Where are we on the North Slope natural gas pipeline? Are we close? Are we at least getting closer?
Or is the pipeline once again slipping out of reach?
The Alaska Legislature needs to find out when it reconvenes in January.
There have been lots of public comments lately from the administration of Gov. Sean Parnell on behalf of the TransCanada-Exxon Mobil project. And there's been corresponding talk from a competing project, known as Denali and backed by BP and ConocoPhillips.
In each case, Alaskans are led to believe that progress is being made.
But is it?
At this point, Alaskans simply do not know.
A lot has been made of Exxon Mobil's coupling with TransCanada, which was the only company to put forward a proposal under then-Gov. Sarah Palin's Alaska Gasline Inducement Act. The state is wedded to the AGIA process, and Gov. Parnell and his gas team continue to tout it.
But is that process working? How committed is Exxon?
The company expects to have four enormous natural gas facilities online in Qatar by next year. One is already producing. All will be 70 percent larger than any built in that country previously, according to an August 2009 story in Forbes magazine.
Those four plants combined will produce 1.6 trillion cubic feet of natural gas annually, enough to supply 10 million U.S. homes each year. Exxon is building tankers that are 80 percent larger than standard tankers to deliver the gas to the United States. Just one of those tankers, according to Forbes, will be able to supply one-twelfth of U.S. daily demand.
Exxon's commitment to producing North Slope gas is a topic to be explored.
And remember this, too: TransCanada, Exxon's leading partner in the Alaska project, has no gas. It's just a pipeline company. A fine one, by all accounts, but just a pipeline company. If Exxon and others companies aren't ready to provide gas, there's no pipeline.
Meanwhile, Alaska loses leverage in negotiating financial terms of the project with every passing year. Alaska, believe it or not, doesn't have an endless supply of money. And it doesn't have an endless supply of oil to provide that money, a fact seen in the continual decline of crude flowing in the trans-Alaska oil pipeline.
The oil companies, who naturally want the most favorable terms possible, will wait until the time is right for them before producing the North Slope gas. Those companies simply cannot be forced into making decisions that are not in their best interest; that's the way of the business world.
The story in Forbes magazine refers to the Alaska project briefly, calling it a "long shot." It then quotes Exxon CEO Rex Tillerson about why that is: "People ask me all the time, 'What's the holdup?'" says Tillerson. "'You made all these billions of dollars of commitments in Qatar; why can't you make them in Alaska?'"
In short, he says, it's because Qatar is "willing to put terms in place to give you stability to go out and make that kind of commitment."
But, he says, "we have difficulties having that same kind of conversation, not just with Alaskans but in this country in general."
The Legislature needs to find out about Exxon's commitment. It needs to find out if the AGIA process is fatally flawed. It needs to find out if the state should be negotiating with the oil companies now rather than later. It needs to find out about the major advances of other natural gas resources in the Lower 48.
It needs to find out if Alaska is about to miss out, perhaps for a generation, on production of North Slope gas.
The Legislature needs to get answers for all of us by forming a special House-Senate committee to review progress of the natural gas pipeline.
