Citizens group offers 14 recommendations to state on pipeline

PHOTO/Rob Stapleton/AJOC
oilgas.jpg Alaska’s leaders should exert their considerable power to direct the future of the state’s natural gas development to most benefit its citizens, even if it means investing $2 billion to $5 billion of state money to own the gas pipeline outright, an Alaska citizens group said Jan. 25.

The group, known as "Backbone -- Standing Up For Alaska’s Future," also released a 130-page study Jan. 25 examining various gas pipeline proposals now being considered by Alaska gas producers, state lawmakers and others.

The study, "Alaska’s Gas, Alaska’s Future," was conducted by Backbone members with the help of experts. It examines the history of gas pipeline proposals in Alaska, dating back to the early 1970s and culled research, opinion and literature to develop a unbiased basis for comparing all of the gas line proposals, said Michael Metz, an engineer who helped with the design and construction of the trans-Alaska oil pipeline 30 years ago.

"We especially need to pay attention to synergism between the possible projects," he said. "If we can piggyback one project on another, it could lower the cost of both."

"We see this study as a starting point for discussion," said Backbone director Christy McGraw, who said the study would be presented to the Alaska Legislature in early February.

Former Alaska legislator Walt Hayes said the group hopes the study will spark widespread dialogue about the gas line proposals. "It is every Alaskan’s responsibility to wrestle with this issue and help the state make the best possible decision," said Malcolm Roberts, another Backbone member.

Among the study’s findings:

* Alaska gas may have a chilling effect on both exploration and development of gas in both Canada and the Lower 48 states.

* LNG represents only a small share of the natural gas market, but its share is forecast to grow dramatically.

* Alaska gas would subsidize the cost of service and wellhead value of Mackenzie Delta gas at the expense of Alaska gas revenues.

* Alaska would profit in revenue, jobs and in-state use of gas more with a tidewater liquefied natural gas project than with either an Alaska-Canada Highway project or a Beaufort Sea-Mackenzie Delta project.

* The most practical and profitable proposal may be a Y-Line Project that combines a 3 billion-cubic-feet-per-day Alaska-Canada Highway project with a 13.8 metric-tons-per-annum tidewater LNG project by sharing the first 541 miles of pipeline.

Backbone made 14 recommendations in the study. They included continuing to study the subject; getting the producers to agree to make gas available to the best project the state discovers; developing, adopting and following a comprehensive gas policy for Alaska; enacting legislation to make all agreements and contracts public; and creating mechanisms for transparent pricing.

McGraw said the group’s goal is similar to its aims when it worked behind the scenes to put the brakes on the BP Amoco-Atlantic Richfield Co. merger a year go. "We want what’s best for Alaska," she said.

Backbone is a group of Alaskans with no common political party or discernible common ideology other than getting the most out of oil and gas development for Alaska.

The group successfully lobbied Federal Trade Commission staff in 2000 and convinced them that divestiture of ARCO Alaska Inc. should be a condition of the merger. Ultimately, ARCO Alaska was sold to Phillips Petroleum Co.

One prominent member of Backbone is former Gov. Walter J. Hickel, who is also former Interior Secretary under President Nixon. Hickel, ironically, conceived the idea of a trans-Alaska LNG project that would ship product to Asia in tankers when efforts to get an Alaska-Canada line failed in the 1970s.

02/03/2001 - 8:00pm