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Despite Pipeline Progress, State Proceeds with Two Lines

By | January 16, 2014 - 5:17 pm

Wednesday the State released details about the new deal that will replace the Alaska Gasline Inducement Act. It makes the state a partner in the development of a natural gas export line from the North Slope. But the government is also still moving ahead with their back-up plan, the Alaska Stand Alone Pipeline.

16 Two Pipes

The State of Alaska is currently putting money into developing two different pipelines that have two different goals.

The producer-led, large-scale pipeline is a behemoth $45 to $65 billion project aimed at getting natural gas to Asian markets and providing revenue to the state. It starts with a gas treatment facility on the North Slope and ends at a liquefaction plant on the Kenai Peninsula.

Along the way Alaskans will be able to tap into the line, extract gas, mix it with some air, and send it to utilities. Alaska LNG’s project manager Steve Butt said it’s unclear how much it will cost consumers.

“That dialogue around domestic pricing will take some time and we’re going to need to understand it. It’s going to take a lot of work between all the parties,” he said.

The Alaska Stand Alone Pipeline (ASAP) is a much smaller beast.

In 2013, the state legislature authorized the Alaska Gasline Development Corporation to move full steam ahead on developing the smaller line. AGDC’s program management director Frank Richards said the proposed $5.5 – $10 billion project is specifically aimed at helping Alaskans.

“The gas coming down the ASAP pipeline would essentially be consumer grade gas available for consumers to burn at their burner tips.”

Richards says that the project would provide energy to Fairbanks customers at about one third of the price they are paying now. That includes the cost of building and operating the pipeline. Anchorage costs would remain about the same. At the planned flow rate, current proven North Slope reserves could provide gas to the state for close to a century.

But federal pipeline coordinator Larry Persily said the larger pipeline provides the best opportunity for Alaskans.

“The big line is the most economical way to get gas to Alaskans. Because most of the gas, the vast majority of that large volume moving down the pipe is going to be sold overseas, which means someone else is going to pay 90-some percent of the mortgage. Someone else is going to pay 90-some percent of the operations and maintenance on that pipeline and treatment plant.”

And project manager Steve Butt said the deal signed this week will help the big project advance further than other attempts in the past.

“What we really added with all this recent work is alignment of the parties and a team structure where we have an integrated view of the project, and we’re all working it together,” he said. “And that’s a first. And I think that’s gonna be the silver bullet that makes a difference.”

So if the bigger line is better for Alaskans, and the new agreement is advancing the project, why will continuing the work on ASAP benefit the state?

According to AGDC, it’s partially because some of the information gathering done for ASAP, like learning about the potential gas customers in the state and different communities needs, will benefit both projects.

AGDC’s Richards said the initial legwork will be useful no matter what project goes through. “We’re acquiring and have assets now that the state of AK owns that is very valuable to us as a project and to any potential future project.”

Persily adds it’s good to have two plans because you just never know. “It’s all speculation. Until you get signed up customers, everyone is just speculating on either project.”

AGDC plans to hold an open season for the in-state line in 2015. The timeline for the large export project is not yet defined.

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