Asian trade essential for Alaska's economy

Posted: Thursday, February 11, 2010

For much of statehood, Alaska products have been exported to Asia. Japan has historically been the strongest Asian trade partner and our ties remain strong today.

In 2008, we exported over $1 billion in Alaskan products to Japan. The Republic of Korea and Taiwan have become lucrative partners with $703 million of goods exported to Korea in 2007. In recent years, the Peoples Republic of China dramatically increased imports of Alaska products. Exports to China have risen from $154 million in 2003 to $733 million in 2008. China is now Alaska's number two partner in trade.

This trade relationship with Asia is due to the abundant supply of natural resources we have in Alaska that those countries want and need. Seafood accounts for our greatest export. Alaska mineral exports of zinc and lead ore, as well as coal, also are in high demand in Asia. Alaska forest products, while a relatively small market, have been a bright spot in our trade relationship with China for several years.

Beyond natural resources, Alaska is a popular Asian tourist destination and we are the location of choice for air cargo operations connecting North America with Asia. Our geographical location and specific trans-shipment opportunities, combined with favorable operating expenses, make us a logical stop for Asian cargo coming to North America.

As North Slope oil production continues to decline, we must work diligently to find additional economic development opportunities. Now is the time to significantly increase our marketing efforts in Asia.

The delegation I led to Asia in December should be just the beginning of a reinvigorated approach to working with our Asian neighbors to expand Alaska exports. The international recession appears to be receding in Asian countries, especially China and they are eager to expand economic ties with the United States. We must not miss this opportunity to position Alaska as a major trading partner in Asia for the 21st century.

This brings me to Alaska's natural gas potential and opportunities for exporting natural gas. Asian countries have a tremendous energy demand with limited organic resources. Asia imports high volumes of oil and natural gas. We know we have natural gas and as we focus on a gas pipeline to bring our gas to market, it is incumbent upon us to include in the discussion what the needs of the Asian market could mean.

For example, the demand for in-state gas in the combined Fairbanks-Southcentral market is estimated at less than 300 mmscfd. Building a pipeline solely to serve this market may result in significantly higher prices for in-state consumers. However, by terminating the natural gas pipeline at tidewater and expanding the quantity of natural gas through the pipeline, the end-cost of delivery could be reduced for in-state use and jobs could be created through associated export opportunities.

China has expressed a huge demand for natural gas to continue their nation's modernization. They recently completed a 1,800 mile gas pipeline from Turkmenistan, through Kazakhstan, into western China. But China readily admits this pipeline will not fully meet the projected Chinese demand for natural gas, and continues to seek other markets to acquire gas.

In addition, China seeks investment opportunities whereby the Chinese manufacturing sector has increased access to natural gas by-products, such as petrochemicals. Alaska could become a significant partner with China in the development of value-added products from our natural gas resources, produced here in Alaska. But time is not on our side. The time for an in-state gas pipeline which provides a cost effective energy source for Alaska, while also terminating at tidewater to provide for export opportunities, is now.

Our In-State Gas Pipeline Team is on the right track to develop a package that could be sold to a pipeline development company for construction of an in-state pipeline. The project must provide for the full scope of domestic as well as export opportunities.

It is time to act.

• Craig Campbell is lieutenant governor of Alaska.

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