Proposed pipeline may mean jobs, lower bills
A spokesperson for the Alaska Gasline Development Corp. gave a compelling argument in Seward Feb. 26 for the proposed Alaska Stand Alone Gas Pipeline and its positive implications for Seward. The in-state pipeline project, dubbed ASAP, is currently in its design and engineering phase and is sometimes referred to as the “bullet line.’
The proposed 737-mile pipeline from the North Slope to Point MacKenzie, one of two natural gas pipeline efforts under way with the backing of the state government, would be buried for the majority of the way. Initially, ASAP would carry up to 500 million cubic feet per day of natural gas but that flow rate could be doubled in short order.
The pipeline would require more than 337,000 tons of steel which could potentially be shipped through the port of Seward, said AGDC spokesperson Leslye Langla. They’re seeking a year-round, ice-free harbor with a friendly environment. Several other Alaska ports also are interested in this aspect of the project, she added.
The pipeline’s construction would bring about an estimated 8,000 new jobs for Alaskans, some of who might have to be trained at facilities here at AVTEC, she said. As there is estimated to be a shortage of workers in Alaska with the kinds of skills that will be needed, AGDC is working with the Department of Labor Workforce Development to assess the skills and training that will be needed so Alaska workers can be trained for those jobs.
According to AGDC’s Langla, if corporate or government sponsors or some combination of the two get on board to fund ASAP’s construction phase, it could begin to provide gas to communities in as little as seven years. The pipeline would help supplement Cook Inlet’s dwindling supply of natural gas, providing gas for electric generation and home heating for the next 100 years, she said. Its construction would provide economic development and jobs to places like Seward that aren’t even along its route.
“The Cook Inlet gas supply affects prices throughout the Alaska economy, whether it’s the cost of shipping groceries, or heating your homes or schools,” said Langla. “Your community depends on electricity, which depends on natural gas.”
For decades Cook Inlet has provided the region with cheap natural gas for home and utility use, liquid natural gas for export and supplied a fertilizer manufacturing plant in North Kenai. However, the fertilizer plant was closed in 2007 and Conoco Phillips announced this week that it is considering shutting down the LNG facility. John Sims, the director of corporate communications for Enstar Natural Gas expects to see a shortfall of roughly five billion cubic feet, possibly as early as next year.
Chugach Electric, which supplies electricity to Seward, began implementing a new 32.4 percent increase to its “base energy and demand” charge, reflected on the latest Seward electrical bills. It also is requesting approval of an additional 17.2 percent above that for Seward. At this mention, some of those attending nodded in agreement as people whispered to one another about their own rising utility bills.
Fairbanks experiences worse air quality than Beijing, as residents burn bad wood, tires, and even animal carcasses or whatever they can afford for heat, continued Langla. The cost of fuel is so high in some parts of Alaskans that some are forced to choose between food and heat. She called the dilemma “embarrassing” in such an oil-rich state as Alaska.
The rest of Alaska residents could soon be facing those same issues if nothing bold is done to start reversing the supply trend, she added.
For it’s setup phase, ASAP is budgeted to cost Alaska taxpayers about $400 million, not including other factors such as distribution sites along its length and the conversion of home or business heaters, said Langla. The $400 million would underwrite all the permitting, engineering, field surveys and other preliminary work. At the completion of that phase, the pipeline would be ready for immediate construction.
The state could build and own the pipeline, but another company, or consortium of companies, would run and manage it. AGDC estimates the cost of construction at $7.7 billion with wiggle room of 30 percent built in along with an escalating cost of 2.5 percent for every year of delay.
Not long ago, natural gas liquids such as propane, butane and ethane that are sometimes found along with methane, the type of natural gas used for home heating, were touted as a way to lower the pipeline’s “tariff,” or what consumers along the pipeline’s route would have to pay for the gas. But AGDC has now changed its focus to omit any liquids, offering instead a “lean gas” and a wider pipeline width.
“We thought at the time that there was a market for that, but with the shale gas development in the Lower 48, the market for NGLs just disappeared,” said Langla. Lean gas refers to the type and grade of natural gas ready for distribution for customers. Its use also reduces the tariff and project price overall, she said.
Taking a richer stream of gas off the line would require straddle extraction (or gas processing) plants to be placed in communities along the pipeline which would cost around $240 million each, she said. Although Fairbanks and Anchorage already have such plants in place, with the new, lean gas approach, more communities along the way can receive gas off the pipeline as long as they come up with a commercial entity to deliver the gas to their customers, said Langla.
House Speaker Mike Chenault (R-Nikiski) has been one of the in-state pipeline’s greatest supporters. At their representatives’ urging, the Seward City Council immediately got on board, approving a letter of support for the House Bill 4 that would define the new AGDC pipeline concept. It was one of several Alaska cities to do so, but with the notable absence of cities like Homer and Valdez.
The City of Valdez has hired a PR firm and has taken out full-page ads in Alaska newspapers in opposition to the pipeline project, which it views as competing with its own pipeline plan.
Here’s where things really get complicated.
The Alaska National Gas Development Authority was created by a 2002 ballot initiative, and passed overwhelmingly by Alaska voters. The purpose was to develop a large diameter liquid natural gas project running from the North Slope to Valdez. The Alaska Gasline Development Corporation was created more recently by the legislature in 2010 to develop a small-diameter natural gas pipeline to Cook Inlet. Now, under Gov. Sean Parnell, HB4 calls for ANGDA to become a subsidiary of AGDC. Meanwhile, the focus of the ANGDA pipeline also has changed from a project delivering gas from Prudhoe Bay to the Lower 48, to a way of exporting liquefied natural gas to overseas markets.
The number of new pipeline projects currently before the legislature, and those still to come, competing for state funding in Juneau make acquiring this project more difficult, said Langla. But AGDC views some the various projects as complimentary, and would actually like to see more than one of them come to fruition, she said. The AGDC pipeline simply would help get some additional gas to Alaskans’ homes faster and more efficiently than the others, she said.
The state has already paid $72 million to the AGDC to begin work including $21 million last year. AGDC is asking for multi-year funding for the remaining $328 million, however, and is urging residents to voice their support to lawmakers for funding the plan in advance, in order to complete the design and fieldwork critical to conducting and open season and complete all regulatory work. It also will need legislation allowing the company to enter into confidential, and proprietary agreements and discussions with producers and pipeline customers, said Langla.
Twenty-five people including the Port & Commerce Advisory Board, which hosted AGDC, attended the presentation at the Seward Community Library Museum. Ron Long, Seward’s assistant city manager arranged the ASAP presentation.
Former Alaska Governor Bill Sheffield, who is touring the state, speaking on his own behalf in favor of AGDC’s pipeline, will be the guest speaker at a Seward Chamber of Commerce luncheon March 15 at the Breeze Inn. The website for AGDC is at http://www.agdc.us.