News-Miner Editorial
$500 million
Does Alaska really need to subsidize a gas line?
Published Sunday, June 29, 2008
Digg
delicious
Facebook
Mixx
Reddit
Stumble It!A half a billion dollars might not seem like all that much to some people when considering that the state of Alaska might see a $9 billion surplus at the end of the current fiscal year.
But half a billion — $500 million — is truly a big load of bucks.
That’s why legislators considering whether to give that much money to Canadian pipeline company TransCanada for construction of a natural gas pipeline from the North Slope need to think hard before making that decision. They need to be certain that the expense is actually necessary and that forces aren’t already at work which will ultimately see TransCanada unite with BP and ConocoPhillips on those companies’ own gas pipeline plan.
People, including some in the Legislature, seem to be speaking more often about the inevitability of TransCanada teaming with BP and ConocoPhillips. TransCanada is a highly regarded pipeline builder and has rights to build a line on the Canadian side of the likely route to get gas to the Lower 48, but the company has no gas of its own to put in a pipeline. BP and ConocoPhillips hold leases to vast quantities of North Slope gas but aren’t really in the pipeline-building business.
It seems, on the outside looking in, to be a marriage-in-waiting. All of those parties say they want to see a project move forward.
So if the marriage is all but inevitable, why should the Legislature spend $500 million? The thinking, apparently, is that giving a state blessing to TransCanada will get a pipeline built on Alaska’s terms. But everyone needs to remember that ol’ problem of TransCanada having no gas of its own. That simple fact gives the advantage to the BP-ConocoPhillips project, which the companies call “Denali,” should both projects end up in front of the Federal Energy Regulatory Commission. FERC is the entity that will give the only certification that actually matters.
There’s obviously a race under way as BP and ConocoPhillips make highly publicized moves to show that they are serious about moving ahead with their pipeline project, which isn’t asking for the $500 million in state support since the companies aren’t doing their project under the Alaska Gasline Inducement Act. The companies recently opened a headquarters in Tok and have been doing field work as part of their commitment to spend $600 million on their project over the next three years.
Those facts can’t be ignored. Nor can the growing impression that BP, ConocoPhillips and TransCanada will, in the end, get together because the national and economic pressure for a pipeline exceeds any pressure that AGIA alone can exert.
A half a billion dollars is a ton of money.
So, again, legislators need to ask themselves in these final weeks of their special session if it really will be necessary to fork over that truckload of cash to TransCanada to get a pipeline going — especially since there’s another inviting project already under way.
Community Discussion
Newsminer.com doesn't necessarily condone the comments here, nor does it review every post. Read our full user's agreement.
It would be helpful if the News-Miner would ask a few fundamental questions about building a gas pipeline.
Both TransCanada and the non-producer schemes would not get gas to Fairbanks until 2020.
1. Can Fairbanks wait until 2020 for affordable energy?
2. And, can Alaska do better?
The non- producers have lied to us many times before about building a gasline. And lets not forget that these are the same crooks who have been stealing from Alaskans by inflating tariffs on the oil pipeline. Most crooks go to jail when they steal $20.00. But when a large, multinational corporation steals one billion dollars, which is the amount that FERC has determined that they have to repay Alaska for their fraudulent tariffs- all they have to do is pay it back.
And then there is the TransCanada scheme to send Alaska's gas to the environmental disaster known as the tar sands; if they are successful. But we won't know that for years and years. DNR makes it very clear that they are not offering a guarantee that a gas pipeline will be built- only that there will be a series of steps leading up to a FERC license.
This is terrible.
The people who live here deserve far better from their elected officials. As the News-Miner has pointed out our surplus will be about 10 billion dollars this year. Maybe 15 billion next year. We have plenty of cash to invest in a 12 billion dollar Alaskan owned gasline and get gas flowing to the Interior within five years. The additional bonus is the magnificent rate of return on a pipeline. We'd get double the earnings from our gasline than any other investment we could make.
So lets stop fooling around. Winter is less than 90 days away. Fuel oil is close to $5.00 per gallon. Crude oil continues to rise in price and is predicted to hit $200 in the near term.
How many will be able to afford fuel oil when it hits $7.00 per gallon? Most are having a heck of a time already. Electricity costs are jumping right along with fuel oil- GVEA may be charging over 30 cents per KWH next year.
The Interior needs certainty. We need our elected officials to move forward with the All Alaska Gasline. That is what we've told them to do in multiple elections. And that is what some of them have promised when they ran for office.
In all of the public hearings held so far about the TransCanada scheme Alaskans across the state have said 'no deal' to TransCanada. And they overwhelmingly said 'yes' to the All Alaska Gasline.
Are our elected officials listening?
Yeah, except for the whole part about bribing lawmakers and buying off as many laws as possible.... domestic oil needs to learn a lesson, and billions of dollars in someone elses pocket because alaskans don't trust them - that sounds like a great idea to me.
Sounds like a HELL of a lot better than giving a company that we hate MORE leverage over our states operations. This diversifies those operations.
The easy way is almost never the best way.
I see the News-Miner is still hard at work shilling for the oil companies again. How can such a clearly biased paper be given any credibility. In point of fact I often take "editorials" in the N-M as a sign that whatever position they are advocating is the wrong one. The oil companies are never going to give up trying to swing things for their benefit, over that of the state. If they can't do it with dirty legislators or a stooge governor, they will try a false-front "alternative gasline plan". This gives legislators still friendly to them political cover to vote against the TransCanada plan, and undercuts the governor, AGIA and TransCanada. It makes the $500M look like wasted money, and the News-Miner is all too willing to help by shamelessly harping about it for them. HOW ABOUT ANOTHER POINT OF VIEW in the editorial column!?!? While the oil companies *have* spent a little money on their 'plan', they really have to, or it would be too obviously a corporate ploy. The timing and tactics used to announce and then "educate" about their deal have been choreographed for maximum effect. I don't buy it for a second, and have zero trust in big oil. I HIGHLY doubt there is any substance to their plan beyond the political; I expect it will eventually simply fade away.
fsjec6
Good post-ya said it all. The state has the only weapon it needs to bring the big oil boys to the table. It's called the DEC. I normally detest enviromental law being used to control an industry, but maybe in this case it's justifiable.
http://www.dec.state.ak.us/
eat_or_heat: Based on the tone of your post, you sound a lot like the treasurer of the Alaska Gasline Port Authority. Are you? If so, which project are you now touting and when would it deliver gas?
The $500 million would better spent on a bullet line that would be ready to start next year and get us some cheaper fuel NOW......
We haven't really heard from our former Governor lately. Is he, by chance, employeed with the DNM?? Most of the editorials that come out look as though they were written by him!!
THE GOOFY BIGWIGS ARE UNWITTINGLY COOKING UP A BAKED ALASKA
$500 million is cheap fire insurance.
The North Slope has so much methane leaking out of it that it's a huge fire hazard with explosive potential.
Anybody who thinks that waiting to monetize the methane is "the only sensible idea" sorely needs their head examined.
The big 2007 tundra fire between the Nanushuk and Itkillik right over the top of the shallow Gubik gasfield should have everybody upset.
New-Lightning sparked that fire, and the cause of the fire is unprecedented ground temperatures during July each year.
There's possibly 10tcf of gas in the extended Gubik formations, and the top of those formations are capped by only a few hundred feet of soil.
In 1951 the well-logs found gas at 890feet. This was a random spud, and flowing gas could actually be found at much shallower depths with further study. Melting permafrost and clathrates can cause surprising changes in the safety of the gasfields of the Arctic Basin at any time.
If you don't use it you'll lose it..
and the windspeeds in Chicago could be 300mph when it blows.
Many fumblementalists will be convinced the Rapture had happened.
Plastic gaslines rapidly deployed to gather the gas from the known seeps and shallow fields and transport the gas southward to the nearest possible market on the south side of the Brooks is a prudent emergency measure.
The First Gasline Over The Brooks Wins !!!
www.fairbanksgas.com
Anybody wanna buy a lightning rod ?
..deploying balloons tethered to electrically grounded anchors in the rivers is just a temporary band-aid.
....flash/rumble
haters, haters, haters...Remember just a few years ago we faced a massive budget shortfall in this state. Now we're facing multi-billion dollar surpluses in the near term. What a tragedy! Those companies that you all seem to enjoy hating so much are single handedly making a future for your children in Alaska possible. The staggering investment these companies have made in our state are paying off for them, and that can't be construed as anything but good. We need our partners to make money. When they succeed, we succeed.
Oil companies don't set oil prices, they just pump it out of the ground. With the collapse of the US housing market, and associated financial markets, investors have turned elsewhere for profits. If I buy 1,000 barrels of oil now, for delivery in mid September, but sell the rights to those 1,000 barrels before delivery occurs, to someone else...If the price of that oil has risen since I bought the rights to those barrels, the difference between what I paid, and what I sold for is pure profit. It's called speculation, and that coupled with the sinking dollar, combined with stifling environmental regulation of new oil production, added to ever increasing world demand for oil are the market forces keeping oil prices high. It is an uneducated mind that seeks to blame so-called "big-oil" for the cost of oil. They represent less than 25% of the world oil supply anyway. The vast majority is controlled by foreign governments.
Educate yourselves haters. You sound embarrassingly ignorant.
Where is it written that the state cannot bond and build a gas pipeline themselves and then make all of the important decisions as to size, schedule, route, turnouts and so on? They own a railroad, and other facilities.
Yes, the state needs to be extremely careful here - and they may want to do an inquiry into the outfit that is stationed down in Tok.
I would like everyone here to know that they started out confidentially & even led the citizens there to believe they were with Conoco Phillips.
I am not sure exactly of their agenda - but, I can assure everyone that they are working for Conoco Phillips and BP.
The person to ask questions of Denali is named John Pickering and something is up.
On top of that, why would we pay $500 million to those companies for anything?
Post a comment
Commenting requires registration.