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Gasline doubters raise good questions

Posted: Sunday, January 14, 2001

The plan to pipe Alaska natural gas south sure has attracted a lot of supporters.

The governor and Legislature love the prospect of an economic boost and some extra revenue. Labor loves the jobs. Industry loves the chance to sell something now lacking a deliverable market. And environmentalists are too busy worrying about their larger loves ANWR and the Tongass - to make a big stink.

Right?

Not quite.

An Anchorage-based citizens' watchdog group known for being a thorn in the establishment's side is raising some points that are hard to dismiss. None of them are project-killers and no one I talked to said the line shouldn't happen at all. But their questions are good, hopefully something the governor and Legislature will consider as they work through the project.

The Alaska Public Interest Research Group says one of the most important issues is whether the pipeline will be, in the words of a trans-Alaska oil pipeline protest song, just another way to ship money south.

"We simply cannot be in the position of giving away our one-time resources," said Jim Sykes, AkPIRG co-executive director.

AkPIRG's fear, in part, is that the plan to pipe North Slope gas through Canada to the Lower 48 is based on a demand that won't be there a few years from now. By the time the line's finished, prices may drop and other gas fields will be open for business.

"If the economics fail, we should have a spur to sell to the Asian markets or the West Coast markets," said Sykes, a former Green Party candidate for governor.

A spur - an offshoot pipeline - could supply Southcentral Alaska, which is dependent on the Cook Inlet gas fields Sykes predicts could run out this decade because so much gas is being exported. AkPIRG suggests the Cook Inlet situation could be a preview of what could happen with North Slope gas.

"They didn't take into consideration the long-term needs of people in Alaska who could freeze in the dark," Sykes said.

AkPIRG, however, doesn't suggest exporting is a terrible thing. If a pipeline spur hits tidewater in Valdez, Nikiski or somewhere else, tankers could take gas on to markets far from the proposed terminus of the Alaska Highway route that seems to be the main focus of the governor and industry. AkPIRG argues flexibility would give the pipeline a better shot at producing profits and revenues if the highway route's markets dry up or prices drop.

The research group raises other issues, painting a possible scenario where low prices and the addition of Canadian gas to the pipeline's volume would leave Alaska without significant revenue from the whole operation. And Sykes places no trust in the industry or Tony Knowles as guardians of Alaska interests.

"If we don't examine this very carefully, this governor, who is totally in the pocket of the oil industry, may screw this state out of its resources yet," Sykes said. "And industry is worldwide and they don't really care."

Those are harsh words and accusations that just don't fit Tony Knowles' intent, according to his chief spokesman Bob King.

The governor knows prices will be different in five years, or whenever the pipeline will be built. And he's considering spurs or other options to get gas to Alaska homes and businesses. One suggestion is a spur to Haines to get gas to the Panhandle and points south. Another is a plant to bottle gas and ship it to rural communities via the Yukon River.

"These are all interesting options and I think they need to be considered," King said.

Knowles also has taken hits for plans that could lower upfront costs for pipeline builders. But King said the governor doesn't intend to give up a penny over the long term, even in inflation-adjusted terms.

Juneau Rep. Beth Kerttula, a former state oil and gas lawyer who criticized Knowles' original plan for the BP-Arco oil merger, was one of a group of Democratic lawmakers who discussed the pipeline with Knowles last week.

She said lawmakers brought up - and Knowles indicated he was considering - some of the same issues AkPIRG raised. There was general agreement the line should help bring gas and not just jobs to Alaskans. And she said analogies with the BP-Arco merger controversy were not really fair.

"I'm pretty optimistic that in the long run we can make this a pretty valuable thing for the state," she said.

Ed Schoenfeld is city editor of the Juneau Empire. He can be reached at eschoenfeld@juneau empire.com.



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