Alaska editorial: Take time to get pipeline deal right

Posted: Friday, October 28, 2005

This editorial first appeared in the Anchorage Daily News:

Alaskans agree on several things about the proposed North Slope natural gas pipeline. We want jobs, lots of them.

We want to burn the gas in our homes and offices and electrical-generating power plants, which will mean expensive valves and facilities and pipelines along the route so we can take off the gas at our convenience. But who will front the money for construction and guarantee the operating costs?

We want the tax and royalty revenues that will pay for our schools and roads and public services for years to come, so that we can continue to avoid taxing ourselves for all that we want.

We want new oil and gas explorers to come to the state, bringing with them more jobs and spending. And we want to guarantee that as they drill wells in the years ahead, they'll be able to ship their gas down the pipeline - even if it's full and needs costly investments to expand the line.

Some Alaskans also want a petrochemical industry to set up shop in the state, turning natural gas into plastic pellets for commercial uses, even though the state's own consultants say it's probably uneconomical.

And some Alaskans want propane plants as part of the deal, so we can fill up hundreds or even thousands of those round metal tanks and ship them across the state, especially to rural Alaskans looking to get off the expensive habit of burning diesel fuel. It's a good idea, but setting up that network could cost hundreds of millions of dollars. Who should pay?

We want all of this now, as in yesterday, not tomorrow. And we want a promise that nothing will be left out of the deal with North Slope producers, or maybe we'll get angry and ask our legislators to vote against it. Maybe we'll get real angry and vote for an initiative to impose a special tax on the producers as punishment for not building our dream project.

Meanwhile, Alaskans would like the gas sold in-state at below-market rates - let someone else pay the high prices that will supply our tax and royalty checks.

And what about heaping all those demands on the gas line project itself? Yes, we want everything good that can come to Alaska from the project, including, perhaps, someday, a liquefaction plant at Valdez to export gas elsewhere in the world if it's not all needed in the U.S. market.

And who is going to pay or all those wants? Should the state earn less tax and royalty income so that residents can get cheap power? And how much of the project's financial risk should the state take just to make sure our wants are met? As they tell gamblers, don't bet what you can't afford to lose.

Our elected officials, our political parties and next year's candidates need to be careful: Don't promise us more than the project can afford; don't entice us with gifts you can't deliver; don't set us up for disappointment when the numbers show what isn't possible.

And one other thing: Don't get so eager to make a deal with the North Slope producers that Alaska comes away with less than it should receive.

The natural gas pipeline is a risky (price of steel, construction delays, future gas prices), expensive ($20 billion and rising) and unique (possible state partnership with three multinational corporations) undertaking that could make Alaskans happy for decades to come. Let's think, let's be realistic and let's get it right.



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