In Juneau, a debate is raging about an in-state natural gas pipeline. In fact, that debate is raging not just about one pipeline, but two. And neither of them exists yet.
For much of the week, representatives have been taking public testimony on House Bill 9. It's a measure that would finally bring to realization the generations-long dream of constructing a multi-billion dollar pipeline from Alaska's North Slope.... Probably the richest natrual gas field in all of North America... With 35 trillion cubic feet of natural gas.
But this pipeline would not go to the Lower-48. It would deliver its gas right here in Alaska. It would run from the North Slope, to within 37 miles of Fairbanks... And from there all the way down to Anchorage.
It would deliver its plentiful natural gas to the two big population centers of the state... And in the future would sprout offshoots to the interior.
But there's one problem with this picture. The gas reserves at the North Slope are so huge, that the only way to distribute them cheaply is through vast economies of scale. Alaska only has 690-thousand people. And they don't use anywhere near enough natural gas to fill a big pipeline.
The North Slope Pipeline envisioned years ago -- the one that would pump gas all the way down to Chicago -- had a four-foot diameter. It was so big, that a 10-year-old child could probably stand-up inside it. A pipe with that sort of diamater was meant to deliver natural gas to tens of millions of people. Alaska's entire population couldn't fill 10 Super Bowl stadiums.
So, with Alaska's gas needs being relatively modest, the pipeline was scaled down to just 2-feet in diameter. That makes sense, but it posed new problems. With nat gas being developed on such a small scale, it couldn't be sold cheaply. Infrasctructure costs would make up a significant fraction of its sale price.
In addition, the gas coming from the North Slope is so-called "wet gas". It contains liquid components that require a processing plant to be built -- to remove the contaminants. Needless to say, such processing plants are expensive.
Despite such concerns, State Representative Mike Hawker has been a champion of this route. A few weeks ago, the Anchorage Republican said firmly, at a news conference, "We have got to stop shooting ourselves in the foot. We've gotta take a firm stand. Move it forward to get Alaska's gas to Alaskans."
But a number of democrats disagree with Hawker.
One of them is State Senator Joe Thomas (D) Fairbanks. A few days ago, Thomas told reporters, "if there's 19 t-c-f of gas *is* in cook inlet, why would you want to build an entire line" from the North Slope, he asked.
Thomas's concern is this:The latest U.S. Geological Survey estimate says there may be up to 19 trillion cubic feet of natural gas in Cook Inlet. That's about half as much gas estimated to be at the North Slope! And if those estimates prove correct, it would mean that Cook Inlet would be far cheaper to tap as a source of natural gas for our state.
In addition, Cook Inlet gas is "dry gas".. It requires little or no processing ... Which is a big cost advantage for relatively small volumes of gas.
Enough infrastructure already exists to move Cook Inlet gas up to Anchorage -- where it's the main source of heat and electricity for the state's largest population center.
Fairbanks would love to have some of that gas. It relies on other more expensive forms of energy for heat and light -- and residents there pay a ton of money in utility bills.
In that sense, a small-diameter line from Cook Inlet is theoretically shorter and easier to build. It could make more economic sense, because if less money goes into infrastructure, the gas it produces would be cheaper than in-state gas pumped from the North Slope.
The problem is this. No one really knows if there's enough gas in Cook Inlet to supply both Anchorage and Fairbanks. The U.S. Geological Survey estimate is just that -- an estimate. It awaits exploratory drilling to confirm it.
Some of that exploratory drilling will take place this summer. A private company will place expensive test rigs in the Inlet to find the hoped-for-gas.
If they do find additional reserves, the hope of an in-state pipeline -- all the way up to Fairbanks will get a boost. But until then nobody knows.
That's why State Senator Tom Wagoner (R) Kenai, thinks the "dueling pipeline" debate is silly right now. Wagoner doesn't see how a decision can possibly be made before the exploratory wells are drilled... And then, he insists, it should be private industry which should decide which route makes the most economic sense... Not people in government.
In the meantime, the urgent needs of interior Alaskans for affordable energy are not being met -- and Governor Sean Parnell is concerned.
At a press conference this week Parnell said he favored trucking natural gas from Cook Inlet to Fairbanks as the only short-term solution to the city's energy problems. "We agreed with Fairbanks legislators in this room," Parnell said, "to pursue the gas-trucking option in the sense that the state could provide low-cost financing, for example."
But Parnell agrees, an important long-term solution for interior Alaska includes a natural gas pipeline -- not expensive trucking.
The still-unresolved question right now is, where will that pipeline start? In northern Alaska or south central?
No one has a conclusive answer yet.
