Call for reality
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What’s the most realistic outcome for gas line development in Alaska?
Larry Persily, federal coordinator for Alaska Natural Gas Transportation Projects, addressed that question Sept. 17 at the Alaska Oil & Gas Congress in Anchorage.
Among three options — the producer line, now focused on liquefied natural gas exports; the smaller state-sponsored line; and the port authority LNG project — which is the most realistic outcome?
Persily said this was his opinion on which of the three was most probable “on the assumption that we have to assume one of the three is going to get built. None of the above is not an option,” he said, likening it to the challenge of a bookie who has to pick the most probable winner “even though both teams have weaknesses.”
Persily said he thinks the odds lie with the producer line based on “money, markets and merit.”
Real money is needed to pull off a multibillion dollar project, he said, cash for a down payment and money to cover cost overruns.
The companies in the producer project — BP, ConocoPhillips, ExxonMobil and TransCanada — have combined assets of more than $700 billion, he said.
“If they decide that a gas line looks good to them, they can afford it.”
But all four have to decide they want to build it, he said. They have to decide that on the same schedule; they have to decide how to divide up ownership; and they need to sign up buyers.
Buyers will require real prices and firm delivery dates. The market for LNG is competitive, he said, and Alaskans have to realize “you can’t sell it for whatever you want — there’s a lot of other suppliers out there.”
Economies of scale can get the price down to something competitive in Asia, but the companies and the state “need to negotiate a fiscal deal that the public will accept.”
The Alaska Gasline Development Corp., the state entity planning an in-state gas line, would have an important role to play delivering gas for use in Alaska, he said, but warned that “populist politics could also ruin the odds of the Alaska project. If you tell people what they want to hear long enough they start believing it even if it’s not true,” he said, calling for “more reality” and the need for Alaskans “to understand the world as it is.”
—Kristen Nelson
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