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My Turn: Two-phase gas pipeline project the way to go

Posted: Monday, March 03, 2008

There are easy things to do and there are hard things to do. Going to the moon was hard. Building a gas pipeline is easy. In July 1961, President John F. Kennedy stood before a joint session of Congress and declared, "First, I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth."

Eight years later, we didjust that.

So why, after more than half a century of discussing building a gas pipeline, are we still faced with the uncertain prospect that it will be 10 or more years before Alaska has a gas pipeline?

It took rocket science to get us to the moon. But it does not take rocket science to build a gas pipeline. Pipeline technology is old and proven.

Gov. Sarah Palin and her gas line team created a level playing field to obtain proposals to build a gas line. By favoring openness and competition over secret negotiations, fundamental questions have been answered.

We now know a gas line project is robustly economic and that there is serious international interest in the project. We also know exactly what the project will cost.

That's the good news. The bad news is that, thanks to sabotage by "Big Oil," the administration has only one inferior proposal, from TransCanada.

Public comment closes on Thursday and Alaskans must make it clear to the administration that there are good reasons to reject theTransCanada proposal.

Why? The proposal does not get gas to Alaska for at least 10 years. Worse, it will be many years before we even know if the TransCanada gasline will be built while Alaska's oil production, our only real source of revenue, continues to decline. We'd have to be insane to take such a risk.

The proposal is not consistent with multiple voter mandates to build an All Alaska Gasline and a project into Canada does not access premium world markets, depriving Alaska of the highest return on our gas.

The Canadian proposal does not provide nearly enough gas delivery points for Alaska. TransCanada has made it clear by their past words and the content of their proposal that they have little interest in protecting Alaska's interest.

TransCanada did not even bother to identify the five minimum required Alaska gas delivery points. To see a real all-Alaska project that protects Alaska's interests looks like, visit www.mygasline.com.

Thanks to AGIA we can now craft a superior project meeting the following objectives:

• To use the state's considerable power as a sovereign to leverage this project into construction and completion.

• To bring gas to the Interior, and to many Alaska villages and cities, within five years by doing a phased project.

We must build this project in two phases. The first step is for Palin and the legislature to commit to build the first 450 miles of a gasline from the North Slope to Fairbanks.

Construction of the first phase should bypass FERC or an open season. We have record, multi-billion dollar windfall oil revenues that have increased the state's unrestricted funds to finance this phase.

Simultaneously, a second AGIA RFA, with a revised scope of work and reduced inducements, for the second half of the pipeline should be issued. Pipeline partners will have confidence in participating within a pipeline consortium knowing that the sovereign is sharing risk in the project.

I am certain, based on the many discussions we've had with companies interested in participating in this gasline project that if the state follows this path, we will have no trouble building a consortium to finish the second phase.

This plan gives us the certainty we deserve. In as little as five years, we will have gas flowing to the Interior and Northern Alaska communities from multiple delivery points. Further, gas can be liquefied and trucked to Delta, Nenana and Valdez while the second phase of the pipeline is being built to Valdez.

Residents of Fairbanks, Delta and Valdez will save more than $1 billion due to a five-year time advantage this plan would afford over the TransCanada proposal due to significant energy savings that clean, low-cost gas afford.

• Merrick Peirce is a resident of Fairbanks and serves on the board of the Alaska Gasline Port Authority. The Port Authority has a voter mandate to build a gas line from the North Slope to Valdez. The opinion offered here is solely that of Peirce.



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