As Alaskans consider our options for a North Slope gas project, we'll do well to remember that wishful thinking is no substitute for actual thought.
Wishful thinking says we can build a pipeline to Valdez to sell liquefied natural gas (LNG) to the West Coast; real thought tells us the sheer volumes of LNG that would be required in order to make a project economic would depress prices in West Coast markets and undermine the economic viability of the project.
Wishful thinking says Alaskan LNG can be marketed in Pacific Rim countries; real thought says there's already an abundance of less expensive LNG from closer sources, ones that don't require a multibillion-dollar pipeline to reach tidewater.
Wishful thinking says we can tax a gas project into reality; real thought says we'll only succeed in making Alaska an even less attractive place to invest, not only for gas commercialization, but for any world-class resource development project that's subject to the vagaries of state tax policy. It will harm long-term production and eliminate private sector job and business opportunities for Alaskans, only to pump more money in the short term into a bulging state bureaucracy.
Wishful thinking says a pipeline project is economically viable already and doesn't need fiscal terms for gas and oil that are lasting in order to proceed; real thought says that's an easy conclusion to reach when it's someone else's money. You aren't the one taking the risks on costs, and you haven't been burned before when the state changed the rules after you made an investment.
Wishful thinking says Alaskans are entitled to whatever we want in terms of a gas project and won't have to assume any of the responsibility or risk ourselves, that we can finance and build an "all-Alaska" pipeline without putting any of our assets like the Alaska Permanent Fund at risk; real thought tells us no investment bank is going to support a 100 percent debt-financed project the size of a North Slope gas pipeline. If we really want an all-Alaska line, we're going to have to mortgage Alaska's future in order to build it.
Wishful thinking says we can trust the government to build and operate a gas project; real thought, along with an empty grain silo in Valdez, a failed fish processing facility in south Anchorage and fallow farmland at Point MacKenzie, suggest otherwise.
Wishful thinking says Alaskans can control our own destiny and won't have to depend on Canada if we build an all-Alaska line; forget real thought. Even proponents of an all-Alaska route now say LNG exports to Canada are the catalyst to their project (the latest version).
Wishful thinking says there will be more jobs for Alaskans with an all-Alaska route; real thought says there will be a surplus of jobs for skilled Alaskans regardless of which project prevails.
Wishful thinking says we'll get a better deal if we hold out once the one(s) being negotiated by the governor are finalized; real thought suggests that once negotiations yield an agreement, it just might be the best prospect for a gas project that many of us will live to see. At best, holding out for something "better" will result in years of delays. At worst, no project at all.
Wishful thinking says we can trust politicians who say an all-Alaska pipeline is the only acceptable option because it's best for Alaskans; real thought says that while political posturing may be best for them, what's really best for us are new jobs, new business opportunities and a reliable new source of long-term revenues and gas supplies for Alaska's communities.
And those will come only through a project with the potential to actually be built.
Paul Laird is general manager of the Alaska Support Industry Alliance.
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