All-Alaska gas line faces uncertain future
KENAI - The backer of a ballot measure calling for construction of an all-Alaska gas pipeline route says $3 million to $5 million is needed to get the project on track.
But some in the oil and gas industry say any money spent without a committed buyer could be wasted.
Voters last week approved Ballot Measure No. 3, which creates the Alaska Natural Gas Development Authority as a state-owned public corporation to build an 800-mile liquid natural gas pipeline from the North Slope to Prince William Sound.
Scott Heyworth, chief sponsor of the measure, disputed opponents' claims that the authority would jeopardize the state's already precarious fiscal situation.
"They're saying 'Scott Heyworth is going to steal the permanent fund,' " he said. "That's not true."
Heyworth said within a year, the authority must produce a successful business model that would market the liquid natural gas the pipeline would carry. He said up to $5 million would go to hiring an executive director and staff, supplying office space, contracting for an engineering business model and traveling to potential markets to attempt to strike purchase agreements.
Sen. John Torgerson, a Kasilof Republican, said finding a viable market for liquefied natural gas shipped from Alaska will be difficult.
"Until you have a market, would you go forward to spend any money on an LNG pipeline without a ship-or-pay contract guaranteeing a market?" he told the Peninsula Clarion. "I doubt it."
Alaska Support Industry Alliance President Jack Laasch said the Nov. 5 vote does not mean Alaska can afford a project estimated to cost hundreds of millions of dollars.
"I don't see where the state has money really to fund this order, considering where the fiscal situation is," he said. "Nothing is going to happen unless the Legislature approves funding for the authority."
Laasch said the state already had explored the possibilities of marketing LNG in the past year and determined it wasn't a good idea. He said he doubted another attempt would prove any more successful.
Heyworth, however, said his plan for the first year of the authority would do more than previous attempts.
"This is not a study, it's a marketing plan - a model," he said.
According to Heyworth's plan, a four-pronged business model would first negotiate a well-head price with the producers, and he said oil companies have agreed to come to the table. Then, a team would approach the Asian and West Coast markets potentially interested in buying the gas, obtaining a written agreement to buy.