Port authority: Producers are conflicted

PHOTO/Claire Chandler/AJOC
Proponents of an all-Alaska natural gas pipeline, touting a new industry partner to back their plan, say the state must push ahead now to get its gas to market, to provide much needed gas for Alaska and to protect the economic future of the state.

Jim Whitaker, chairman of the Alaska Gasline Port Authority, told the Alaska Natural Gas Development Authority in Anchorage July 20 that the port authority would announce shortly a new agreement with an industry partner.

The California-based energy company Sempra Energy recently ended its relationship with the port authority, citing lack of support for the project from the state administration among its reasons for dropping out.

Whitaker said that Alaska is at a critical point, one where its gas could be excluded from market entry. Whitaker said the worldwide gas development strategies of BP, ConocoPhillips and Exxon Mobil create an interesting dynamic, in that Alaska’s major North Slope producers are in actuality Alaska’s major competitors for North American natural gas markets.

It appears the future of Alaska North Slope natural gas development, the very economic future of the state of Alaska, is in peril, Whitaker said.

ANGDA, an agency within the Alaska Department of Revenue, has as its stated mission the development of a gasline from Prudhoe Bay to tidewater on Prince William Sound, and a spur line from Glennallen to the Southcentral Alaska. On ANGDA’s Web site is a note: "Happiness is Alaska gas going south."

But just how or when that North Slope natural gas is ever going to go south remains a matter of contention between major North Slope producers, the state government and various private interests. Beyond the actual route of the proposed gas line, several groups have expressed concern that any such construction might be delayed until market opportunities are long past.

In the dynamic natural gas marketplace, not all natural gas reserves are the same, Whitaker said. In addition to Alaska, Exxon Mobil, ConocoPhillips and BP have lease rights to natural gas in the Middle East, Russo-Asia, Southeast Asia, South America, Canada and Australia, he said.

Most of the producers’ leases around the world are time-sensitive, mandating that the resource be produced and marketed within a specified time frame, but the leases on Alaska’s North Slope have no enforced time constraints specific to natural gas, he said.

The port authority, like the Yukon Pacific Corp. before it, has tried without success to get the major North Slope producers to sell the slope’s natural gas.

Jeff Lowenfels, who served as president of YPC, said he is concerned that Alaska is running low on natural gas to fill demands statewide. "I want someone to start working on that problem now," he said.

"If Anchorage is in trouble, if Kenai is in trouble, the rest of the state is in trouble," Lowenfels said. "It’s a mess and we don’t have anyone capable of solving the problem."

David Gottstein, an Anchorage businessman and co-chair of Backbone II, another organization backing an all-Alaska gas line, said he was happy to see the two boards get together, but that a public debate on the issue was needed. Gottstein said the Legislature needed the opportunity to choose between an all-Alaska and Canadian gas line.

Gottstein and former Gov. Walter J. Hickel, co-chair of Backbone II, sent a letter to Gov. Frank Murkowski July 5, expressing concerns over negotiations for a stranded gas contract between the state and North Slope producers and other parties.

Hickel and Gottstein several essential provisions must be included in the contract for it to serve the best interests of Alaskans.

They included an absolute commitment to build a gas line with a definite construction start date in Alaska - an element that is required by the Stranded Gas Act, they said. They also called for a project labor agreement that ensures Alaska hire, access to the gas liquids for in-state, value-added processing, including production of propane for rural Alaska’s energy needs.

Margaret Bauman can be reached at [email protected]

journal.com.

Updated: 
07/30/2005 - 8:00pm

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