Alaska needs to consider all its energy options

Posted: Tuesday, May 19, 2009

Ensuring that Alaskans have affordable energy for decades to come is one of the most important jobs on my desk right now. To succeed, the state needs to look at every possible option and make sure Alaskans have all the information to make the right decisions.

That's why I asked the Legislature to fund a thorough review of an in-state pipeline to move natural gas from the North Slope to Fairbanks, through the Railbelt and Southcentral regions, serving as many communities in the state as economically feasible.

We're not wasting any time in this effort. The Legislature adjourned just three weeks ago and the gas line review is already under way, led by Harry Noah, former commissioner of Natural Resources under Gov. Wally Hickel.

First, I want to reassure Alaskans of our purpose.

Our effort complements the progress TC Alaska is making on a line to the Lower 48, using its state license under the Alaska Gasline Inducement Act. Alaskans can look forward to all the benefits the AGIA project will produce.

We are not walking away from efforts to promote development of a spur line coming off the "big line" to distribute gas to Alaskans.

And we are not walking away from the long-standing hope that someday a gas liquefaction plant may be built in Valdez to ship Alaska gas to ports all along the world's Pacific Rim.

We are reviewing all options to ensure Alaskans know all the facts about progress to flow gas to our homes and businesses.

An in-state gas line to serve as many communities as possible is one of the options, and would not interfere with plans for the larger interstate pipeline. Geologists say there is enough gas throughout the North Slope for both pipes. There is enough investor interest for both pipes. And there may be enough consumer demand for both pipes.

A smaller in-state line could be put into operation sooner than a spur off the big line, and timing is crucial for Alaskans. Each winter brings more worries about gas shortages, unaffordable energy prices, and residents choosing which bills they can afford to pay that month. This is unacceptable. The smart move is to look at the costs, the challenges, and the feasibility of an in-state line to meet our needs sooner rather than later.

The Legislature directed this review to include a full analysis of all possible pipeline routes, to look at any economically feasible options for spur lines, and to coordinate with any and all parties interested in building, owning or operating the line.

My team is working with experts and interested parties to prepare cost estimates, and to figure out what is needed - from gas supply contracts at one end of the pipe to gas purchase contracts at the other end. Unless reasonably priced gas goes into the line, no one will be able to afford what comes out.

To help reduce the risk, my team will start the process of applying for right-of-way permits along the preferred pipeline route - after the Alaska Natural Gas Development Authority makes that choice later this summer. If the in-state line goes ahead along that route, the state will have saved time by starting the right-of-way process, rather than waiting.

Timing is crucial. We know Cook Inlet natural gas reserves are declining. We know consumers are worried about price and supply. We know we need more storage capacity to hold gas produced during the summer until it's needed in the cold, peak-demand winter months. Our review is looking at all these issues.

We are blessed to have many possibilities for solving our energy challenges. Possibilities include explorers finding and developing new gas supplies in Cook Inlet. Perhaps a spur line off the big line will be built in short order. Experience shows us that the prudent thing to do is consider all options to maximize benefits for Alaskans, and that is what we're doing in readying a plan to ensure our residents have the gas we need.

• Sarah Palin is governor of Alaska.



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