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Politics : Rat's Nest - Chronicles of Collapse -- Ignore unavailable to you. Want to Upgrade?

To: Wharf Rat who wrote (10162)	3/24/2010 11:06:09 PM
From: Wharf Rat	Respond to of 24225

Alaska: Confronting the Prospect of 6 Billion Barrels of Stranded Gas by Steve LeVine Alaska -- and the so-called Sarah Palin pipeline -- are in the crosshairs of the abrupt surge of natural gas supplies in the continental United States. Leading the charge against a much-promoted pipeline to ship Alaskan natural gas into the currently glutted Lower 48 is former Sen. Ted Stevens. The locally influential Republican says the gas should be rerouted to Asia, and that if Alaska doesn't move fast, this fuel -- the equivalent of 6 billion barrels of oil -- could end up effectively stranded at home. This blog has been discussing the far-reaching ramifications of the "shale gale," as Dan Yergin's Cambridge Energy Research Associates has dubbed the unexpected tide of natural gas being produced from U.S. shale rock in Oklahoma, Texas and elsewhere. Already the supply has forced Russia's Gazprom to postpone development of its gigantic Shtokman natural gas field; pushed Qatar to divert planned liquified natural gas shipments away from the U.S., and to other customers; and driven down gas prices in Europe, Gazprom's main market. Fighting to hold the line, Gazprom for now at least is much less the foreign policy instrument that it's been for the Kremlin in recent years. Which brings us to Alaska's North Slope. For three decades, a string of Alaskan politicians has advocated the construction of a 1,700-mile natural gas line to customers in Canada and the U.S. When Palin was Sen. John McCain's vice-presidential running mate, she touted her work to get a $500 million subsidy approved for a $26 billion line to be built by TransCanada, Canada's largest pipeline company, in partnership with Exxon. This summer, TransCanada will try to seal the deal in competition with a company called Denali, which is a partnership of BP and ConocoPhillips. The two rivals will battle for binding, multi-billion-dollar contracts from North Slope natural gas leaseholders, which a decade from now will need a pipeline to ship their gas to market. There's general agreement that only one of the pipelines will be built -- either TransCanada-Exxon or Denali -- and if one of them can lock up sufficient long-term commitments now, it will stand the best chance of prevailing. They call this process "open season." To its advantage, Denali's partners -- BP and Conoco -- already control half the North Slope gas, and obviously will commit to shipping their volumes through their own line; their challenge is to persuade other gas-owners to fill up the other half of Denali's capacity. But TransCanada can't be counted out: In addition to the $500 million subsidy, it has hedged its bets by including two options in its proposal -- a line to Canada; or a pipeline to an LNG terminal on Alaska's coast for onward shipment of the gas to Asia. Enter former Sen. Stevens. In his locally much-discussed speech in Anchorage, Stevens was merely parroting what others have said -- that Alaska should sell the gas in the form of LNG to Asian customers. But the idea resonated more strongly coming from the mouth of Stevens, previously a strong advocate of a line to Canada, and is attracting much local attention. Of course, it's possible that neither pipeline will win because of the high degree of uncertainty in the gas market -- no one knows for sure whether the shale gas glut will continue in the long term; one main reason is environmental worries about the potential impact on underground water. I was in Anchorage a few days ago, and spoke with David McDowell, a spokesman for the Denali pipeline. He explained the project's objectives. McDowell acknowledged the challenge posed by shale gas in the Lower 48, but asserted that Denali's proposal for a line into Canada, and not LNG into Asia, remains the best market choice. McDowell said that Alaska could make it easier for shippers to make a decision on one of the pipelines if it provided a type of predictable tax structure. Exxon also in the past has said that gas shippers need to have some idea how much they'll be taxed on their shipments. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ energybulletin.net ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~