US shale gas won't cut need for Alaska gas pipeline
02 February, 2010
Reuters News
* Pipeline would move about 4 bln cubic feet of gas daily
* Alaska has about 35 trillion cubic feet in gas reserves
* Pipeline could cost $40 bln, take 10 years to build
By Tom Doggett
WASHINGTON, Feb 2 (Reuters) - The U.S. market will still need huge natural gas supplies brought from Alaska by an expensive pipeline, even though vast gas resources trapped in shale rock in the Lower 48 States can now be developed, the federal coordinator for the pipeline told Congress on Tuesday.
U.S. natural gas demand is expected to grow over the next decade as utilities run more of their power plants on natural gas to reduce greenhouse gas emissions and more consumers choose gas to warm their homes.
"The nation is certainly looking to natural gas to a much larger extent in the future in the decades ahead as a preferable cleaner-burning fuel of choice," said Larry Persily, nominated by President Barack Obama to coordinate Alaska's pipeline project.
Two pipelines are competing to bring about 4 billion cubic feet of natural gas a day from Alaska's North Slope to the lower 48 United States. Alaska holds an estimated 35 trillion cubic feet of natural gas reserves.
"There will be a place in the market for Alaska gas. We just have to get it to the buyers," he told the Senate Energy and Natural Resources Committee at his confirmation hearing.
Persily acknowledged that transportation costs will be higher for Alaskan gas than shale gas in the Lower 48 States, but production costs will be lower than shale gas.
TransCanada Corp and Exxon Mobil Corp have teamed up to build a pipeline, while BP Plc and ConocoPhillips have joined forces in a rival project.
"Eventually it's going to become one project. No one expects those two pipes," said Persily. "It's going to be a commercial deal that involves all four of those companies."
To help cover the costs of the winning pipeline, which could have a price tag of up to $40 billion and may take a decade to complete, Congress has approved $18 billion in federal loan guarantees for the project.
Persily is a former Alaska journalist who has worked for more than a decade on oil and gas issues for three Alaska governors. |
