COMMENTARY: Over-the-top route minimizes natural gas benefits to Alaskans

Article VIII, Sections 1 and 2 of Alaska’s Constitution mandate that “Alaska’s resources are to be developed to the maximum use and benefit of its people.”

Following the discovery of oil on Alaska’s North Slope in the late 1960’s, we Alaskans held our breath watching the daily progress of the ice breaking oil tanker, the SS Manhattan, as it carried a single barrel of North Slope crude oil towards the New York Harbor.  Although it ultimately reached its destination, we cheered at the announcement that this route was a non-commercially viable option for moving Alaska’s oil off the North Slope.

Soon thereafter the construction of the Trans-Alaska Oil Pipeline System commenced and thousands of Alaskans went to work. All of the development resulting from the construction of the oil line and the decades of commercial activity across Alaska are a direct consequence of that oil line running 800 miles through Alaska. Development for the “maximum benefit of Alaskans” was accomplished.

This same rationale led the late Sen. Ted Stevens to secure the passage of federal legislation to prevent Alaska’s gas from being taken off the North Slope via Exxon’s proposed “Over the Top” gas line destined for Canada without traversing Alaska.

The Alaska Legislature passed a similar law for the very same reason. Just like the oil, if Alaska’s gas left Alaska from the North Slope via an over the top gas line or an LNG tanker, the benefits to Alaskans would be minimal.  Fortunately our delegation and legislature have long recognized this option would not deliver the “maximum benefit of Alaskans.”

Alaska’s historical approach is not an anomaly. Alberta long ago passed a law requiring that natural resources could not leave the province without first being made into a product. This value added requirement created the bulk of Alberta’s natural resource jobs.

It is with this backdrop of history that I was shocked to learn from a Houston oil and gas reporter in a recent interview that there are current elected officials in Alaska considering options whereby Alaska’s gas would be transported directly from the North Slope. Are these officials not aware that for decades we fought united as Alaskans for as much benefit from the development of our resources as possible and passed laws to ensure that happened? It is for the jobs and lower cost of energy that we must continue to fight that fight.

The recently released Wood Mackenzie report showed that LNG from Valdez could be delivered nearly one-third cheaper to the Asian market than that from the LNG project being developed in Kitimat, British Columbia. While Kitimat is signing up customers, are we really considering a project that would not bring Alaska’s gas through Alaska?

Clean burning natural gas delivered to Alaskans from a large volume line with an LNG export component would be magnitudes cheaper than any other option. Without this, how do we get affordable energy into the Interior communities? How do we protect against another run at mothballing our Interior military bases due to high energy costs? How does LNG leaving Alaska’s North Slope help the cost of energy in Bethel? This winter it is anticipated that the cost of heating oil in Bethel will exceed $40/mmbtu as compared to less than $3 for the same unit of energy in the Lower 48.

It is not just the amount of money that goes into state coffers that defines the “maximum benefit to Alaskans.” The quality of life for Alaskans as measured by employment and affordable energy for homes and businesses must also be of primary concern.

In 2002, 138,000 Alaskan voters (62 percent) were right when they voted for the All Alaska gas line. They are still right today. And I am confident they join me in urging our elected officials to not embark on yet another study that will ultimately conclude that a deep draft LNG tanker could not load LNG from the North Slope’s ice packed, shallow shores. Exporting Alaska’s jobs and future off the North Slope leaving behind no relief from high energy costs and a high unemployment rate offends Alaska’s constitution and the very people it was intended to protect.

Bill Walker owns an Anchorage law firm that focuses largely on oil and gas and municipal law and serves as general counsel for the Alaska Gasline Port Authority. He ran for governor in the 2010 Alaska Republican primary.

01/05/2012 - 1:58pm