$1.2 Billion Cut from Projection of In-State Gas Pipeline Cost
Project has been simplified, agency says
ANCHORAGE - The state agency working on an in-state natural gas pipeline says a re-design of the project means lower projected costs for consumers.
The Alaska Gasline Development Corporation reported to legislators today that it has simplified its project.
The biggest change: The corporation no longer proposes to ship natural gas liquids, or NGLs, through the pipe, because the economics no longer support it.
"Everyone's heard of the impact of shale gas on natural gas prices in the Lower 48, and there's been a similar impact on NGLs in the Lower 48,” said Daryl Kleppin, commercial manager for the corporation. “If you look at the literature in the last year or two, they reference an NGL glut in the Lower 48."
Leaving the liquids on the North Slope means the project shaves off $1.2 billion in costs for various facilities to handle them, thus reducing the tariffs paid by consumers.
Some legislators obviously were energized by the report.
"We have elevated the energy security for the state of Alaska to a priority state mission," said Representative Mike Hawker, R-Anchorage.
But the gasline development corporation said it needs more assistance from the Legislature, including $400 million in additional funding in the coming session, as well as more authority in the law.
"The confidentiality challenges that we've had in order to be able to talk to potential clients, producers, has made it difficult for us because we aren't able to have those meaningful conversations because we are subject to the open records act," said Frank Richards.
Corporation officials acknowledge the in-state line would be unnecessary if the North Slope producers and TransCanada move forward quickly on the proposed project to tidewater for exports of liquefied natural gas, which would include gas take-off points for Alaskans.
But for some, patience has worn thin.
Hawker said, "If that fork is a dead end, we've got an agency that with our backing and a minimal amount of funding we are able to move forward to an open season and move Alaska’s gas forward at the direction of the legislature."
It has shaped up as one of the biggest issues of the legislative session that starts next month.
The corporation's timeline calls for an open season in 2014, in which gas producers would buy space in the line, and then first gas flowing through the pipeline in 2019.