 miles (2,737 km) from the North Slope Alaska through Yukon and northeastern British Columbia to the B.C./Alberta border near Boundary Lake, and will include new and existing infrastructure in Alberta."

  • Web site.
  • Map.
  • TransCanada press: Cecily Dobson (403-920-7859 or 800-608-7859).
  • ExxonMobil Press: Margaret Ross (713-656-4376).

 

NEXT STEPS

According to Erika Bolstad in the Anchorage Daily News: "Next year, the two competing projects will hold open seasons, where they will lay out their shipping rates and seek gas producers to commit to using their pipe. The two companies would need those commitments during the open season to land approval from regulators and the money needed for construction." Story.

Bolstad's ADN story also maps out the political landscape: "22 US federal agencies must sign off on an environmental impact statement before the project can move forward. … One small federal agency, the Office of the Federal Coordinator (nine employees), is overseeing the effort." The article features an interview with OFC director Drue Pearce.

The open season results will indicate much about who will be paying for the pipelines – both for initial construction, and how the cost will be subsidized through natural gas rates.

But the open seasons might not succeed. SEJ member Elizabeth Bluemink reports for ADN: "Some pundits, economists and former legislators are predicting that neither open season – a key milestone in the early stages of developing a major pipeline – will lock in enough gas to move the project forward. If TransCanada's open season fails, the company has 'an obligation' under a state license awarded last year to keep soliciting gas from the producers every two years, said Tony Palmer, the company's vice president for Alaska development, during a House Resources Committee hearing in Anchorage on Tuesday. If Denali's open season fails, its next move depends on the reason for failure, said Denali team spokesman David McDowell." Story.

The SolveClimate article mentioned above notes that federal money will probably help fund the pipeline: "The Natural Gas Pipeline Act of 2004 provides about $18 billion in loan guarantees for pipeline construction, in addition to tax incentives. These dollars won’t be insignificant for a project estimated to cost between $26 billion and $40 billion. A report written by the Congressional Research Service in September 2008 points out that the rationale for federal support of the pipeline was to increase the supply of natural gas to the lower 48 states. In other words, federal dollars could be in jeopardy if the pipeline doesn’t serve the US."  CRS report.

 

BACKGROUND

The AK natural gas pipeline was spurred by a 2007 incentive from the state of AK called the Alaska Gasline Inducement Act: "to encourage expedited development of Alaska's gas resources by offering incentives to companies that produce the state's gas resources and companies that can build a pipeline." Background and current documents/news. Press, office of Gov. Sarah Palin: Sharon Leighow, 907-269-7450.

The pipeline will be built only if Canadian authorities can strike a deal with native Canadian First Nations whose lands are on the pipeline route.