Competition prevents creation of gas line

Letter to the editor

Posted: Friday, October 14, 2005

Alaskans have been looking forward to development of North Slope natural gas for more than 30 years. In fact, in an office in Fairbanks hangs a poster-sized copy of a newspaper advertisement touting "Coming Soon - Natural Gas for Fairbanks!" The date of the ad is Dec. 3, 1958. Some parts of Fairbanks now have access to limited distribution of natural gas, which is trucked up from Anchorage. Not all neighborhoods though. No pipeline yet.

Why is that? When natural gas is selling for more than $11 per million British thermal units, and a recent study shows that the producers would make between 17 and 83 percent profit on a North Slope gas line project, add to that a $20 billion federal loan guarantee that removes the risk, why don't we have a gas line yet?

The North Slope producers have said for years that a gas line project isn't economic. Is it possible that they really mean that it's not more profitable to their shareholders than their competing gas projects in the Middle East, Russia, Southeast Asia, South America and Canada? I know the Alaska Gasline Port Authority has offered to buy the gas straight from the producers with no risk to them. I also know the producers have not accepted that offer. Why? It looks to me like the producers' other projects around the world are actually preventing our gas from being developed.

How much does Alaska have to give away to get them to actually build the gas line? I think we shouldn't give away anything. If the producers can make a reasonable profit, they should develop the gas. What other industry in Alaska gets to negotiate a guaranteed high rate of profit before they will fulfill their contractual obligations to us?

I like the proposed all-Alaska gas line project, and am insulted that the governor doesn't think I know the difference.

Patrick Falon


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