Sunday, May 19, 2013
In-State Gas Line 'Feasible,' Report Says
An in-state natural gas pipeline looks far better than previous expectations, according to a comprehensive report today.
ANCHORAGE — An in-state natural gas pipeline looks far better than previous expectations, according to a comprehensive report today.
The line could deliver gas to Fairbanks at less than one-half the current price here, according to the state-owned Alaska Gasline Development Corp.'s analysis.
The lower price is achievable without a major cash payment from state government, the report said. The finding counters claims that the intrastate pipeline would need subsidies.
But such a pipeline could only be operating in seven or eight years, later than some had hoped, the report said.
A pipeline could also deliver competitive prices to Anchorage, the authors concluded.
The estimated Anchorage prices are “far better than I ever envisioned,” project chairman Dan Fauske said.
The Legislature ordered the report last year. Policymakers and Gov. Sean Parnell are comparing options as they push for development at the North Slope’s vast natural gas fields.
The report estimated the line could deliver gas to Fairbanks at a price of $10.45 per thousand cubic feet. That would significantly “lessen” energy costs in Interior Alaska, Fauske said. The price would be around 8 percent cheaper in Anchorage.
The intrastate line would cost around $7.5 billion with trimmings. Fauske's estimated prices would apply assuming a builder borrowed 70 percent of the cost of construction.
Fauske said using a route that lies west of Fairbanks would minimize costs. Fairbanks could be fed through a feeder line.
That conclusion will frustrate some here: Public and business leaders have lobbied for the main line to pass through Fairbanks to provide direct access to larger volumes of gas.
The Fairbanks North Star Borough Assembly voted 6-1 last summer to fight any construction scenarios that bypass town. Proponents said a feeder pipeline would limit the sort of long-term industrial development opportunities that access to greater volumes would provide.
Work by the gasline corporation, a subsidiary of the Alaska Housing Finance Corp., identifies the bypass route as the best alternative. Fauske suggested sticking with it and moving ahead.
He said state government could complete an environmental review by early 2012. The corporation’s review project focused largely on early permitting and engineering work.
Many worry a multibillion-dollar intrastate gas pipeline would pull the rug from beneath a bigger option — a pipeline built largely to ship gas for export. Such a line could lower delivered prices and would benefit the state through royalties and taxes and by encouraging North Slope oil exploration.
Advocates of the bullet line say they won’t compete, a notion Fauske echoed today.
Parnell said the report “leaves some flexibility” as policy makers consider options and represents “a positive foward in solving Alaska’s energy challenges.”
Contact staff writer Christopher Eshleman at 459-7582.