ADN Editorial: Gas line economics -- Chamber report says Southcentral spur line may not be prudent
adn.com
Published: February 21, 2006
Last Modified: February 21, 2006 at 01:18 AM
The Anchorage Chamber of Commerce, in its second volume of a well-done report on the proposed North Slope natural gas line, states very clearly: A pipeline carrying gas to Southcentral will not get here in time to help the Kenai Peninsula's fertilizer plant or liquefied natural gas export plant. But neither is the line economical without those heavy industrial customers.
Unhappy words for Cook Inlet residents who have been led to believe otherwise by some state officials, candidates and gas line promoters in recent years.
The report states the obvious: The Agrium fertilizer plant will close this fall if it cannot find an affordable supply of natural gas, and the Conoco Phillips LNG plant will lose its federal export license in 2009 unless it can show enough gas is available to send overseas.
Those deadlines will come several years before any pipeline carrying North Slope gas could reach the area.
"Using the (North Slope) gas pipeline to supply either of the existing natural gas-based industries appears to be an unrealistic and impractical goal," the report says, adding, "If they are to be supplied, something else will have to do it."
The report looked at proposals for a so-called bullet line that would carry gas directly from the North Slope to Southcentral and a spur line that would branch off from the North Slope gas line as it follows the Alaska Highway toward Canada. The problem with the spur and bullet line proposals, the report says, is volume. Without a large industrial base, there just wouldn't be enough gas moving through the line to pay the bills and get to market at an affordable cost.
"Local demand for natural gas in homes, businesses and electrical generation will be insufficient to justify either a 'Bullet Line' or a 'Spur Line' on purely economic terms," the report says. "If either of these lines is to be built, either it will have to be subsidized or there will have to be significant additional demand for natural gas in the Cook Inlet area."
It's essentially the same message delivered to legislators last month by Mark Myers, former director of the Oil and Gas Division at the Alaska Department of Natural Resources. Myers told lawmakers a spur line is not economically feasible unless it carries a large amount of gas.
The answers could include attracting new gas-based manufacturing industries to Southcentral to justify the cost of a spur line, the chamber report says. Or finding more natural gas in Cook Inlet to meet local needs. Or looking to wind power and coal to supply the area with electricity.
Whatever answers work best for Southcentral, we shouldn't fool ourselves into believing that a spur line or bullet line carrying North Slope gas will march over the hill like the calvary to the rescue, just in time to save us. As the chamber report says, it's not likely.
BOTTOM LINE: Public officials should be careful in promising too much from a North Slope gas line. |
