Consultant: Alaska must get behind gas pipeline

Posted: Friday, December 24, 2010

FAIRBANKS - Public aid in the form of loan guarantees will be required if developers are going to build a proposed large-diameter natural gas pipeline in Alaska anytime soon, a financial consultant told business leaders in Fairbanks.

David Gottstein of Anchorage argued Wednesday for state guarantees of rights of way and of loans, in exchange for the rights to capacity in the line.

The Fairbanks Daily News-Miner reported that Gov. Sean Parnell has backed efforts to solicit leadership from private sector parties, but Gottstein argues the state must "co-sponsor" a short pipeline from the North Slope to the Fairbanks area, where connections could be made to extend the line to tidewater for export.

Gottstein, an ally of former Gov. Wally Hickel, said alternatives such as doing nothing, importing liquefied natural gas, or building a slimmer "bullet" gas pipeline from the North Slope fall short of meeting the state's long-term economic needs.

"I believe Fairbanks is the poster child for both the problems and the opportunity," he told a chamber of commerce audience.

The state is subsidizing pre-development work by a potential builder, TransCanada, but Gottstein said that relationship - governed by the 2007 Alaska Gasline Inducement Act - leaves room to negotiate new terms. He said state financial involvement would "change the business model" and shift part of the pipeline project's risk to the state's shoulders.

The proposal has gained interest from Interior lawmakers, who also received word Wednesday the U.S. Energy Information Administration has dropped the prospect of a larger, transcontinental pipeline from its 20-year forecast of energy markets. It has attracted attention in Anchorage, where utilities are looking to Cook Inlet and liquefied gas imports for supplies.

Gubernatorial candidate Bob Poe placed the "pre-build" proposal at the center of his campaign before dropping out last summer.

Anchorage Mayor Dan Sullivan said similar ideas have periodically floated across the desks of state agencies such as the Alaska Natural Gas Development Authority, where he served as board director for seven years.

"I think there's definitely some merits to it," Sullivan told the Daily News-Miner. "It's worthy of consideration."



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