KTUU.com | Alaska's news and information source | AGIA plans right on schedule, says Parnell

AGIA plans right on schedule, says Parnell

by Lori Tipton
Tuesday, November 03, 2009

ANCHORAGE, Alaska -- Plans to build a natural gas pipeline in Alaska are moving forward.

The Parnell administration released its second AGIA gasline project report Tuesday, showing that the project is on schedule.

However, a federal report that was recently released says Alaska gas could be a tough sell.

"The question that Alaskans need to know is where are we on that project," said Mark Myers, the AGIA coordinator.

According to the Department of Revenue commissioner, Pat Galvin, a natural gas pipeline is considered the single most important project for the future of Alaska.

In terms of revenue projection, state officials say there is no alternative.

"We still see it as a very vital and very strong economic project," Galvin said.

Some question whether the Alaska pipeline project is economically viable.

While the state says it is, a report released in October by the U.S. Energy Information Administration says shale gas finds in the Lower 48 could hurt the sale of Alaska gas and that finding Arctic oil and natural gas deposits is difficult and expensive.

Developing them as commercially profitable ventures is even more challenging.

"The bottom line for Arctic oil and natural gas potential is that high costs, high risks, and lengthy lead-times can all serve to deter their development in preference to the development of less challenging oil and natural gas resources elsewhere in the world," concludes the report.

Galvin and Myers addressed that issue Tuesday.

"We cannot allow the advancement of the natural gas pipeline to be driven by short-term natural gas prices," Galvin said.

According to Galvin, gas prices in the short term tend to jump up and down.

"If you look at the project, you've got to look at long-term cost, long-term need for gas, long-term pricing," Myers said.

"It's the long term-trend we're after, because remember this is first gas eight years from now, and so we're looking at those trends that are important," he said.

But state officials say they are certain that in the long term, Alaska natural gas will sell.

"The long-term price expectations for natural gas in the Lower 48 continue to support the economics for this project," Galvin said.

While plans for the Alaska pipeline move forward, the same cannot be said for Canada's McKenzie natural gas pipeline.

That project was halted a few days ago over concerns about natural gas prices and because there are more accessible shale gas deposits in Texas, Louisiana, British Columbia and Eastern North America.

Contact Lori Tipton at ltipton@ktuu.com