In 2002, over 138,000 voters created the Alaska Natural Gas Development Authority to construct our own gas line from the North Slope to Valdez, where the gas would then be converted to LNG and shipped to market. Despite this clear expression of intent and will by Alaskan voters, a tremendous amount of time and energy has been spent on the Canadian Highway gas line.
Regarding the North Slope producers, who have developed Alaska's oil and provided many benefits to Alaska: We must be crystal clear about Alaska's strategic interests and understand that in some cases our interests may not be the same as theirs. The high stakes for Alaska's future are clearly enormous when we consider major decisions concerning North Slope natural gas development.
The North Slope producers are not committed to producing Alaska's gas. They are deliberately leaving Alaska's gas in the ground, while steadily marketing their other worldwide LNG projects. The recent announcement between BP and Sempra is just one example. Try imagining LNG tankers plying through the Gulf of Alaska loaded with imported foreign gas for delivery to California while ours remains stranded on the North Slope for another 20 years.
The producers have mounted a full-court press on Congress, trying to get them to provide price subsidies for a Canadian pipeline that is supposedly more economic than an Alaskan LNG project, but somehow also needs taxpayer subsidies before they can build it. Additionally, they will not release any of their economic studies explaining why the Canadian project is uneconomic without these subsidies.
Following the failure of Congress to include the price subsidies, the producers made the following public statements: "We just think the project is uneconomical," Exxon Spokesman Bob Davis said. "Without the low-price tax credit provision, the pipeline will not be built," said Archie Dunham, chairman of ConocoPhillips.
Prior to Congress' adjournment, Senate Energy Committee Chairman Pete Domenici said the producers would not commit to building the Canadian project, even if they got the price subsidies. After that became clear Senator Stevens and Representative Young publicly stated that if the producers weren't going to build it, then the gas should be "condemned" so someone else could use it.
Sen. Lisa Murkowski has successfully led an effort by Alaska's congressional delegation to include Alaska's LNG project in the loan guarantee portion of the Omnibus Bill. While the Senate may or may not pass the Energy Bill, thus enacting the Omnibus language, this is an important example of our elected officials standing up for Alaska's strategic interests.
I am predicting that the next distractive stall tactic by the producers or a foreign consortium will be to submit an application under Alaska's Stranded Gas Act, even though they have clearly stated that the Canadian project is uneconomic without massive federal price subsidies.
It will be a sad day for Alaska if this obviously delaying ploy is taken seriously by Alaska's political leaders. Their application could possibly contain proposals for Alaska to give away the benefits that would normally come to Alaska from responsible oil and gas development, with no commitment on their part to actually build the project. And rest assured that Alaska can in no way match the federal incentives the producers asked for. Don't be fooled again.
By contrast, ANGDA is currently looking at the benefits an all-Alaskan project can bring including local high-paying long-term jobs, substantial new state and local revenues, and gas supplies into South Central and our coastal communities to name just a few. The Canadian Highway project falls miserably short in providing these same benefits to Alaska residents.
The best way for our Legislature and governor to support the strategic interests of Alaskans in North Slope gas development is to provide an adequate level of funding for the Alaska Natural Gas Development Authority. This would show respect to the voters of Alaska and allow ANGDA to complete the due diligence necessary to make definitive offers to buy and sell Alaska's North Slope gas.
Scott Heyworth is an Anchorage resident who was the chief sponsor of Ballot Proposition 3.
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