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LINKS: FERC Reports
to Congress, 1,
USGS Arctic Gas Estimates;
Enstar Bullet Line: Map and News Links;
Alaska Energy Forum;
Shell Alaska OCS Study;
Mackenzie Gas Project EIS;
Alaska Gas Pipeline Blog
Governor Sarah Palin's AGIA Links;
2007 ACES tax bill links;
Department of Revenue 2007 ACES
2007 ACES tax Presentations;
2007 ACES tax news;
Alaska Gas Pipeline Training and
Gas Pipeline and Economic
Development; Andrew Halcro;
FERC's Natural Gas Website Links
Alaska Natural Gas Pipeline Act;
History of H.R. 4;
DOE Energy Bill Position, 6-02;
Daschle-Bingaman Energy Bill
(Alaska, Sec. 1236 & tax credit, Sec. 2503 &
H.R. 4 Conferees),
See amendments, "Energy
Policy Act of 2002";
"Alaska Natural Gas Pipeline Act
of 2001 (Draft)" &
Legislature Joint Committee position;
Governor's 10-Point Plan;
U.S. Senate Energy Committee
Testimony, 10-2-01 -
text version; U.S.
Senate Energy Committee Testimony, 9-14-00;
Report on the Alaska Natural Gas
Transportation Act of 1971, prepared by staff of the Federal Energy Regulatory
Frank Murkowski's State of the State Speech;
2002 DRAFT Recommendations to 2003
'02 Alaska Legislation;
Alaska Highway Natural Gas
Pipeline Policy Council;
Legislative Gas Pipeline Committee; 9-01 Alaska Models:
HR 4 Story;
Cook Inlet Supply-Demand Report:
Commonwealth North Investigation
State Gas Pipeline Financing Study;
5-02 Alaska Producer Update;
Kenai: "Oil & Gas Industry Issues
and Activities Report, 11-02";
Alaska Oil & Gas Tax Structure;
2-27-02 Royalty Sale Background;
Alaska Gas Pipeline Office
opens, 7-01, and
1-10-03, "Arctic Gas Pipeline
Construction Impacts On Northern Transp."-Transport Canada-PROLOG Canada
Inc.-The Van Horne Institute;Hill
Times Reports, 8-30-02;
9-30-02, Cons. Info. Requirements;
CBC Archives, Berger Commission;
GNWT Economic Impact Study,
GNWT-Purvin & Gertz Study, 5-8-02;
Alberta-Alaska MOU 6-02;
Draft Pan- Northern Protocol for
Oil and Gas Development;
Yukon Government Economic Effects:
Gas Pipeline Cooperation Plan
Mackenzie Valley Environmental
Impact Review Board;
Mackenzie Valley Pipeline MOU
FirstEnergy Analysis: 10-19-01;
Integrated Delta Studies;
National Post on Mackenzie
Nation v. British Columbia;
Indian Claims Commission;
Skeena Cellulose decision --
aboriginal consultations required, 12-02;
Misc. Pipeline Studies '02
Alaska Gas Producers Pipeline Team
APG Newsletter: 5-02,
ArctiGas NEB PIP Filing Background;
NRGPC Newsletter: Fall-02;
4-02 ArctiGas Reduces Field Work;
BP's Natural Gas Page;
YPC Perspective, 7-02
REFERENCE: Alaska Journal of
Commerce; Alaska Inc. Magazine; Anchorage Daily News; Canadian Broadcasting
Corporation; Fairbanks Daily News Miner, Juneau Empire; Northern News Services;
Oil & Gas Reporter; Petroleum News Alaska; Whitehorse Star, etc.
EXTENDED CONFERENCE NEWS:
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Chamber of Commerce,
Inuvik Petroleum Shows,
International Association of Energy Economists,
Development Council for Alaska,
Ziff Energy Group
LEST WE FORGET!
Northern Gas Pipelines: The Alaska Opinion Page
Readers know that Northern Gas Pipelines is supportive of all of the people and governments working so hard on all projects. We have treated all with respect and, we hope, equality. Sometimes we editorialize both here and in other publications--not advocating our own special interests but rather advising on public policy. Here we will insert opinion pieces from readers. We retain editorial rights, discourage uncivilized language and honor good thinking and honest motives. Beyond that, we leave you as judge.
The author's opinion pieces are here. To have your opinion archived here, email us.
Please click the 'Up' button on the left to find editorials by the Author and
other writers. -dh
Voice of the Times
(Published: January 28, 2003)
PIPELINE INCENTIVES ARE ... No
SOME MEMBERS of the media, including The Wall Street Journal and a few
Alaska reporters, persist in characterizing the construction incentives in
proposed gas pipeline legislation as "subsidies." They are not.
Webster's New World Dictionary defines "subsidy" as "a grant of money;
specif., a government grant to a private enterprise thought to be good for
the public." The dictionary gives as an example: "subsidies are given to
farmers in crop-control programs."
The incentives in the legislation advanced and championed by former Sen.
Frank Murkowski were tax breaks, not subsidies. There is an important
difference because a subsidy would require that the taxpayers put up federal
money to help fund the pipeline.
Instead, the energy companies would at best be getting a break on taxes
that they wouldn't be paying at all unless the pipeline were built. The
American taxpayers would be paying nothing to make it happen. And the
primary tax break would only kick in if the price of gas fell below $3.25
per cubic feet; it would have to be paid back later if the price climbed
The four incentives in the Murkowski legislation are these:
The income tax credit that kicks in if gas prices should tank, and gets
paid back if the prices later rise.
A loan guarantee that could theoretically cost federal taxpayers money,
but only if the giant energy companies like BP and Exxon went broke or
walked away from the project before its completion. That is extremely
unlikely and carries virtually no risk to the taxpayers.
A tax credit for development of alternative fuels on the North Slope like
methane and hydrates.
Accelerated depreciation on construction costs, allowing builders to
recover a portion of their investments through a tax write-off in seven
years instead of the normal 15.
Other than the long-shot risk of the loan guarantee, the taxpayers would
pay nothing to get the pipeline built. And, for this near-zero investment,
they would get a major source of energy, many thousands of jobs and billions
in taxes. If the pipeline were not built because the incentives were
politically unacceptable, none of these benefits would come.
We're not just arguing semantics here. The problem is that using the word
"subsidy" suggests that taxpayers would have to put up cash. That
understandably scares potential supporters; "subsidy" is often used as an
epithet to suggest that the pipeline would somehow be a boondoggle. It would
We don't expect The Wall Street Journal to change its ways, but Alaska
media should make note of the difference and clean up their acts.
At a time in life when most
Alaskans would have long since retired, Alaska Sen. Ted Stevens is taking one of
the toughest challenges in the oil patch: opening ANWR.
Voice of the Times. SEN. TED
STEVENS says his highest priority in 2003 will be opening the coastal plain of
the Arctic National Wildlife Refuge to oil exploration. ... Another of the
senator's priorities will be winning legislation allowing construction of a
pipeline to carry North Slope gas ....
12-7/8 Weekend Updates: BALLOT MEASURE #3.
ADN by Larry Houle (NGP Photo,
3, the All-Alaska Gas Line
Initiative that passed by a 60 percent majority, now presents state
policy-makers with the decision whether to fund a state-owned Gas Development
Authority. ... Measure 3 had nothing to do with the commercialization of North
Slope gas to Lower 48 markets. In fact, creation of the new state-owned Gas
Development Authority is now the very distraction that could kill the Alaska
Highway gas pipeline project.
Voice of the Times. An
all-Alaska, state-owned gas pipeline may sound good, but it would almost
certainly be a financial nightmare.
horrified will voters be when we wake up Wednesday morning and learn that a well
intended vote on an apple pie issue produced an unwanted law on Tuesday? Ballot
Proposition #3 is well intended. Like apple pie, its steaming aroma is
intoxicating. Who could not want an Alaska gas pipeline, new jobs and new
industry? I’ll vote for that!
a piece of fresh, warm apple pie, Prop 3 offers more than meets the eye. Those
who patriotically vote for it could unknowingly be approving about 10 pages of
new law that isn’t on the ballot.... (Complete
Here are other supporting and opposing views.
Fairbanks Daily News Miner:
TUESDAY, ALASKA VOTERS WILL DECIDE WHETHER TO CREATE A GOVERNMENT AGENCY TO OWN
AND OPERATE A NORTH SLOPE GAS PROJECT INVOLVING LNG ... NOT CANADA.
10-28-02. Scott Heyworth's
latest arguments in favor of Ballot Proposition #3.
ADN on Fiscal Gap.
Anchorage Times Comments on WSJ
Proposition 3 Commentary, by Doug
Reynolds, Fairbanks Daily News Miner.
Proposition 3, an Op-Ed piece printed
in the Anchorage Daily News, by
8-13-02. Nels Anderson
supports LNG project and oil industry gas
7-6-02. Op-Ed writer Karl
Francis on Fighting the Good Fight.
7-22-02. Op-Ed writer Ken
Thompson writes in the Anchorage Daily News
7-22-02. On the fiscal gap and
role of the Permanent Fund, Anchorage
Daily News Opinion.
Voice of the Times: on Federal gas
ruled out the so-called 'over-the-top' route through the Beaufort Sea and the
oft-touted "all-Alaska" route from Prudhoe Bay to Valdez." Anchorage
worldwide CEO of BP said a gas pipeline to the U.S. Midwest is not economically
viable right now," Anchorage Times Editorial.
"...pipeline route will not be dictated by Alaska
politics", Anchorage Daily News Op-Ed, by Steve Haycox.
LA Times Op-Ed by former Alaskan, Dr. Karl Francis.
5-19-02. Ken Thompson
Questions and Answers by Matt Zencey,
Anchorage Daily News.
"The People’s Gasline Initiative and HB302
are Substantially Different", by Scott Heyworth.
Gas Pipeline is Viable Now", by Ken Thompson, Anchorage Daily News
Letter from Candidate for Governor, Nels
Anderson, to U.S. Senate Energy Committee Chairman, John Bingaman.
See earlier political statements of
Voice Of The Times,
(Published: February 21, 2002), A GAS PIPELINE . .
. In 2010
Letter from ANGTL President, Richard
Peterson to Dow Jones Wire.
2-6-02: Alaska Needs Leaders—Now! by Chuck Achburger, Common Sense for Alaska.
2-5-02: "What is the best way to commercialize North Slope natural gas?", by Dave Harbour, Northern Gas Pipelines.
2-5-02: "What is the best way to commercialize North Slope natural gas?", by Nels Anderson, Candidate for Governor.
2-6-02: Opinion, by Scott Heyworth, Candidate for Lt. Governor-The All-Alaska route to Valdez down the existing TAPS corridor is a cheaper, quicker....
See this outstanding piece on ANWR: ALASKA: MORE THAN JUST A PRETTY FACE? by Paula Easley
1-17-02. Recently Ken Thompson, former president of Arco Alaska, Inc. wrote us an email outlining benefits of the southern route. Find it here. (Please find numerous references to Thompson's participation in the public process by searching his name, here, and reviewing Council activity here.
1-16-02. Your author provided an Op-Ed piece to the Anchorage Daily News today. In response, a candidate for governor, Nels Anderson, wrote a critical response by email, copying a large number of respected Alaskans. The author replied. Anderson wrote back again as the author rested his case. The exchange is here.
* * *
Sen. Stevens' top priority remains an uphill battle
(Published: December 22, 2002)
ADN-At a time in
life when most Alaskans would have long since retired, Alaska Sen. Ted
Stevens is taking one of the toughest challenges in the oil patch: opening
The 1.5 million-acre coastal plain of the Arctic National Wildlife Refuge
is estimated to hold between 5.7 billion and 16 billion barrels of oil. But
ANWR has proved a tough sell in the U.S. Senate. And the current 51-49
Republican majority may not be enough to open the refuge to drilling, even
with the push of House approval and strong backing from the Bush
But Sen. Stevens knows that circumstances may not get much better than
they are now. While Americans aren't sold on drilling in ANWR, they're well
aware of the nation's dangerous dependence on foreign oil, particularly with
the prospect of another war with Iraq. And the senator knows that his
position as chairman of the Senate Appropriations Committee guarantees that
both his colleagues and their constituents will listen to him.
But that doesn't mean that 60 senators -- the number needed to kill a
filibuster -- will vote with him. That doesn't even mean that 50 senators --
the number needed to win a straight up-or-down vote, with Vice President
Cheney casting the tiebreaker -- will vote with him.
The fact is that while Alaska would stand to gain much from oil
production in ANWR, the refuge is national land, and therefore to drill or
not is a national decision.
From a national point of view, drilling in ANWR fails to gain decisive
support because Americans on the whole are not convinced its production will
put a significant dent in our foreign oil dependence. Will it be helpful?
Yes. But even with ANWR producing, we'll still be importing more than half
the oil we consume. We'll still be subject to oil shocks.
Sen. Stevens will have a better chance to open ANWR if he's willing to
open the minds of the Bush administration to both higher mileage standards
for Americans' beloved SUVs and other vehicles and to the need for practical
alternative energy sources.
With the U.S. moving aggressively on all three fronts -- domestic oil
production, alternative energy research and application and higher mileage
standards -- we could put a serious dent in our foreign oil dependence. And
we'd be doing what we should be doing: making the most of our resources and
current technology while striving to perfect new technology and cleaner
resources to meet growing energy needs.
Even with that, Sen. Stevens has to convince a majority of his colleagues
that the industry can drill and produce in ANWR without lasting damage to
wildlife and the rest of the environment. That's another tough -- but not
impossible -- sell. Performance is what counts here, and while the senator
has said that ANWR and current pipeline and North Slope regulation are
separate issues, neither his colleagues nor the American public will make
that distinction. Spills, pipeline maintenance questions, any doubts about
tanker operations in Prince William Sound, all will argue against opening
Whether seen as harsh wasteland or wilderness haven, ANWR will remain
closed until Sen. Stevens, the administration and the industry can make a
stronger case. Gov. Frank Murkowski, while still in the Senate, once said
that ANWR would open to drilling when foreign events forced Americans to tap
those reserves. Maybe so.
But rather than try to ride danger from abroad in a rush to the Arctic,
Sen. Stevens should fortify the argument for opening ANWR by making it part
of a comprehensive energy policy. We can think beyond present needs even as
we're meeting them, and prepare for a future that doesn't run on oil, either
foreign or domestic.
Voice of the Times
(Published: December 20, 2002)
TED STEVENS HAS THE ...
SEN. TED STEVENS says his highest priority in 2003 will be opening the
coastal plain of the Arctic National Wildlife Refuge to oil exploration.
That's good news because the time seems right for approval of ANWR
drilling and Ted Stevens is undoubtedly the right man for the job. In recent
years the effort to open ANWR has been led by Sen. Frank Murkowski, who has
now become Alaska's governor.
Murkowski has done yeoman work on the issue and will be in good position
to champion the effort in his new job. Stevens is keeping mum on his
strategy for the ANWR battle, but his position as chairman of the
Appropriations Committee will give him considerable leverage with his
colleagues in the Senate, where even some Republicans follow the
The greens are adamantly opposed to developing the huge oil reserves
believed hidden beneath the coastal plain despite the nation's vulnerability
to Middle East oil politics and terrorist attacks. The environmentalists
also refuse to admit that the oil can be developed without harm to the
area's wildlife resources, as was done at nearby Prudhoe Bay.
Stevens rightly notes that when the 1.5 million-acre coastal plain was
added to the refuge in 1980, its oil potential was known and the area was
designated for oil evaluation and development, which has not happened. "That
million and a half acres," he noted in a speech to the Anchorage Chamber of
Commerce, "we've been trying since 1980 to get it open."
Another of the senator's priorities will be winning legislation allowing
construction of a pipeline to carry North Slope gas down the Alaska Highway
to markets in the Midwest. The pipeline will almost certainly require a tax
break to make it feasible, but if the line is not built, it will generate
A tax break -- not a subsidy, as some media persist in calling it --
would therefore not cost taxpayers anything. If it is built, the pipeline
would create thousands of jobs in Alaska and the Lower 48 while providing
the nation with a major new source of clean energy. It would therefore offer
considerable net benefit to the economy and energy security of the nation as
well as a major source of jobs and revenue for Alaska.
Whoever Gov. Murkowski appoints to fill his Senate seat will have no
seniority and minimal clout. But with Ted Stevens in a position of power in
the Senate and Congressman Don Young in a leadership seat in the House,
Alaska's junior senator will have friends in high places.
The three working together will have a unique opportunity to advance
Alaska's agenda in Congress.
11-2/3 Weekend Updates.
TUESDAY, ALASKA VOTERS WILL DECIDE WHETHER
TO CREATE A GOVERNMENT AGENCY TO OWN AND OPERATE A NORTH SLOPE GAS PROJECT
INVOLVING LNG ... NOT CANADA.
Fairbanks Daily News-Miner -
Vote no on Ballot Measure No. 3. Of all the ballot
measures, the initiative petition labeled No. 3 has the scariest opportunity to
pass--and it very likely will. … The one-paragraph description on the
ballot doesn't do this complex issue justice. Take a gander at the text of the
proposed law, which extends from page 119 to 125 in your State of Alaska
Official Election Pamphlet, and you'll begin to share our doubt. … the measure
mandates a line from Prudhoe to Valdez with a spur to Cook Inlet to aid the
Phillips-Marathon liquefaction facility at Nikiski, which is hurting because of
dwindling Cook Inlet gas supplies. This route is the one deemed most expensive
by producers …. The all-Alaska route to Valdez and Cook Inlet is financially
risky for the state. It counts on building a natural gas conditioning plant on
the North Slope, an 800-mile pipeline to Valdez and a liquids extraction plant
there, the spur to Southcentral, a new tanker terminal and tankers. That's
right, even the tankers to carry the stuff have yet to be built. Reading
through this measure, we begin to have visions of past state follies into
industry and agriculture: Millions lost on the Delta Barley Project and related
grain cars and storage facilities at Valdez; the Point Mackenzie Dairy Project;
the Alaska Seafood Center and the Alaska Petrochemical Co. These were all
seemingly great ideas that ended in lost millions for our state. And this time
it's a project involving billions. … Passing this measure puts our state on
the road to spend millions upon millions of dollars studying the feasibility of
the project and obtaining permits, and bringing itself to the same place North
Slope producers are currently--at a point where they see a gas line is not
economically feasible--at least not right now, and not under the mandates of
Fairbanks Daily News-Miner - Lori Backes is a 19-year
resident of Fairbanks and has worked as a legislative aide for the past four
years. … Few would argue that a natural
gas pipeline is the most promising economic development project in our future.
It will provide a much needed source of revenue to the state, untold economic
benefits in value-added industry, a cleaner and cheaper source of energy for all
of Alaska, and a true opportunity to take full advantage of the vast natural gas
resources currently stranded on the North Slope. … State ownership of the gas
pipeline allows us to control our economic destiny to a greater extent than any
other project scenario. It offers the greatest protection of competition by
ensuring access to all who seek to develop natural gas, it removes the burden of
much of the federal taxation of the project thereby improving its economic
viability, and, finally it allows us to determine when, where, and how our
natural gas resources will be developed, for the maximum benefit of the people
of the state. It is time for us to exercise the mandate of our constitution
and provide for the development of North Slope natural gas in the maximum
interest of Alaskans. Ballot Measure No. 3 gives us the best opportunity to do
just that, I encourage you to vote "Yes." (Our
other Prop 3 references.)
9-22-02 Anchorage Daily News. For
candidates seeking state office, the most important subject, bar none, is the
state's fiscal gap.
Each year, state lawmakers pay for today's level of state services by tapping
state savings accounts for somewhere between a half billion and a billion
dollars. Our political leaders must act soon and close the gap before the
state's savings run out. Otherwise, catastrophic budget cuts or tax increases
will be necessary, triggering a recession that more intelligent preparation
Most candidates agree there is a real problem. Some of them are even willing
to discuss real solutions, instead of serving up fraudulent claims of an easy
way out. But it can be hard for voters to distinguish between candidates who
"get it" on fiscal issues and those who really don't have a clue.
Wouldn't it be great if candidates for state office had to take an entrance
exam, demonstrating that they have a certain minimum understanding of the
state's fiscal situation?
If there were such a test, it might look something like this. Each day over
the next couple of weeks, we'll run the answer to one of the questions in this
1) How much money did the state spend in last year's general fund budget?
2) What percentage of last year's general fund budget was covered by
withdrawals from state savings (known as the Constitutional Budget Reserve
3) How much money was left in the Constitutional Budget Reserve at the start
of this fiscal year?
4) According to the most recent official state estimate, when will money in
the Constitutional Budget Reserve run out?
5) What percentage of last year's general fund budget was covered by oil
6) What percentage was covered by non-oil taxes and fees?
7) What is the largest single expense to the State of Alaska, and how much
was spent on it last fiscal year?
8) How much money did the state deposit into the Alaska Permanent Fund last
9) What is the long-term historical average price of North Slope oil (to the
nearest dollar), and what is the price today?
10) When did Alaska oil production hit its peak, and how does today's level
of production compare with that peak?
11) How much of Alaska's oil production (in barrels per day) comes from
Prudhoe Bay and Kuparuk and where do the two fields rank among North America's
largest oil fields?
12) What is the average production (in barrels per day) from other North
Slope oil fields?
13) Roughly how much new oil production would be required to fill this year's
projected fiscal gap? (Clue: Last year, the state earned $1.3 billion in general
fund revenue on 1.02 million barrels a day of oil production.)
14) Roughly what percentage of the state government work force would have to
be laid off to fill this year's projected fiscal gap solely through personnel
15) What percentage of state K-12 education funding would disappear if those
funds were used instead to fill the fiscal gap?
16) How much would the state's mining industry have to grow (in percent) to
make mining revenues large enough to fill the fiscal gap?
17) What oil price would be needed to balance this year's budget and avoid
withdrawals from the Constitutional Budget Reserve?
18) How much does the average Alaskan receive in state services from the
general fund budget and how much does the average Alaskan pay for those
19) How much would be raised by the state income tax that was repealed in
1980 if it were still in effect today?
20) How many other states have neither a state income tax nor a state sales
Anchorage Times Comments on
NOW THE Wall Street Journal has swallowed whole the spurious arguments
against an Alaska Highway gas pipeline put forth by a team of critics.
An editorial in the Thursday edition of the Journal said the pipeline measure
written into the national energy bill by the House-Senate conference committee
is a reason President Bush should veto the bill.
Two gas line critics wrote a similarly skewed article recently for the Los
Angeles Times. Though not mentioned by the Journal, the two writers of the
earlier piece were Jerry Taylor, director of natural resources studies for the
Cato Institute, and Roger Berliner, a Washington lawyer who once served as
legislative director for Sen. Howard Metzenbaum, an Ohio Democrat who told fairy
tales about Alaska for many years.
The Journal editorial suggests that the gas pipeline language could take $30
billion from taxpayer pockets, "$20 billion in subsidies and another $10 billion
in loan guarantees."
Actually the claim is blatantly false. The two measures are tax breaks that
would apply if natural gas prices fell far enough to make the project
uneconomic. That would protect the pipeline investors by reducing the line's tax
burden if gas prices should tank.
Since the line might never be built without such protection, the taxpayers
stand to lose nothing. If the line isn't built, they would get nothing from the
project. If it is built -- and thoughtfully applied tax incentives would help
enormously -- the nation would gain an important new energy source, thousands of
jobs and billions of dollars in tax revenues.
The Journal also touts the so-called merits of building the gas line beneath
the Beaufort Sea to the Mackenzie Delta, where it would pick up stranded gas in
the Canadian Arctic. The newspaper is attracted to that route because it would
be shorter than an Alaska Highway route.
But it ignores the difficulty -- if not the impossibility -- of resolving
environmental objections to an offshore route and the difficult engineering and
construction problems of building a subsea line in such a remote and ice-choked
environment. Such a line could be much more expensive than building along an
established highway route.
And the Beaufort route would run through a whale migration area below ice
frequented by polar bears, seals and other wildlife. That alone could result in
years of expensive delay that might undermine the viability of the project.
The Wall Street Journal dismisses the gas pipeline measure as pork.
In a pig's ear.
Fairbanks Daily News Miner.
|Markets change for Alaska gas
Four years ago when I went to vote for the
Fairbanks North Star Borough initiative to create a gas line port
authority, I believed that a state natural gas authority to build and
own a liquid natural gas (LNG) project was a good idea. I voted for it.
I thought it was a good plan to jump start development. I also thought
it would have assured gas producer competition, but now the situation
The reason the situation has changed is not because the port
authority didn't do a great job. It came up with a good plan, it tried
to get that plan implemented, and it contacted the oil producers in
order to get an agreement for gas sales. Unfortunately, the oil
producers did not go for it. Now I think that a window has closed.
Why was a gas authority a good idea back a few years ago but not now?
The simple answer is that markets have changed. Back then there was a
greater expectation that Japanese and Chinese gas demand would increase;
but no one expected a substantial increase in Lower 48 demand. But now
the reverse is true. Japan and China have both faced relatively slow
growth. In fact they are moving to flexible free market gas options
where Alaska cannot compete.
Japan for example has endured a 10-year economic stagnation. This has
forced it to open up its energy markets to flexible contracts, where
once it had fixed contracts in order to assure energy security. Japan is
hoping that this will lead to cheaper energy in order to help their
economy recover. Alaska would not be able to offer flexible contracts
due to the tremendous fixed costs any Alaska LNG project would entail.
Other LNG competitors including Indonesia, Qatar and others have more
flexibility and lower costs. That means Alaska will have a tough time
competing on the Pacific Rim market.
On the other hand, the Lower 48 market is on the verge of a massive
gas shortage. The price of gas reached $10 per thousand cubic feet (MCF)
not two years ago, where usually it is $2 to $3 per MCF. That is a
strong signal that supply problems are on the horizon. Every six months
the U.S. Energy Information Administration seems to increase its
forecasted price for Lower 48 gas. The latest forecast indicates a price
of over $3.25 in 2000 dollars for the next 20 years. Likely it will be
higher than that, particularly if Atlantic Rim LNG producers cut
production via cartel agreements. Therefore Alaska can sell its gas to
the Lower 48 and receive top dollar.
Another market for Alaska gas is California, where the Alcan route is
the cheaper supply route compared to LNG, and Alaska would earn more
Passing an LNG initiative does not change who owns the gas leases.
These are currently owned by the oil producer companies. Unless the
producers sell their gas to Alaska, the gas line will not receive any
revenue. The oil companies can make more money selling their gas to the
Lower 48 than to the Pacific Rim. There is no incentive for them to sell
to an LNG project.
Unless Alaska legally takes away that gas somehow, the producers are
going to sell the gas where it makes the most money. Alaska can easily
get tied up in millions of dollars of legal wrangling, feasibility
studies, and permit fights if the state tries to force the issue. There
are also other costs that Alaska may be forced to bear such as putting
up pre-construction capital investments to obtain engineering plans and
There are many options to provide gas supplies to Southcentral and
rural Alaska. One would be to build a dedicated gas line from the North
Slope directly to Anchorage once gas is finally needed there. The LNG
initiative does no more to assure Southcentral gas supplies than does an
Alcan pipeline. Furthermore, an LNG initiative does not assure greater
economic growth nor increases in new industries anymore than the Alcan
option. We tried the port authority option, and it didn't work. It was a
good try, but now we need to move forward. All the market indications
are for a strong Lower 48 demand for Alaska gas. I think we need to
concentrate on that option and let go of LNG.
Dr. Doug Reynolds is an associate professor of oil and energy
economics at the University of Alaska Fairbanks. He can be contacted at
Prop 3 (Anchorage Daily News Op-Ed,
The All-Alaska gasline project
will be on the November general ballot. It is titled Ballot Measure 3. This
ballot proposition offers new jobs for Alaskans, new state revenues, gas for
Southcentral, and a bright future for our children and their children. The
passage of Prop 3 will create the All-Alaska Gasline Authority to own and
oversee the construction of a gas pipeline in Alaska. The Authority is modeled
after the Permanent Fund Administration, small and efficient.
The private sector, through
competitive bidding, builds this gasline, not the State.
Ballot proposition 3 is a real
project, not another study. Alaskan gas has never been offered to any markets.
The time for more studies has come and gone. We must stop studying routes and
actually offer a real project to the world financial and gas markets.
The section of the Initiative
language entitled “Credit of state not pledged” (Sec. 41.41.400) was carefully
written so that the project would stand-alone based on this project’s revenues,
not the Permanent Fund or the State’s general revenues. Nothing will be built
until markets for the gas are secured.
The All-Alaska gasline project
parallels the existing oil pipeline (TAPS) to Valdez. The gas is then liquefied
and shipped by tanker to markets in the US West Coast, Asia, British Columbia,
and Hawaii. Keeping the gasline in Alaska has so many positive possibilities
for Alaskans, all of which would be lost by going through Canada.
Prop 3 abides by our state
Constitution regarding development of our natural resources. Building a massive
“bullet” pipeline to Alberta simply exports our valuable hydrocarbons into the
Canadian Petrochemical industry where they will “strip out their pound of flesh”
and give us nothing back. We cannot allow this to happen. Not one atom of our
North Slope hydrocarbons should ever be “exported” into Canada. Our
hydrocarbons, minus the methane, must be extracted from the gas on our side of
the border even if a Canadian line is built in the future.
Building a spur line from
Glennallen to South central will help avert gas shortages estimated to begin in
2013. The key to continued and new economic development in South central is
clean abundant energy. Bringing our gas to South central solves this problem.
The All-Alaska gasline will also provide clean new energy to our coastal and
river communities statewide. I challenge anyone to show how a “bullet” pipeline
to Canada accomplishes these objectives. Prop 3 does just that.
The Canadian Highway project
offers only a portion of the revenues Alaska would receive if we owned the
All-Alaska project outright. Estimated project revenues: up to $1 billion per
year. Through Municipal Revenue Sharing, Prop 3 lets all Alaskan communities
benefit in the new revenues. The All-Alaska route also has the most
construction jobs (13,000 estimated) and over 350 permanent jobs.
Prop 3 also fuels a new
Petrochemical industry for Alaska, thus providing thousands of additional new
jobs and a new manufacturing and exporting industry in Alaska using our existing
port, rail, road and shipping infrastructure which are already in place. The
extraction and commercialization of the most valuable hydrocarbons (benzene,
ethane, propane, etc.) is the proper management of our resources for the maximum
benefit of Alaskans per our constitution.
This project has a current
estimated price tag of $12 billion, including 16 tankers for both LNG and LPG
(propane). This price tag also includes the “fractionation” plant ($3.6
billion) for capturing the hydrocarbons. This project does not need Federal
price subsidies as the Canadian route does to make it economical. We could,
however, use our own Railroad bonds to help finance it, keeping the benefits in
Alaska, and not in Canada.
Alaskans must take Our Gas and
Our Future into our hands once and for all. We do not need a dividend
reduction, income tax, or sales tax with Prop 3. It solves the fiscal gap and
more. Can 40,000 Alaskan voters who signed the Initiative petition be wrong?
Vote yes on Prop 3.
POB 100531, Anch., AK. - 907-277-9981
- Scott Heyworth is
chief sponsor of Ballot Measure 3.
Anchorage Daily News, Candidate's goal is to energize Alaska
My goal as governor will be to
energize Alaska, energize our economy, energize our education system.
I will introduce the necessary legislation that will expedite the
construction of an all-Alaska gas pipeline. If the initiative to build an
all-Alaska gas pipeline is approved, I will announce my selections to the
governing board and have them begin their work as quickly as possible. Yukon
Pacific Corp. demonstrated that an all-Alaska gas pipeline is feasible. The
oil and gas industry will never produce our stranded North Slope gas until
it is in their best interests to do so. Alaska must take its gas from the
North Slope and build a gas pipeline through Alaska down to tidewater. I
would like to see that gas brought down through the Railbelt and have that
gas and its derivatives used to bring down the cost of energy in all of our
communities in Alaska.
I am concerned about Anchorage's energy needs when the gas reserves in
Cook Inlet are exhausted. We need to find a long-term source of energy; the
North Slope stranded gas is the answer. I will introduce legislation that
will place a tax on our stranded gas on the North Slope. I will also begin
the process of reviewing existing oil and gas royalty payments, oil and gas
taxes, corporate and state fees to determine the fairness of our taxing
policies. I want to make sure that we are not being paid less than what we
should be from our nonrenewable resources, adjust where there is a need, and
get new revenue into our treasury as quickly as practicable.
Energize our economy. In addition to imposing a tax on the stranded gas,
I will cut unnecessary spending and corporate welfare, stop the funding of
grants that do not have a rational public purpose, place a freeze on hiring
and raise the alcohol tax to equal the social costs of abuse. By getting the
all-Alaska gas pipeline and pushing alternative forms of energy, we will
bring down the cost of fuel and electricity.
Most importantly, I will determine what is needed to take the volatility
out of our budgeting process. I believe the Cremo plan
http://www.alaskafund.com needs to
be put in place. This plan advocates taking our money from all nonrenewable
resources and placing that revenue into a fund that cannot be spent by the
Legislature. We cannot build budgets that depend on the price of oil.
Business will not invest in Alaska if we cannot develop a predictable
funding source to operate our government. A plan like this would stabilize
the budget process. I do not support an income tax at this time. I will not
support any raid on our Permanent Fund corpus.
Energize our education system. I want to increase our foundation formula
in order to hire the needed teachers, ensure proper salaries and benefits,
and encourage our teacher aides and substitutes to get their degrees in
order to provide stability in the teacher corps, especially in the Bush. I
want to track the dropouts from our schools to get them back into school or
a GED program. I want to make sure our teachers are teaching reading, math
and sciences to standards needed to have high school graduates ready for
vocational-technical training or college. Energizing our education system
will lead to maximizing our work force for the jobs now available and for
jobs that will be open with the advent of the gas line. In addition to our
public schools and vocational-technical schools, we need to adequately fund
our university so that the university can train our people, attract students
from across the country and provide the expertise needed to build a strong
Nels Anderson is an Alaskan Independence Party candidate for governor. He
lives in Dillingham.
1002 opponents won dirty victory
Anchorage Daily News Compass
By Karl Francis
(Published: August 6, 2002)
I share with most Alaskans a
commitment to opening the 1002 petroleum reserve of the Arctic National
Wildlife Refuge to responsible development, and I have had the privilege
through many battles to work for the only Native people of the 1002, the
In the past, those often were difficult uphill battles. We fought hard,
but we were defeated mostly by lurid rhetoric and huge passions generated
throughout the rest of the nation by people thinking this was about
protecting the environment and Natives from oil-hungry Alaskans. It was a
massive deception, but it worked. It worked because we were at huge
political disadvantage and because the issue was so far removed from the
fronts on which it was fought that almost any well-stated lie could persuade
some quite decent person in Peoria to call her Senator to put a stop to
these wretched Alaskans destroying everything in sight, including her
precious wildlife refuge.
The facts, of course, had little to do with it. The opponents captured
and trotted out at every opportunity people posing as Natives of this place,
as if a Native is a Native is a Native. One day some years ago, Fenton
Rexford, the mayor of Kaktovik, and I came out of the Hart Senate Office
Building and noticed a great tumult on the steps of the Capitol. Curious, we
went over to see screaming feathered hordes demanding Congress protect their
caribou. Since the mayor was the only native Native of the 1002 in town, we
were curious about who these concerned folks might be.
Cherokees, Apaches, Comanches, Utes -- you name it, they were there, and
one Gwich'in, Miss Sarah James, the only Alaskan in sight. All made a great
scene about the oil industry destroying their caribou.
I don't have to tell you that oil doesn't destroy caribou. We do that
when we build public highways across their migration routes, as the
Canadians did with the Dempster Highway, the only place now where the
Porcupine Caribou herd is taking a serious hit.
There is a whole lot I don't have to tell you, just as there is not much
left to tell Congress. Early on there was some confusion, but now just about
everyone on Capitol Hill knows the reality of this thing, that drilling the
1002 would have far less impact on caribou or any other wildlife than the
rafters and hikers and photographers and biologists who swarm out there to
join the other pests and predators that attack when and where the poor
creatures are most vulnerable. Not like the oil industry that shuts down
when they are so indisposed.
I don't have to tell you that or anything else about how things really
are here. Nor the folks on the Hill. They know. All across the political
spectrum I have had people tell me they know we are right. But then many of
them have to add that they can't help us because they will take such a hit
on home base, among the folks in Peoria and Des Moines and Los Angeles who
know all about Alaskans and oil and caribou.
What I do have to tell you is this. One often hears about fighting the
good fight, which usually means you fought a lousy fight and lost. Good
fights in my book are fights you win. It has been the opponents of 1002
development who have fought the good fights. They win. Sure, they cheat and
steal and tell monumental lies, but they win. And this time they won against
This time we went to town with the House, most of the Senate and the
president and his administration all on our side. All we needed were the
several senators who wanted to help us but needed a little political cover
to do that and a small deal with a weak and pretty disinterested Senate
This time we did not fight the good fight. This time nobody fought the
good fight, even our opponents, who failed even to show up. On Capitol Hill
people joke about how we Alaskans have somehow managed to snatch defeat from
the jaws of success. It is not a pretty picture.
Karl Francis is an economic and political adviser to Native North
Americans. He once served as environmental director for the Alaskan Arctic
Gas consortium of companies and as a geotechnical and environmental adviser
to Northwest Alaska Pipeline Co. He was also University of Toronto's
professor of northern affairs.
about oil premature
By Ken Thompson
(Published: July 22, 2002)
I see a different reality for the
Alaska energy industry than that painted by BP CEO John Browne
this month in Anchorage. His
speech created a sense of pessimism.
I see hope and a positive future. While major companies BP and Exxon may
be de-emphasizing Alaska in their global portfolios, Phillips Petroleum,
Anadarko and new independents will become more prominent.
Such evolution, old as the industry itself, has played out throughout the
BP has some of the best and brightest personnel in the business. But
geology and other factors can deal tough blows to any oil company in any
given area. BP has spent hundreds of millions of dollars in Alaska
exploration with unlucky results; its wildcat group was recently eliminated.
Delay, high costs and production problems have plagued new fields Badami and
North Star. As production declines, costs per barrel increase.
It's easy to see why Browne is pessimistic.
Other companies have fared better here. When BP went east on the Slope to
explore, ARCO went west. From 1994 through 1999, ARCO discovered more than 1
billion barrels of new oil, and Phillips Petroleum, which acquired ARCO
Alaska, has added to that total. Anadarko Petroleum has also been highly
successful in exploration on the Slope. Forest Oil Corp. and others have had
sizable oil and gas discoveries in Cook Inlet.
The May 2002 Foothills lease sale resulted in more than 1.1 million acres
being leased by Anadarko, Unocal and companies new to the Slope: EnCana Oil
and Gas, Petro-Canada and others.
NPR-A leasing drew more than $104 million in the 1999 sale and $63
million in the sale a month ago. BP chose not to bid last month, but great
explorers like Phillips and Anadarko bid strongly. And another new
significant player came to Alaska: TotalFinaElf.
Browne said that "aspiration has gotten too far ahead of what can be
achieved" and that oil production has continued to decline. ARCO before and
Phillips now have created a different reality: Great production results in
the new 425-million barrel Alpine field, Kuparuk and other fields have given
Phillips greater net production now than in the late 1990s.
One of the main drivers behind BP's cost cutting may be that its stock
price over the past three years has underperformed several key competitors,
and executives are feeling the heat to get additional cash flow and profits
from existing assets.
According to a popular financial Web site database, had you invested
$10,000 three years ago in BP stock, your investment would be worth around
$9,000 today. I can see why Browne is pessimistic. Chevron, Texaco and Shell
have had similar performance. With Exxon stock, you would be holding steady.
Had you bought $10,000 of Conoco stock, its value would now be $11,000.
Had you bought stock in Anadarko Petroleum, TotalFinaElf, EnCana, Phillips
and Petro-Canada, your $10,000 investment would be worth $12,000 to almost
See this more recent 7-23-02 investment analysis. -dh)
There are huge oil and gas resources remaining on the North Slope. To
realize this upside potential, Alaska should adopt an energy policy more
conducive to independent oil and gas companies. Create a reality in which
players like Phillips, Anadarko, EnCana and others increase their
investments. The state should offer a better program of oil and gas
exploration incentives and expedited, streamlined permitting without
jeopardizing environmental protection. The state must also adopt a
balanced-budget fiscal policy.
I strongly believe the state has potential for a natural gas business,
but we must find different investors, such as multibillion-dollar pipeline
companies, Alaska Native corporations, Phillips and perhaps the state
itself, if gas pipeline investment does not meet the higher rate-of-return
requirements of BP and Exxon. The state should pass a property tax exemption
for a gas line that is not excessive but is fair to investors, the state and
communities. Congress must also pass enabling legislation.
I have a sense of confidence in the future of Alaska's energy industry
with new investors excited about their future here. Let's keep in mind that
another man's reality does not have to be my -- or your -- reality for
Ken Thompson is former president of ARCO Alaska and is president of
Pacific Rim Leadership Development, a business consulting firm in Anchorage.
He lives in Anchorage.
"Voice of the Times"-PHILLIPS ALASKA
President Kevin Meyers said here a week ago that risk-reduction measures in the
pending federal energy bill would "go a long way" toward making a gas pipeline
Meyers said at a joint meeting of the Alaska Oil and Gas Association and the
Anchorage Chamber of Commerce that if tax incentives in the bill now before
Congress pass, his company will move ahead with permitting for the pipeline.
The incentives were added to the energy bill by Sen. Frank Murkowski,
R-Alaska, and guarantee producers a minimum price of $3.25 per 1,000 cubic feet
of gas by offering a tax credit whenever the price fell below that level. The
producers would pay the government back for the credits whenever the price
reached $4.85 or higher.
Without such incentives, Meyers said, the pipeline is not economic. With
them, the project just might be attractive enough to potential investors and
could move ahead. The Bush administration opposes the incentives, but Alaska's
congressional delegation is fighting hard to keep them in the bill. Let's hope
Alaska wins this one.
Daily News Opinion
(Published: July 22, 2002)
Let's lower expectations
Nobody is crying in their beer about the announcement that this year's
Alaska Permanent Fund dividend will be $1,550, about $300 less than last
year. The dividend still represents an unparalleled privilege for Alaska
citizens. Most of us are just grateful.
But this is a sign of things to come. The dividend is less and less
likely to be the mainstay of income and economic activity it once was. In
our gratitude, we should also lower our expectations.
The dividend is a major force in Alaska's economy and lifestyle. It is a
significant part of the yearly budget for a family of four -- indeed, a
crucial part for those at the lower end of the income scale. In the
aggregate, the dividend distribution represents about 6 percent of household
buying power in the state's economy.
The dividend peaked two years ago at $1,960 and dropped last year to
$1,850. Barring an unimaginable turnaround in financial markets, it will
fall again next year. The dividend formula is based on a five-year average
of market performance; when the markets drop, so does the dividend, albeit
with some lag. Alaskans benefited from the market bubble of the late 1990s,
and they are suffering since it burst.
We have argued that the dividend should be phased back to help fill the
state's billion-dollar-a-year fiscal gap and to forestall the need for
draconian taxes. We have argued that the dividend should be preserved, to
help protect the Permanent Fund itself, and ratcheted down gradually, to
give people time to adjust to the change. Finally, we have suggested that
income supports for Alaskans should be shifted more to a basis in work or
need than in mere residency. These proposals represent a middle ground in
the debate over whether new taxes or Permanent Fund earnings should fill the
But as markets continue to slide, that middle ground is shrinking and the
need for action is growing. Smaller dividends represent smaller Permanent
Fund earnings and fewer choices in dealing with Alaska's fiscal mess. The
state will need to act smarter, sooner, to cope successfully. As this year's
election campaign proceeds, voters would do well to query the candidates
closely on what they'd do about it.
Voice Of The Times
(Published: July 11, 2002)
BP CHIEF GETS SPECIFIC ABOUT . . .
Gas line route
BP CHIEF executive John Browne said emphatically during his recent
Anchorage visit that his company's preferred route for the gas pipeline is
through Canada, along the Alaska Highway.
Browne ruled out the so-called "over-the-top" route through the Beaufort
Sea and the oft-touted "all-Alaska" route from Prudhoe Bay to Valdez.
The northernmost route, over the top and down the Mackenzie River, is off
the table, he indicated -- presumably because of environmental and political
concerns that would mire such a project in controversy.
And the all-Alaska route to Valdez, he said, would carry the gas to the
wrong destination. It would involve tankering liquefied natural gas to
Pacific Rim markets that already have large and relatively cheap sources of
gas available to them.
That leaves the Alaska Highway route through Canada, which would bring
the gas to the U.S. Midwest, where a large and potentially profitable market
But Browne said that route will only become financially viable when
economic rents -- the earnings share taken by government and investors --
come into a balance more attractive to prospective investors.
With that announcement, BP joins Phillips as one of the two major gas
holders favoring an Alaska Highway route. The third, Exxon, has not yet
announced a preference. An Exxon affiliate in Canada holds a major interest
in gas fields located in the Canadian High Arctic, whose development would
be aided by a Mackenzie Delta route.
Alaska alone cannot make the gas pipeline happen, but it certainly can
and should make itself a more attractive investment by improving the state's
fiscal stability and offering incentives that would reduce tax-related
economic rents as an obstacle.
Of The Times
(See Our Original NGP Report Here
and related Op-Ed piece by Steve Haycox, below, 7-5-02)
(Published: July 7, 2002)
BP LEADER SUGGESTS CHANGES IN . . .
LORD JOHN Browne's (RDC
Photo) remarks to Anchorage civic and business groups a week ago should
be a wake-up call to Alaskan politicians and the voters who elect them.
The worldwide CEO of BP said a gas pipeline to the U.S. Midwest is not
economically viable right now -- a fact that everybody has known for some
time. But, he said, Alaska has the ability to remove some important barriers
-- actions that could make all the difference.
Right now, the projected lifetime cost of a gas pipeline would be $20
billion for construction, another $20 billion for operating expenses and
still another $20 billion for financing.
Browne said BP and other companies are trying to reduce capital costs
with technology such as high-speed welding, higher-strength steel and more
efficient CO2 removal. The target is to reduce construction costs by about
$2 billion and cut overall financing costs by a similar amount, with total
savings of about $4 billion.
But that's not enough, Browne said. At that point, the issue then
"becomes one of public policy. Because the decision is about the sharing of
the economic rent arising from the development." He later explained that the
term "economic rent" in this case meant taxes, royalties and investor
"As thing stand," he added, "the current distribution destroys the
viability of any such development. But public policy can change that
distribution." In other words, Alaska's existing tax and royalty system
would give investor payback the short end of the stick. Left unsaid was the
inescapable reality that without adequate investor payback there would be no
investors and therefore no gas pipeline.
The problem is this: Alaska's tax and royalty regimen was designed for
the glory days of oil production and was written at a time when the rallying
cry was for Alaska to get its "fair share" of the value of oil when it moved
through the trans-Alaska pipeline at more than 2 million barrels a day. Now,
pipeline throughput is half that amount and declining, but the old system is
still in place and applicable to new projects.
Without changes, many future projects -- including the gas pipeline --
almost certainly will be uneconomic and unlikely to come to fruition. Browne
was not specific about what changes he would like to see. But his remarks
made it obvious some changes are essential.
The BP chief's comments suggest that a more equitable sharing of earnings
would result in a bigger financial pie overall. That could translate into
billions of dollars in taxes and royalties as well as corporate profits,
public and private wealth that would never be created unless the project is
Daily News by Steve Haycox-Lord
John Browne of BP reminded Alaskans just a week ago that absentee corporate
investment still controls much that happens, and will happen, in Alaska. Despite
some Alaskans' insistence that a gas pipeline will be built soon, over a route
determined by Alaskans, Browne made it clear that the pipeline will be built
when BP determines it should be built. Cost effectiveness measured on a world
scale and global supply and demand will be the determining factors, not the
Rumpelstiltskin-like foot-stamping of Alaska politicians. Moreover, he implied
strongly that the pipeline route will not be dictated by Alaska politics.
Rather, it will be a function of economic factors involved, as determined by the
developers and marketers of the gas, not the Alaska Legislature. Alaskans will
have little effect on the ultimate decision.
Weekend Updates: Sat. 12:10 ET.
LA Times opinion (Download Here): Dr. Karl
advisor to the Kaktovik City Council:
I was reminded the last time I drove the Alaska Highway that
Fairbanks is a long way from Los Angeles, about 4,000 miles. But that is hardly
an excuse for the recent spate of articles, editorials and letters about Alaska
and its people in the debate over drilling for oil in the Arctic National
LA Times Archives. 2.
As uncomfortable and bewildering as it may be to Karl Francis, neither he
nor other Alaskans own the Arctic National Wildlife Refuge (Commentary, June 10,
Ken Thompson Former ARCO executive
Anchorage Daily News
(Published: May 19, 2002)
Q ARCO promoted you and took you Outside. Once you were done
with ARCO, you came back. Why?
A When the ARCO-BP merger occurred, we did reflect on doing something
different. ... I thought (about) doing something that would benefit others
... (and) decided to form a company. It's now called Pacific Rim Leadership
Development. We work with businesses about 70 percent of the time and make a
profit. We then turn around and donate time -- consulting help -- to
churches and nonprofits. ...
We really enjoyed Alaska. We thought it was the best place to raise our
son, Michael, who's now 14, an 8th grader at Grace Christian School. Plus
starting a business, I had a network here, so I knew I'd likely have some
All three of us love to fly-fish. We just enjoyed a smaller city of an
Anchorage size vs. L.A. -- the smog, the crime, high taxes, traffic. We
Q So you think Anchorage has an asset in being attractive to people
like yourself who are mobile and can set up shop in many different places?
A I think that it really does. Several of our neighbors, in different
lines of work, have done that very same thing.
Q You're now Alaska's independent guru of natural gas. What's your
quick take on what Alaska can do to encourage development of the gas?
A Alaska should work and cooperate to make natural gas sales happen. On
the other hand, Alaska should realize there's foreign sources of gas
competing, and we should make sure our gas is on the same level playing
Q How do we do that?
A For the next two years, I would cooperate. There should be incentives
by the state. But the reality is that in other countries, while there are
incentives, they are always balanced with tough consequences for not moving
forward. Other countries have very firm deadlines . . . there are always
second parties in the wings, so that if you can't deliver, you part (as)
friends and it goes to the next party.
(The state should) work together hand in hand but there has to be a time
that we say enough is enough or else things will continually be shoved out
into the future. Because companies such as BP and Exxon have huge global
Q How do you get the producers to open up the ball game to others?
A The secret is time. You set a timetable of 2004. Exxon won't be ready
to go. Phillips will. BP depends on the wind at the time. If you set a firm
timeline you will see a consortium step forward of pipeline companies, and
Phillips, and maybe we can get together a group of Native corps that can
play a role. . . . The biggest concern I have about the gas project is Exxon
preventing it so it fits their timetable.
Q What about sending gas to tidewater and exporting it?
A My last two years at ARCO, we looked at the resource base across the
Pacific and Alaska -- Malaysia, Indonesia, Australia, even the Middle East.
The price to get LNG in the ship is just so much less from those countries
where the gas resource is already at tidewater. If the other countries
wanted to undercut us in price, they could.
When a line comes south to the Lower 48, I believe entrepreneurs should
look at a smaller LNG project of bringing gas into Anchorage and Phillips'
Nikiski plant or maybe a spur line into Valdez. Start small, don't threaten
Q You're very bullish on our gas potential. What about our oil
A I am personally very bullish on the National Petroleum Reserve.
Phillips drilled several prospects last year that ARCO has had. They've
announced discoveries on every one. (Though) they have not announced if they
are large enough to be commercial.
I think we'll see several 100 to 200 million barrel fields in NPRA. That
size is good for Alaska because you can develop most of the modules here or
down on the Kenai peninsula. ...
If BP's not going forward, (the state should) urge BP to make broader
partnerships with companies like Shell or Anadarko or other companies that
would get the BP acreage explored.
The worst thing that could happen for oil? Grant these lease extensions.
(Instead, make them) explore and develop or let's turn it over to the
Anadarkos and others -- PetroCanada -- (and) see what they can do.
Q A governor who wanted to be a little more assertive with the
industry might want you as a DNR commissioner.
A I'm enjoying what I'm doing. (Laughs.) I enjoy my freedom.
Q Not going to run for public office?
A I'm not going to run for public office. I got off one treadmill. ... At
ARCO, because of important meetings or travel, I would miss most of my son's
basketball games or track meets. A difference now is those are put on my
Palm Pilot as business meetings. ...
Q Any final words of wisdom?
A I don't want to come across where I'm opposing industry now that I'm on
the other side and being tough. ... Actually, the best things have always
happened when you work together and cooperate. ...
(But) when you don't see the actions -- forget the words, it is action
like a gas project physically moving forward. We should not fear being
tough. There are investors in the wings and there always will be.
The People’s Gasline
Initiative and HB302 are Substantially Different
The “All-Alaska Gasline Initiative”
certified by Lt. Governor Fran Ulmer and will be on the November 5,
Election ballot. On April 22, the House passed HB302; a bill entitled “An Act
establishing the Alaska Gas Corporation”. A heated discussion is now brewing in
Juneau as to whether the two pieces of legislation are “substantially similar”.
If the Senate passes their version of
this Bill, some in Juneau are saying HB302 might be “substantially similar” to
the Initiative. Therefore Lt. Governor Fran Ulmer will ultimately have to
decide if HB302 and the Gasline Initiative “accomplish [the same] purpose by
means or systems which are fairly compatible”. I believe the Lt. Governor will
easily determine they are not at all similar.
HB302 language calls for a “report and
feasibility study of a project plan”. The Gasline Initiative calls for a
“project”. The words “feasibility study” and “report” do not even appear once
in the Gasline Initiative ballot language or underlying bill. That is the first
clue that they are totally different in nature and purpose.
Alaskan Natural Gas reserves have been
stranded on the North Slope for over 25 years now. Numerous studies have been
conducted ad nauseam. The latest one, recently completed at cost of
$125,000,000.00, has not even been released to the Legislators as
promised by the big three North Slope Oil producers. Does the fact that all
three producers continue to say that any Canadian Highway project is
“uneconomical” at a cost of over $20 billion have anything to do with it?
Now along comes the Oil producers
pushing for HB302 which, yet again, simply calls for another “feasibility study”
to find out if the project is viable. Having the State of Alaska pass a law,
HB302, mandating yet another “feasibility study”, brings with it a price tag of
at least the same amount as the just completed Producers Feasibility Study. If
the Producers can fool the Legislature into passing a Bill mandating yet another
study, this time at State expense, there is only one outcome for Alaska’s
Natural Gas: another long delay and the gas will remain stranded. Alaska will
have no new jobs or much needed new revenue streams. Once again, the window to
build a project will close shut. Welcome to Stranded Gas 101.
HB302 as proposed, under Sec.41.41.990.
Definitions, states in number (3) that “project means the gasline transmission
pipeline, together will all related property and facilities, to extend from
Prudhoe Bay…to interconnect with a gas transmission pipeline in Canada…” The
All-Alaska Gasline Initiative ballot language says; “The gasline route would be
from Prudhoe Bay to tidewater on Prince William Sound and the spur line from
Glennallen to the Southcentral gas distribution grid”. The Gasline Initiative
never uses the word “Canada” even once and HB302 never
uses the words “spur line” or “Glennallen” anywhere in the bill’s language.
The All-Alaska Gasline Initiative
language in Sec.41.41.010(a), Establishment of the Authority states the purpose
of the Initiative is to achieve the following: (1) acquisition and conditioning
of North Slope natural gas; (2) the design and construction of the pipeline
system; (3) the operation and maintenance of the pipeline system; (4) the
design, construction, operation, of other facilities necessary for delivering
the gas to market and to Southcentral Alaska; and (5) the acquisition of natural
gas market share sufficient to ensure the long-term feasibility of the pipeline
Notice the pro-active words in this
section: acquisition, conditioning, construction, delivery, design,
maintenance, and operation. The Gasline Initiative is about action and a real
project. Words calling for more “studies” do not appear anywhere in the Gasline
Before any Legislative bill, which
involves finances becomes law, a ‘fiscal note” must be generated by the
Department of Revenue. The same is true with any Initiative. The “fiscal note”
report by the Department of Revenue issued for the Gasline Initiative projects a
cost of $250,000,000.00. In the written comments attached to the fiscal
note for the Initiative, generated by the Department of Revenue, the following
verbiage appears: “We estimate mobilization and construction would take four
years. The estimated cost for acquiring existing permits and engineering,
negotiating gas purchase and LNG sales contracts is assumed at
$250,000,000.00, spread over two years”.
HB302, which just passed the House, also
has a “fiscal note” attached from the Department of Revenue. Total cost:
$0.00. Does that sound “substantially similar” to you?
Scott Heyworth, Anchorage, AK, (907)
Natural gas pipeline is viable now
By Ken Thompson
(Published: March 7, 2002)
I have lost my patience with the "Big 3" major oil producers on
the North Slope -- Exxon Mobil, BP and Phillips -- in regard to timely
marketing of Alaska's North Slope natural gas.
Alaska must plan tougher action if pipeline project permitting is not
under way in 2003. A North Slope gas line across Alaska and Canada to the
Lower 48 is commercial today and should be built.
Now is the time for Alaska to cooperate with new investors: pipeline
companies, Alaska Native corporations and others -- perhaps one of the Big 3
could dissolve their gas study group and partner innovatively with a new
progressive consortium. Now is the time for a visionary project considering
not just the 35 trillion cubic feet of gas leased by the majors, but
encompassing the enormous gas potential that Alaska offers elsewhere on the
North Slope and in the Interior.
A gas line can also offer 50-plus years of clean energy for many
Alaskans. Alaskans -- not the producers -- have the most at stake!
Last year, the Big 3 testified that an Alaska Highway gas project to the
south had an 11 percent rate of return after taxes. They stated this return
was not competitive with other, worldwide investments.
The world has changed since then, and an Alaska project currently exceeds
the commercial threshold of a 12 percent rate of return, in my opinion.
President Bush's plans to lessen dependence on foreign oil and reduce
global warming emissions calls for increased use of clean-burning natural
gas and other alternatives to oil and coal. While natural gas prices are
currently low, the NYMEX futures contracts for 2003 reflect a start in price
Since the majors' testimony last year, a consortium of pipeline companies
-- Foothills, TransCanada, Duke, El Paso, PG&E, Sempra, Williams and others
-- have stated they believe they can build a gas line across Alaska to
Alberta at a lower capital cost than cited by the producers, saving almost
$1 billion. They also state they can operate at lower costs. I've seen these
companies achieve this elsewhere!
TransCanada, the largest pipeline company in Canada, believes the
additional $5 billion capital mentioned by the producers to construct a new
pipeline from Alberta to Chicago is not needed. TransCanada believes the
alternative, to expand existing pipeline capacity to Chicago, the Pacific
Northwest and California, could be half the cost of a new line.
A state proposal for low-interest bonds for the pipeline could be
significant to some investors. Further, a proposed federal energy bill would
streamline permitting, and other federal incentives could include a tax
credit when natural gas prices fall below certain levels and loan guarantees
to lower project risk.
With retraining in the next two years, thousands of Americans can be put
back to work in good paying jobs building a gas pipeline.
With all these factors, the gas line is commercial today.
Why haven't the major producers announced a "go" project? Because they
are demanding a higher rate of return and more profits to make such a major
investment competitive with their worldwide portfolio. But I challenge this!
The North Slope leases these companies signed in the late 1960s do not say
these investments must compete with others. The leases require development
if a project is commercial. A rate of return exceeding 12 percent is
commercial! The Big 3 should proceed with a project or sell their gas at a
"reasonable price," as required in lease covenants.
What should Alaska do? First, seek out entrepreneurial leadership among
the pipeline companies and other investors.
Second, send a strong message to the majors that a "reasonable time" to
market our natural gas has passed (another lease stipulation). I favor a gas
reserves tax payable in 2009 if a pipeline project has not commenced by the
end of 2003. Let's give all parties a last chance. After that, it is time to
balance the potential gain with some pain, much as the producers often
demand "reward and penalty" contracts with Alaska contractors on the North
Time has run out. Alaska needs to do what other countries do. Until
Alaska offers "pain and gain," we will always be at the bottom of the
investment portfolio pile.
Lease covenants mandate development and marketing when a project is
commercial, and that threshold has now been crossed.
I say it's time for "Gas to the states in 2008!"
Ken Thompson is president of Pacific Rim Leadership Development. He is a
past president of ARCO Alaska Inc. and former ARCO executive vice president
for the Asia/Pacific region and global gas marketing.
February 28, 2002 (sic. below)
Senator Bingaman, Chairman
Senate Energy Committee
Thank you for the opportunity to testify on Energy Issues as they relate to
Alaska, rural and remote, and the United States.
I will touch on; 1) cost of electricity, 2) cost of fuel, 3) alternative energy
initiatives, 4) proposed gas pipeline and energy
implications, and 5) OPEC.
1. "99 utilities provide 195 Alaska villages with electricity. Virtually all
of them are totally dependent on diesel for their source of fuel. Very few
villages are inter-connected with one another. They are independently operated
and must provide fuel, maintenance and operations for their village. The small
number of people served and the small load adds expenses to the production of
power. The Rural Alaska Energy Plan, Phase I, states that "the average cost of
power in Rural and Remote Alaska is 25.4 cents per kilowatt hour, 3.7 times the
national average. The cost of power in the communities of less than 1,000
population is even higher at 32.5 cents per kilowatt hour, 4.7 times the
national average." This compares to the national average rate of 6.85 cents a
kilowatt hour." Quote from Alaska's DRAFT Energy Plan-Phase 1
I pay 19.1 cents per kilo Watt hour. I used 449 KW last month. This compares
with the my cost of electricity of .18 cents per KWH last year.
Diesel fuel is going up and we see no relief in sight for the foreseeable
future. We will need to convert to alternative energy sources at some point in
time and those alternatives must be explored and tested to be ready for our use
when the cost of diesel makes its use prohibitive for electrical generation
The only meaningful action that the state of Alaska has taken to address the
high cost of energy was the creation of the Power Production Cost Assistance
Program (PPCA) in 1980 and the Power Cost Equalization Program (PCE) in 1985.
These program recognized high power costs in Rural and Remote Alaska "due to the
cost of fuel, the geographic remoteness of the utilities, the number and classes
of consumers they serve, and the relatively small size of theutilities electric
load. The power production cost reduction received bythe utility would be
passed on to its consumers through lower electric rates."
In order to evaluate the alternative methods to provide meaningful assistance to
Alaskans for lower cost electrical energy and fuel, the federal government
should consider adopting the following nine criteria for developing a power
production cost assistance program:
1. The program must provide immediate assistance for the severely
impacted Alaskan and other rural electric and fuel consumers.
2. The program must reduce the current disparity between national
and state, rural and urban electric rates.
3. The program must promote the efficient use of generating
facilities and energy efficient appliances.
4. The program must promote the development and utilization of new
and more economical generating facilities.
5. The program must promote conversion to renewable energy
6. The program must ultimately become economically
7. The program must be relatively simple to develop and
8. The program must be operationally consistent with the intent of
existing energy related legislation.
9. The program must conform to the cost-of-service rate making
philosophy as approved by the Dept. of Energy.
The state of Alaska's Power Cost Equalization Program (PCE) has some
effect and we are very glad it is helping. However, according to the
Alaska Draft Energy Plan-Phase I, "despite a substantial subsidy from
the state, the average residential rates is still 2.1 times the national
average but that does not address the cost of heating fuel and the cost
of gasoline for our outboards and snowmachines and four wheelers that
are used for Subsistence purposes.
2. Cost of heating fuel in rural and Remote Alaska:
Heating fuel costs $179.00 for a 50 gallon barrel in many of our
Bristol Bay villages. That is $3.58 plus a gallon. Propane is $4.25
a gallon in contrast to propane in Anchorage at $1.89 a gallon.
Villagers are paying $2.75 a gallon of gasoline and have been doing so
for three years. Many villages are paying more. While Anchorage is
enjoying gas at the pump for $1.58 a gallon, their neighbors are
struggling to keep their outboard motor gas tanks full to go hunting for
Subsistence food for their tables.
Alaska is exporting virtually all of its oil and gas and is not
creating enough programs that would lower the cost of fuel for our Rural
and Remote villages.
Because bulk fuel owners are able to get their diesel fuel delivered to
Bristol Bay for $1.02 a gallon and we pay $2.58 a gallon at the pump, we
feel that we may not be paying a fair price for our fuel.
The state and federal governments need to conduct surveys on a regular
basis to make sure that our villages are getting their fuel at a fair
price. Our governments also need to make sure that our villages have
enough affordable fuel for our villagesd for next winter and subsequent
3. Alternative energy initiatives, including gas cap and oil, and coal
There are a number of alternative energy projects that are being worked
on in Alaska that would be of some use in bringing down the cost of
energy in the future. There is a wind energy project in Kotzebue, Alaska
that is displacing diesel. There is some hydro generated energy and some
work being done on finding geothermal energy.
Finding alternative energy in Rural And Remote Alaska does not only mean
displacing diesel which most of our villages use to generate their
electrical power. Alternative energy development should include finding
gas caps or oil reserves in Rural and Remote Alaska. Village people are
saying that they want to see all state, federal and private uplands
explored for small gas caps and oil reserves that could be a source of
lower cost petroleum products. Villagers are advocating for sensible and
orderly exploration for oil, gas and coal that is sensitive to
Finding new sources of oil and gas should not exclude all other federal
uplands in refuges, parks, and other currently restricted lands
belonging to all of the people of the United States.
In order for Rural and Remote Alaska to engage in viable economic
development activities, we must first have asecure, low-cost, and
safe source of energy other than diesel. That
source would include gas cap exploration in our Rural
and Remote regions of Alaska.
We urge the Energy Department to begin todevelop a strategy that
will outline a programof identifying potential gas and oil reserves
in close proximity to our villages in Alaska. We need a plan that
will begin drilling for gas thatcould support micro-turbines for
Another idea would take some of our Alaska's royalty oil and have it
refined into heating fuel and gasoline and have it delivered to our
villages at a cost we can afford. A federally and state sanctioned
Alaska Fuel Coop needs to be considered to coordinate these kinds of
projects in close cooperation with our village and regional Native
Other alternatives include tidal, geothermal, wind, solar, peat, hydro,
gas and coal for our potential use for energy
sources in Rural and Remote Alaska. There is no one quick fix for any
one region of our state but one of these shouldhave some practical
application for bringing down the cost of electrical energy. However,
the best project on the horizon for Alaska is the All Alaska Gas Line.
4. Proposed All Alaska Gas Pipeline and its energy implications:
In addition, the federal government and state must NOT give any
consideraton to any special "incentives" to the oil and gas industry
to make an Alaska/Highway pipeline that Senator Murkowski and
the Knowles/Ulmer administraion are espousing. The oil and gas
industry has deemed the Alaska Highway Gas Line "uneconomic"
at this time. The only project that makes sense for Alaska is the
All Alaska Gas Line proposed by Scott Heworth. He is the chair
of the petition drive that secured 42,000 plus registered voters
to place the All Alaska Gas Line on the November 2002, General
The All Alaska Gas Line is the line that would provide the most jobs
for Alaskans and other Americans, get new revenue into a severely
depressed Alaska state treasury, has the fewest permitting hoops
to go through, and helps secure the future viability of over 227
villages in Alaska by providing a long-term, low-cost, reliable
source of energy.
The All Alaska Gas Line could also be the answer needed for the future
gas needs of Anchorage and the Rail belt. The Cook Inlet reserves are
coming near their useful life and another source of gas is needed. The
35 Trillion Cubic Feet of gas stranded on the North Slope could be the
long-term, secure source of the Alaska Railbelt's energy needs. It would
also meets the needs of the West Coast of the US which suffered severe
energy shortages in 2001.
President Bush and many congressional leaders, including our own
Senators Stevens and Murkowski and Congressman Young, are deeply
concerned about the United States dependence on foreign oil. Many Alaska
villages are concerned as well.
Our dependence on OPEC nations for our fuel has a direct impact on our
high cost of electicity and fuel in Rural and Remote Alaska. As a
result, we urge our national leaders to move toward energy
self-sufficiency as soon as practictible.
Alaska's Native People are in favor of orderly exploration and
development for fossil fuels. But there is a concern that exploration
efforts may interfere with Subsistence hunting, fishing and gathering
activities. However, it is believed that with close coordination with
the Native people and their respective villages, these concerns can be
Furthermore, Alaska's Native people and other Native American Tribes are
among the most patriotic people in the United States. Native Americans,
including Alaska's Natives, have sent more people per capita in defense
of our country and we do not want to see the United States weakened by
failing to secure its energy needs. We are not only concerned about our
own energy self-sufficiency but ALL Americans as well. Our national
security is vulnerable if we do not solve our long term need for a
source of reliable and stable source of energy for our villages, Tribes,
and all Americans.
Like all Americans, we want to have a quality of life that is energy
secure in the future. As we look at how we can reduce our energy
demands, I would like to suggest the following:
a) That our nation consider adopting a 55 mph speed limit once again to
help reduce our gas consumption.
b) That our national government speed up development of fusion to
provide as another source for our energy needs.
c) That our government work diligently to develop the technology needed
to burn coal in an environmentally safe manner.
d) Begin an accelerated program to develop fuel cells for heating and
lighting our homes in Rural and Remote Alaska.
1) We need to make sure that our villages will have enough affordable
heating fuel for their homes each winter and subsequent winters until we
have found energy alternatives that will provide electricity and fuel at
an affordable cost without impacting our Subsistence way of life.
2) We must embark on an immediate exploration program to find gas caps
and oil reserves in close proximity to our villages in Rural and Remote
regions of our state.
3) We must secure funds to develop an energy grid for those villages
that could benefit from tying into the Railbelt Energy grid in Alaska.
4) We must secure funds that will allow us to develop regional energy
grids that will consolidate our villages and provide interties that will
connect our villages to help reduce the cost of energy.
5) We must begin the process of identifying the number of jobs that will
be needed for the All Alaska gas pipeline construction and
develop an Alaskan work force with the jobs skills needed to handle all
of the jobs that open up, including training for operating and
maintaining the the All Alaska gas pipeline.
6) In order for us to divorce ourselves from over dependence on OPEC oil
in our nation and diesel in our villages in Alaska, we must work on
immediate strategies to use our coal in an environmentally safe manner,
investigate all alternative energy development, and create programs to
develop fusion, fuel cells and other alternatives to generate our
future electrical power needs.
Nels Anderson, Jr.
Dillingham, Alaska 99576
Voice Of The Times,
(Published: February 21, 2002), A GAS PIPELINE . .
. In 2010
THE ASSESSMENT by British Petroleum that it will be 2010
before a natural gas pipeline will be in place in Alaska drew a lot of attention
from those who oppose constructing the line on a route that follows the Alaska
Highway. Said they in glee, "Ha! Ha! We told you so!"
Well, wait a minute. The prospect of another eight years
before a pipeline is in place isn't new at all. And the remarks by Dick Olver,
head of upstream operations for BP, didn't knock the highway route at all -- and
certainly was no endorsement of a liquefied natural gas project so beloved by
the anti-highway hucksters.
Putting all the pieces in place to finance, engineer,
design and construct a pipeline -- any pipeline -- puts the actual flow of
natural gas to market easily into a 2010 time frame. That's only eight years
away, and that's no time at all considering the magnitude of the project.
Olver was straightforward about this in a meeting last
week with analysts in New York. "We're not going to have a gas line until the
end of the decade or thereabouts," he said. "It might be in 2008, but it's
perfectly likely in 2009 and it could be 2010."
The financial risks are huge, as noted by John Browne, BP
Group chief executive.
With prices now in the middle of what was described as
"the normal boom-and-bust" cycle, Lord Browne said the pipeline "is not a very
good project at all."
And that's precisely the challenge facing the project, and
points out why it is necessary now to get everybody working together to clear
the hurdles -- the Legislature, the governor's office, the state's congressional
delegation, the producers and the community as a whole.
Government participation is vital, both locally and
Because of the immense nature of the project, and the
inherent financial risks of any venture of this size, the producers will be
unable to commit to it unless there is legislation to smooth over the volatile
price fluctuations that are part of the natural gas business.
Browne capsulized it this way: "It probably does need
something from the government to reduce the risk of what is a very large project
even for companies the scale of BP."
Getting all these complex ducks in a row will take a long
time. For the good of the nation, and for the enormous economic benefits that
will accrue to the state, we need to get started now.
2-6-02. Alaska Needs Leaders—Now! by Chuck Achburger, Common Sense for Alaska
The size of state government has to be reduced…
No formulas put forth have yet closed the fiscal gap. The governor acknowledged the gap then added another $170 million or so to it before proposing a first round of taxation to close the gap. And you wonder why the public is apprehensive.
First the $400 million he proposes has to be only the start. He makes no projections as to where the next $800 million will come from and that is only if government spending doesn’t increase. This is not leadership this is a sham.
Our Legislators must step forward and address this problem now. We are beyond the “soft landing” projected by ISER 10 years ago, this is going to hurt. We are not alone in this. Faced with a recession many states are having to downsize services.
Cutting the size of Government is going to hurt, it is going to have an impact on our economy. So will “random acts of taxation” impact our economy. Without certainty business in Alaska will suffer. This dartboard approach to taxation, where you attempt to raise a few million dollars here and there leads to that uncertainty.
Raising a couple of hundred million by the current suggestions coming out of Juneau only leads the citizens to wonder where our government will attack next, as our "leaders" roam our economy like wolves, to look for victims . They have told us they need $1.2 Billion so we know you will be back haunting our doorsteps looking
Without a plan and that means a plan that addresses a reduction in government what else can we expect.
2-17-02. Letter from ANGTL
President, Richard Peterson to Dow Jones Wire.
Your article on the Dow Jones Wire on POLITICS AND POLICY, "Senate Adds Measure
to Energy Bill Pushing Plan for Alaska Oil Pipeline" was passed on to me for
The political in group wants a gas line from Alaska, the fact that it does not
make economic sense is of little interest to them.
There is a alternative to a gas line. It is gas to liquids or GTL's. GTL's are
not new, they have been around since before WW II. The South Africans have used
the process taken from the Germans by the US since 1954. What do they produce?
a biodegradable, non-toxic synthetic diesel that burns cleaner and more
efficiently than natural gas in a diesel engine. Did you know that 70% of the
pollution in California comes from diesel engines.
A second advantage of GTL's is that they can be transported (batched) in the
existing oil pipeline from Alaska's North Slope to Valdez for transportation to
the lower 48. That's right, no new $20 billion pipeline for the political fat
cats, just using the existing oil line that has over 1 million barrels per day
of excess capacity.
Why would BP, Exxon and Phillips not want GTL's. First none have a commercial
GTL technology but others like Sasol, Shell and Mossgas do, but they are not on
the North Slope. Second and more importantly, major US refiners do not want the
US public to know that there are cleaner fuels out there as they collective
continue to fight the EPA as it reduces the sulfur level in diesel.
In 1926, Frank Howard, head of Standard Oil’s R&D (now EXXON) visits the IG
Farben (German) synthetic fuels pilot plant
Howard immediately fired off a wire to Walter Teagle, Standard Oil’s president:
- “Based upon observations and discussions today, I think that this matter
is the most important which has ever faced the company since the
dissolution. This means absolutely the independence of Europe in the matter
of gasoline supply”.
Walter Teagle, President Standard Oil NJ :
- “I had not known what research meant until I saw it [IG Farben’s
synthetic fuels pilot plant].”
Standard (Exxon) immediately purchased the rights to make synthetic fuels
from this process outside of Germany and boasted that each company agreed to
stay out of the other’s main fields of activity. (Farben became the largest
stockholder in Standard after Rockefeller)
– As one Standard official said:
- “ The I.G. are going to stay out of the oil business - and we’re going
to stay out of the chemical business”.
- Why didn't the US pursue GTL's like the South Africans after WW II.
In effect, the short-term political and economic interests of the 50's
and 60's helped to create the oil dependency we are experiencing today.
The US has enough raw material to make 100% of its gasoline and diesel needs for
over 200 years with existing technology. Our National Energy Policy has placed
low cost foreign oil ahead of US energy independence. But at what cost?. If
you think that $15 OPEC oil costs the US consumer $15, think again. Just as
9/11 showed us, the cost of sending petro dollars abroad cost the US hundreds of
billions of dollars beyond the price of crude. A US synthetic fuels program
isn't cheap but then all of the money stays in our country.
The Alaska Natural Gas To Liquids Company (ANGTL) does not own GTL technology,
we do not own the gas or coal reserves, we do not own the refineries or the gas
stations that sell the fuels. Our interest is "Energy Independence" for the US.
To learn more about GTL's see our web site at
310 K Street, Suite 200
907 264-6709 office
907 360-0909 cell
www.angtl.com web site
February 15, 2002, POLITICS AND POLICY Senate Adds Measure to Energy Bill
Pushing Plan for Alaska Oil Pipeline, By CAMPION WALSH WASHINGTON -- Senate
leaders have added a provision to broad-ranging energy legislation to require
the federal government to consider building a multibillion-dollar pipeline for
Alaska North Slope natural gas.
Private companies operating on the North Slope have said the project to carry
Alaskan gas to the lower 48 states is too expensive at current gas prices and
that construction costs are estimated at $15 billion to $20 billion.
The energy legislation introduced by the Senate's Democratic leadership Thursday
night contains a new section calling for the government to consider ways to
encourage the pipeline if private-sector companies don't proceed within six
months of the bill's enactment.
It would require the secretary of energy to study "the feasibility of
establishing a government corporation to construct an Alaska natural gas
transportation project, and alternative means of providing federal financing and
ownership (including alternative combinations of government and private
corporate ownership) of the project."
The bill calls for the energy secretary to consult with the Treasury Department
and the Army Corps of Engineers.
The initial draft of Senate bill 1766 from Senate Majority Leader Tom Daschle
(D., S.D.) already had contained substantially more support for the Alaska
gas-pipeline project than was contained in a rival energy bill passed by the
Republican-controlled House last August. The Senate is expected to debate the
energy bill when Senators return Feb. 26 from a weeklong recess.
The Senate bill countered Republicans' support for oil and gas drilling in the
Arctic National Wildlife Refuge with financial aid to get Alaska's huge but
remote gas reserves to market. The Daschle bill would allow federal guarantees
for 80% of $10 billion in loans for U.S. sections of a massive pipeline system
that also would cross Canada.
The Senate bill also provides a spur for hesitant petroleum companies to begin
working. It says the loan guarantees would only be provided if "applications for
certificates to move forward with the project are filed prior to six months
after the enactment of this [bill into law]."
The legislation also aims to remove regulatory and legal obstacles for a speedy
construction of the pipeline.
In addition, the bill would allow the Federal Energy Regulatory Commission to
use an expedited review process for applications to build the pipeline. The
commission would also be the lead agency for environmental reviews of the
project and face an 18-month deadline on the reviews. Additionally, the U.S.
Court of Appeals for the District of Columbia would have exclusive U.S.
jurisdiction for legal claims arising from the project.
Alaska's three top natural-gas owners -- Phillips Petroleum Co., Exxon Mobil
Corp. and BP PLC -- recently completed a yearlong study on the proposed
pipeline. They contemplated a pipeline that could carry up to 4.5 billion cubic
feet a day of gas, or nearly 7% of current U.S. gas demand.
The companies began their study when natural gas prices were at record highs of
nearly $10 a thousand cubic feet, but the subsequent decline in prices to nearly
$2 a thousand cubic feet left them skeptical of the project's economic
The Alaska government also has been looking for financial alternatives for the
project, which would boost state revenue since most of the discovered North
Slope gas is on state land. Earlier this week, Alaska Governor Tony Knowles
introduced state legislation to authorize the Alaska Railroad Corp. to issue $17
billion in tax-exempt bonds to finance a gas pipeline that partially follows the
2-6-02: Dear Voice (i.e. Submitted to Voice of the Times, copied to Northern Gas Pipelines):
I could not agree more that a Gasline is needed immediately to jump-start the Alaska economy.
However, the Alaska Highway route, the one the Oil Companies admitted they do not find economical, is the wrong project for Alaska and Alaskans.
It's cost, actually over $20Billion, is prohibitive without large Federal guaranteed price supports, tax subsidies and accelerated depreciation. The All-Alaska route to Valdez down the existing TAPS corridor is a cheaper, quicker, more beneficial route for Alaska at about $8Billion, including that big gas conditioning plant, 3 compressor stations, pipeline, and LNG facilities/terminal in Valdez, and it needs no Federal help whatsoever. It is a stand alone project. And the State could own some portion of it producing yet more direct revenues into our coffers. We can not own the Highway line. It's in Canada.
Senator Murkowski recently stated to the Alliance group that his Highway route brings only 3,500 jobs for Alaskans while Valdez brings 13,000 Alaskan jobs. And 500 permanent jobs.
Valdez is permitted. The Canadian Highway route is lacking many, many permits and still has over 10,000 parcels to be negotiated with land owners. How long will that take? And all the gas companies proposing to build the Canadian Highway route, including Enron, are now suffering deep financial troubles.
The Highway route, proposed at 4.0BCF per day would dump 30Million tons of new supply into the Midwest. Now what will that huge slug of new gas do to the price of natural gas, which closed yesterday at $1.98mmbtu (Henry Hub)? Drive it down to 50 cents? Then American/Alaskan taxpayers can bail out the big Oil Companies while our Governor proposes to tax all of us in various ways to make up the budget gaps? The Valdez project puts some 6 million tons into the worldwide markets, including our own West Coast, thus not affecting our domestic prices one iota.
That way too large 52 inch Canadian pipeline would tie up 80% of the 6 major steel producing countries resources just to manufacture all that pipe. It would virtually stop all other steel pipe production worldwide for 3 years.
And while all those Alaskans (about 100,000?) along that Canadian corridor get our gas, what about the half million of us in South-central? The Highway line brings us nada. Valdez has a spur, from Glenallen, right into Anchorage now, not later. Can we be smart economically just once?
Valdez could break ground in 2004 if our politicians, the Voice of the Times and the Anchorage Daily News would start supporting the All-Alaska route instead of the Canadian route.
Let's do build the one right project for Alaska. That is the LNG project from the North Slope to Valdez. The only route that makes any sense. It energizes all Alaska and all Alaskans.
Candidate for Lt. Governor
Dave, on some of your other thoughts or questions, if we take a long-term view - say 50+ years, or the life of the proven and potential gas reserves - I think what may most impact the future Alaskan economic health for businesses and families will eventually be the price of energy. This has been true for so many nations as we look at world history (and world wars). If forecasts for the Cook Inlet gas deliverability decline hold...but add in a major Cook Inlet gas discovery or two...Anchorage and the Kenai peninsula citizens and businesses may be paying natural gas prices that are two to three times higher than they are today within a decade. This will adversely impact personal home budgets, businesses and overall state corporate taxation. Lack of reasonably priced clean energy would greatly affect Alaska in 3-4 decades. Yet I suspect at that time, event without gas sales, Alaska will still have billions of dollars in the Permanent Fund account to assist in balancing government spending or else further reduce the size of government.
The issue is not just dollars, or revenues. It's revenues and energy that's needed for Alaska and for Alaskans.
I also believe that other significant natural gas supplies in Alaska will not make it to market over the long-term unless a line comes south...interior basin reserves that are literally not known because there is no reason currently to assess them without a way to market, coal degasification reserves in the interior, and gas hydrates along the whole distance from the North Slope to the Arctic Circle that may become viable with new technology. Fifty years from now, I believe Alaskans will look back and say the incremental resource and economic development value due to a line coming south far outweighed any hypothetical present worth calculation for an alternative route across the Beaufort Sea assuming any such route would even receive permitting approvals.
Dave, from what I'm hearing "on the streets" in Houston, I actually believe the pipeline companies find a line to the south is economic now! I hope the pipeline consortium makes a "reasonable price" offer to the producers soon and that a project progresses. And I certainly hope producers accept any "reasonable price" offer as the lease terms mandate they must market gas at a "reasonable time" and at a "reasonable price". I think any judge and jury would find that 25 years since the startup of Prudhoe Bay meets the "reasonable time" definition! All we're waiting on is a written "reasonable price" acceptable to the State of Alaska that would then allow the State to enforce its lease covenants if there is not producer cooperation. But I think at a "reasonable price", the producers will cooperate and this all can progress to the same level of cooperation being seen in Canada, thinking optimistically!
If the pipeline companies or the producers don't find the line commercial to the south, however, I'm for leaving the gas reserves in the ground for a future generation of Alaskans that will run short of energy. Again, it's not just government revenues...it's revenues and energy that interests me. Many nations' economic fates have been and are affected by 1) quality of people, and 2) energy availability. Development across Alaska means more high quality jobs with high quality people and energy.
----- Original Message -----
Sent: Tuesday, January 08, 2002 1:41 PM
Subject: Re: Personal
Like you, I personally favor as much steel in Alaska as we can get. Sometimes I wish I had the money to build it myself, then I could pay for it to go 'my way'. If others put up the money my influence is, understandably, more limited.
I am always curious about logic. Correct me if I'm wrong, but it would have been illogical for Mackenzie producers to go west as the longer journey to ultimate markets would have inflated transportation costs. Their route, for their gas, seems logical since it is the shortest route from point A to point B. As you point out, it happily coincides with the ability to easily access the gas.
It looks like Alaska producers are making a huge effort to make the highway pencil, even meeting with the pipeline companies as we speak. I hope that works. If it does not, sensitive to Alaska's best interests as we both are, do we dig our heels in and say "let it stay in the ground unless you build it my way"? The most compelling Alaska issue is our deficit budget spending and projection within 2 years of fiscal calamity: deficit spending + no savings reserves. It would seem that our bargaining position is at a slight disadvantage. In short, do you think a wise Alaska position under these circumstances is "leave it in the ground unless it goes the Highway"?
...an interesting intellectual and practical exercise, isn't it?
----- Original Message -----
Sent: Tuesday, January 08, 2002 12:39 PM
Subject: Re: Alignment of Interests in Canada
Dave, I note that the public/private process worked so well in Canada due to a very major fact the Canadians will be able to use their own natural gas for energy in addition to having economic development and government royalty and tax revenues. This is a significant fact that rarely gets discussed or even mentioned when some start pointing out that Canada is cooperating well with producers.
Had producers in the Mackenzie Delta proposed that a line be built offshore the Delta and taken west through the Beaufort Sea to a Prudhoe Bay gas processing plant then down a pipeline across Alaska to be shipped to Asia as LNG, I suspect there would not have been a very smooth public/private partnership in Canada. I would even venture to say that you would have seen provincial politicians and government bodies throwing up roadblocks to prevent the gas to be taken offshore into another country without them being able to use the gas for their own citizens' energy needs...even if Asian LNG markets were different in the future and would hypothetically have given the Mackenzie Delta higher netback prices.
Had the producers proposed that Canada could not even use their own gas for their peoples, I suspect the whole process would have been delayed by a few years. There would have been conflict and friction. Bottom line: why has there been cooperation - the Canadians are getting a deal that is revenues and energy! Alaska should command the same, in my opinion.
When a line decision is finally made that comes south across Alaska from the North Slope, I think Alaska at that time will become the role model for public/private partnership. As long as any party continues to foster taking our energy outside our land without allowing us the right to use it for our own citizens, I favor conflict and opposition as I'm sure Canadians would have had. Hopefully, however, the pipeline companies will become the leaders of a viable project to take Alaska gas south with a scenario that gives Alaska revenues and energy!
Just some personal thoughts. Ken
----- Original Message -----
Sent: Tuesday, January 08, 2002 11:24 AM
Subject: Alignment of Interests in Canada
Yesterday...we alerted readers that the "Mackenzie Delta Producers Group and the Mackenzie Valley Aboriginal Pipeline Corporation (MVAPC) have announced their intent to begin preparing regulatory applications needed to develop onshore natural gas resources in the Mackenzie Delta, including a Mackenzie Valley Pipeline." In today's report we provide ....
Today...we report that Canadian Federal, Territorial and Aboriginal agencies are joining to produce a draft cooperation plan leading to .... This development is receiving less media attention but is no less significant.
The two events represent a potentially historical alignment of interests in Canada among the key gas pipeline interests. The public/private cooperative process involved is to be commended.
1-16-02. ----- Original Message ----- (Numerous addressees eliminated due to space restraints)
Sent: Wednesday, January 16, 2002 12:55 PM
Subject: All Alaska Gas Line the Only Way to Go
To: Mr. Dave Harbour
Fm: Nels Anderson, Jr.
Subject: Alaska Gas Line ADN Compass January 16, 2002
Dave, you seem to think that the oil and gas companies own the state of
Alaska. Your Compass article of Jan 16, 2002 says that Alaskans do not
own the gas. That may not be completely true now but it may not be
the case IF BP, Exxon, and Phillips cannot get their act together and
join in with the 42,000 plus Alaskans who want gas sent down a
publicly owned gas line to Valdez.
If I am elected governor, I will give the major owners a deadline to get
the a pipeline built in line with the wishes of the people of Alaska,
not the wishes of the oil and gas industry. Alaska is made up of
independent, clear thinking people who know that it is in our best
interests to keep our gas in state and use it to benefit the maximum
number of people in Alaska in compliance with our constitution, Article
VIII, Section 2. After we meet our energy needs in-state, we can then
take stranded gas and export it to other markets on the west coast of
the U.S. and Pacific Rim.
The royalty gas belongs to Alaska's PEOPLE contrary to your statement that
Alaskans do not own the gas at Prudhoe Bay. Alaskans can get the funding
to build the gas line from their royalty gas, market that gas, meet our
in-state energy needs and export our royalty gas if it is not sold by
the Governor before hand. Alaskans have the right to claim and market
their royalty gas. Alaskans can also demand that the oil and gas
industry stop sitting on the stranded gas in Prudhoe. In my view, it is
use it or lose it. The message is: Oil and GAS Industry, Develop a plan
that sends gas to energy starved communities around the state and get
something going within three years or face the consequences
Alaskans have already answered the question you posed in your Compass
article. Alaskans will not favor a northern route. They also do not seem
to want the Knowles/Ulmer highway route either. The People of the state
of Alaska have sent a resounding message to the legislature,
administration AND the oil and gas industry that they want a gas line
built from Prudhoe Bay to Valdez. Are the oil and gas people going to
fight the will of over 42,000 plus people and expect to get anywhere
I don't think so. I have stated publicly that I favor an All Alaska Gas
Line from Prudhoe Bay to Valdez. I think that this route is less
expensive to build, environmentally safe, gives Alaskans more job
opportunities, sends more dollars more quickly to the state's treasury,
requires fewer permits, and can get on line sooner than the over the top
route or the Knowles/Ulmer highway plan.
It appears to me that the oil and gas industry is desperately flailing
their arms about confusing that behavior with meaningful action. When
will the oil and gas industry wake up, smell the oil and gas and get a
Prudhoe Bay to Valdez gas line going as soon as is practicable? I do not
think that will happen so the People of Alaska will take the bull by the
horns and create their own operating company, acquire the funding, train
and hire Alaskans, get the permits, build the gas line, market the gas,
and get the show on the road.
No more talk is needed. No more $100 million studies are needed. The
best way to go is the All Alaskan way.
Nels Anderson, Jr.
Dillingham, Alaska 99576
CORRECTED VERSION OF EARLIER MESSAGE SENT>
To: Candidate for Governor, Nels Anderson
From: Dave Harbour
Having visited with you in your home and known you for over 20 years I respect your desire to see Alaska achieve the best goals for her citizens. I am delighted to have your views and shall publish them on our web page but will take the opportunity here to respond to your specific remarks, as I know you would want.
I, knowing little, frequently find that difficult questions are easily answered emotionally but require more science, research and logic to answer with credibility. Developing northern gas for the benefit of Alaska, Canada and all of our fellow citizens is one of those tough ones requiring much diligence. Make no mistake: many valid stakeholders will have to reach agreement which requires a certain willingness to be open minded.
Your letter raises some of the issues from a fairly strong perspective and I shall do my best to join you in shedding light on them, as follows:
- I did not say in the Anchorage Daily News Op-Ed piece and do not think any companies own, or should own, or even could own Alaska. When in good faith, Alaska holds a lease sale and takes industry money the State has an obligation to live up to the lease terms as do the companies. That is why we should not refer to all ANS gas as 'our gas'. As a rule, the royalty gas share is our gas to sell in-value or in-kind when the producers produce gas. Even today in Juneau, the Commissioner of Natural Resources verified that Alaska could be legally challenged for attempting to unilaterally sell its ANS royalty gas to Netricity.
- Regarding your giving the producers a deadline for selling gas, as a friend I would advise you to consult with attorneys and read the lease documents. On that basis, could sound policy be determined.
- You again referred to 'our gas'. For it to be truly 'our gas', Nels, as governor you would probably want to create a state-owned oil company. If it ever made discoveries, the oil & gas could then be considered by Alaskans to be 'our oil & gas' and 'we' could market it any economical or uneconomic way the Legislature and you, as Governor, would agree. But if we want to have someone else shoulder the risk, then we'll continue to hold lease sales and must be obligated to respect the outcome, even with the rising and falling of emotional issues.
- Maybe I just understand the law a little differently from you, and as you are a former legislator I would be misguided to debate you on the law. But in your statement that, "Alaskans have the right to claim and market their royalty gas", I would suggest that is a little more complicated than the sentence suggests. Yes, under certain circumstances, we can sell a royalty share being produced, 'in-kind'. But if I ever have the honor of serving in your 'kitchen cabinet' I would advise that we need to carefully review lease terms in reaching a final decision. After all, while we both want the best for Alaska, we also want to be known for 'keeping our word' and for being 'a good place to do business'.
- I join the 42,000 Alaskans you referred to in wanting an LNG line. But I want more than you. I want a highway line, coupled with an LNG project and efficient transportation of ANS and Mackenzie Delta gas--high royalties. And, I want cheap fuel for every village, a petrochemical industry for Fairbanks and a guaranteed long term supply of gas for Anchorage. I also want us to balance a $1 billion annual deficit and don't want to pay taxes and want to have the Permanent Fund give me $2 thousand per year (i.e. preferably more) forever. I also want complete recovery of our salmon stocks, high fish prices and for President Bush to reverse President Clinton's destructive Tongass Forest and other natural resource policies. And, I want any evidence of an urban/rural divide abolished forever. However, I have found in life that my wants have sometimes exceeded my means. This is also what I have taught my children. In this case, we can and should politically advocate what we believe is true and honest, but we should not stoop to blackmail, to breaking contracts, to not doing our legal homework, or even to threats lest we diminish our investment climate reputation in a very sophisticated and competitive world.
On reflection, I think the difference between us on this issue is that I personally want more than you do for Alaska. I side with those who would seek that goal by being cool-headed, logical and relying on a great deal of economic and scientific expertise surrounding us in State government and the private sector. I believe government can support economic development but cannot do it independently. I also do not view the big companies as opponents: after all they are paying over 80% of our freight right now and have a right to make their own investment decisions. I believe in advocating with good reason what we believe to be the truth, keeping commitments, treating all with respect, approaching problems with diplomacy whenever possible, defending our rights when they are being illegally infringed upon and lastly...sleeping well at night.
Nels, I would rather be me than you on this one. I have worked in Alaska the majority of my career and at nearly 60 now don't have the axes to grind or conflicts of interest you do. I'm not running for public office, not working for government or big oil. I'm just doing private consulting jobs that please me and putting out an independent public service, gas pipeline web page that tries to treat all projects equally, with honor, in the interest of public understanding.
Therefore, I hope you don't fault an old friend for counseling good will and common sense and occasionally editorializing on public policy issues.
Northern Gas Pipelines, http://www.arcticgaspipeline.com/
----- Original Message -----
To: <email@example.com>; "PresidentRickHalford" <Senator_Rick_Halford@legis.state.ak.us>
Cc: (We deleted the many email addressees Mr. Anderson copied out of respect for privacy)
Sent: Wednesday, January 16, 2002 3:23 PM
Subject: Dave Harbour response to Nels Anderson's comments on his Compass
> Jan 16, 2002
> It is good to hear from you again. As I recall you came over to
> Dillingham to give me campaign money which I respectfully refused to
> accept. We have been good friends since we both know where we stand. A complete and open understanding of where one's interests are is very important to
> a long-term, amicable relationship.
> I will send you another email responding to the points you raise. I do
> not completely disagree with your assertions but I cannot for the life
> of me see how you can say you want more for Alaska than the 42,000
> Alaskans who signed a petition to get an All Alaska Gas Line built.
> Needless to say, you need to rethink your points and when the heat of
> the moment has subsided, you will probably see your way more clearly.
> Best regards,
> Nels Anderson, Jr.
> Box 234
> Dillingham, Alaska 99576
Natural Gas & Oil
IOGCC, 5/11 -13;
Newspaper Front Pages--WORLDWIDE
Our view of South Central Alaska's imminent Energy Crisis
Publisher's 2002 Editorials
magazine & newspaper articles;
Seattle Chamber of Commerce Speech, 5-8-02,