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Editorial Dept

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Global Energy Advisory – 25th April 2014

Alaska Endorses Gas Pipeline Plans

Last weekend, the Alaska Legislature approved gas pipeline plans to spend some US$100 million in the short-term to join four energy companies to build infrastructure to transport North Slope gas along an 800-mile pipeline to an LNG export plant. Both the House and the Senate have approved the plan, which has now been sent back to Governor Sean Parnell to sign off on. This is Parnell’s plan to begin with, so signing off is a foregone conclusion. Under the deal the State of Alaska will collect future taxes from the pipeline in the form of a share of the natural cash, rather than cash. Effectively, this means the state will be partnering with pipeline giant TransCanada and oil and gas companies (Exxon Mobil, BP, Conoco Phillips).

Opponents of the deal argue that Alaska will make unacceptably low revenues on this project, while proponents say it’s a fair deal and the only way to start getting the gas out of the ground and to the market. Proponents are talking about the potential for around US$4 billion in revenues annually. However, this assumes that project costs aren’t high and gas prices aren’t low, and opponents point out that actual state revenues could end up being 10% of this.

The project’s goal is to market 35 trillion cubic feet of North Slope gas through the 800-mile pipeline connecting to an LNG export facility. The project will cost an estimated $45 billion to $65 billion for the pipeline and the LNG facility.…




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