Alaska may spend $9 billion to help build gas pipeline

Tired of waiting for major oil companies to build a natural-gas pipeline to the rest of North America, Alaska officials are considering spending around $9 billion to help fund a $45 billion pipeline and export facility, Margaret Kriz Hobson reports for Energy Wire. The report from a consulting firm "suggests that the state cover 20 to 30 percent of the project as an equity investment to generate more revenue," Alexandra Gutierrez reports for Alaska Public Media. "The gas line would stretch from the North Slope reserves down to the southcentral coast." (Alaska Pipeline Project photo)

Accepting the project "would mean joining forces with TransCanada Corp. and the North Slope's three major energy producers -- BP Alaska, ConocoPhillips Alaska and Exxon Mobil Corp.," Hobson writes. "Those companies have done preliminary planning work on an 800-mile pipeline that would run from a gas treatment facility in Prudhoe Bay to an export facility in south-central Alaska. Last month, the companies announced that if they build the long-awaited pipeline, they're likely to site a gas liquefaction plant and export terminal at the Kenai Peninsula town of Nikiski. But after years of debate and discussion, they have yet to commit to actually building the project."

Most Alaska state officials are likely to support the recommendation, Hobson writes. Natural Resources Commissioner Joe Balash told Hobson, "If we do it right, direct state participation in the project can allow the other project sponsors to structure their business and financing in whatever way benefits them. That would leave us free to structure our share of the business in whatever ways maximize the benefits to Alaskans." (Read more)

Balash told Gutierrez, "A lot of the heartburn, a lot of the fights between the state of Alaska and industry were a consequence of that misalignment, and it could have been fixed right up front, and it wasn’t. I think there’s a lesson to be learned there. We’re no longer resource rich and cash poor. We’re resource rich, and frankly cash heavy.”

Republican Gov. Sean Parnell "has called for an annual spending limit of $6.8 billion over the next five years, but that state-wide legacy projects shouldn’t count toward that amount. Parnell has previously said that a North Slope gas line would fall in that category," Gutierrez writes. The report will be presented Friday to the state House Resources Committee. (Read more)