Front Page News

Northern Gas Pipelines, (Alaska Gas Pipeline, Denali - The Alaska Gas Pipeline, Mackenzie Valley Gas Pipeline, Alaska Highway Gas Pipeline, Northern Route Gas Pipeline, Arctic Gas, LNG, GTL) is your public service, objective, unbiased 1-stop-shop for Arctic gas pipeline projects and people, informal and rich with new information, updated 30 times weekly and best Northern Oil & Gas Industry Links on the Internet.  Find AAGPC, AAGSC, ANGTL, ANNGTC,  ANGDA, ANS, APG, APWG, ANGTA, ANGTS, AGPPT, ANWR, ARC, CARC, CAGPL, CAGSL, FPC, FERC, GTL, IAEE, LNG, NEB, NPA, TAGS, TAPS, NARUC, IOGCC, CONSUMER ENERGY ALLIANCE, AOGA,AOGCC, RCA and more...

2009 LINKS: FERC Reports to Congress, 1, 2, 3, 4, 5, 6, 7....; USGS Arctic Gas Estimates; MMS hearings: RDC, Our NGP, AJOC, DH, ADN, KTUU; Enstar Bullet Line: Map and News Links; ANGDA; Alaska Energy Forum; Prosperity Alaska

2008 LINKS: Shell Alaska OCS Study; Mackenzie Gas Project EIS; Join the Alaska Gas Pipeline Blog Discussion; Governor Sarah Palin's AGIA Links; 2007 ACES tax bill links; Department of Revenue 2007 ACES tax documents;  2007 ACES tax Presentations; 2007 ACES tax news; Alaska Gas Pipeline Training and Jobs; Gas Pipeline and Economic Development; Andrew Halcro; Bjřrn Lomborg; FERC's Natural Gas Website Links

WASHINGTON: 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), Tax Credit; See amendments, "Energy Policy Act of 2002";  "Alaska Natural Gas Pipeline Act of 2001 (Draft)" & Background Paper, 8-9-01;Alaska Legislature Joint Committee position; Governor's position; Governor's 10-Point Plan; Anadarko Analysis; 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 Commission, 1-18-01

ALASKA: 1-23-03, Governor Frank Murkowski's State of the State Speech; 2002 DRAFT Recommendations to 2003 Legislature; '02 Alaska Legislation; Alaska Highway Natural Gas Pipeline Policy Council; Joint Legislative Gas Pipeline Committee; 9-01 Alaska Models: Canadian Routes, LNG, GTL; HR 4 Story; Cook Inlet Supply-Demand Report: AEDC; Commonwealth North Investigation & Our Article; Report: Backbone; Legislature Contacts; 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 closes, 5-02; Betty Galbraith's 1997-1998 Chronology Our copy.

CANADA: 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, 5-13-02; 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: 4-02 & PPT; Gas Pipeline Cooperation Plan Draft & Mackenzie Valley Environmental Impact Review Board Mackenzie Valley Pipeline MOU Draft, 6-01; FirstEnergy Analysis: 10-19-01; Integrated Delta Studies; National Post on Mackenzie Pipeline, 1-02;Northern Pipeline Act;  Haida Nation v. British Columbia; Indian Claims Commission; Skeena Cellulose decision -- aboriginal consultations required, 12-02; Misc. Pipeline Studies '02

COMPANIES: Alaska Gas Producers Pipeline Team Newsletter, 7-27-01; APG Newsletter: 5-02, 7-02 & 9-02; ArctiGas NEB PIP Filing Background; NRGPC Newsletter: Fall-02;  4-02 ArctiGas Reduces Field Work; BP's Natural Gas Page; Enbridge Perspective; Foothills Perspective; Williams Perspective; YPC Perspective, 7-02

 MEDIA 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: Alaska Support Industry Alliance, Anchorage Chamber of Commerce Canadian Institute, Insight Information, Inuvik Petroleum Shows, International Association of Energy Economists, Resource Development Council for Alaska, Ziff Energy Group











Northern Gas Pipelines: Author's 2002 Opinion Page

This is the author's 2002 opinion page.  2001 opinions are here and the author's bibliography is here  See ANWR editorials here.

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.   On other pages, we provide opinion pieces from readers in Alaska and Canada.  To have your opinion archived here, email us.    -dh

12-31-02: "New Year's Eve Commentary"  Since 9-11-01 we have urged readers to place more emphasis on protecting northern oil & gas facilities.  North Americans are pretty good at reacting to crises, but long-term project security in our brave new world rests on prevention of terrorist activity....

12-28-02:  Security and Gas Pipelines

11-14-02: Why Gas Pipeline Legislation Died in 2002; How to Revive it In 2003

11-05 (Election Day): How 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!  Unlike 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 editorial here.)   Here are other supporting and opposing views.


10-16:  Compliments to Wicker, Woodruff, et. al.

10-5:  "Doing it Right" (Tax Policy)

10-3: Energy Bill Conference Amid Turmoil. (Energy Bill)

10-2: "Why?"  (On ARC's Persistence)

10-1: Intersecting Orbits. (Insight)

9-29: ANWR Band: Music for Conferees. (ANWR)

9-26-02: "Alaskans Must Bite the Bullet" (Fiscal Crisis)

9-25-02: Note:  Faithful readers know we truly support the work of all northern gas pipeline project advocates.  It is thus in a cooperative spirit that today's page represents hours of reviewing historical and current events in light of imminent decisions.  For whatever creative ideas these thoughts provoke, we are grateful.  For whatever criticism they generate, we can only fall back on our commitment to give you our best public service effort.  The next two weeks will be critical.  We ask divine guidance for all involved.  -dh  "For The President and The Prime Minister"

9-24-02:  "Commentary: A Chapter in the History Books"

9-13-02:  "Our Kyoto Opinion."

9-5-02:    "Where is Our Environmental Concern?"

9-4-02:    "Commenting on September: Time is Short and Stakes are High."

8-29-02:   "Let's Lay Our Cards On The Table", Anchorage Chronicle.

8-27-02:   "Moody's Outlook Negative On Alaska".

8-22-02:   "Learn From Experience or Repeat the Lesson."  Anchorage Chronicle.

8-15-02: "Who Will Build An Alaska Gas Pipeline?", Anchorage Chronicle.

8-7-02: "Trading volatility may be a new, post-Enron argument favoring federal gas price floors for U.S. & Canadian Arctic gas projects: stability at the lower end of price fluctuations and reimbursement at the higher end."

7-24-02.  "Don't Take World Competition For Granted."

7-20-02.  "Energy Bill Has 50% Chance."

7-15-02.  "On White House Meeting."

7-12-02: "Any hydrocarbon province which believes it can politically dictate terms to energy investors in a competitive world-wide market is likely to produce disappointing results for constituents."

6-27-02: "Like Alaska, Congress is Well Intended...."

6-7-02: "49 North", Far North Oil & Gas Review, Yellowknife.  Subscribe.

6-5-02: "U.S. Not Coordinated...."

5-16-02: Legislature Adjourns Minus Gas Pipeline Legislation.

5-15-02: "Next Generation Still More Likely...."

5-13-02: "If today's news below represents the 'big picture', we reluctantly conclude the next generation is now more likely to build an Alaska gas pipeline than this one."

5-10-02:  "49 North", Far North Oil & Gas Review, Yellowknife.

5-6-02:   "Fiscal Clarity Improbable This Year."

4-16-02: "U.S. Can Ill Afford Alienating Closest Friends."

4-06-02: "Investors are Watching"

3-30-02: "ANWR: Push-Pull Polls"

3-28-02: "Arctic Gas Pipelines Are Only Part of the Big North American Picture"

3-28-02: "Truth Is Stranger Than Fiction"

3-26-02: "Gas Pipeline/Softwood Statesmanship"

3-22-02:  "Stroke of the President's Pen"

3-14-02:  "Caveat Investor"

3-12-02:  'Tinkering with Mother Nature and Private Enterprise

2-05-02: "What is the best way to commercialize North Slope natural gas?", by Dave Harbour, Northern Gas PipelinesSee opposing editorial here.

2-05-02.  "It's My Gas!"

2-01-02.  "Where Would Alaska Get the Money?"

1-16-02.  "Alaskans should continue advocating their desires, but recognize their limitations."

1-07-02.  "Fiscal crisis impacts gas pipeline."

2001.      See earlier author editorials here.

*     *     *

5-6-02: Fiscal Clarity Improbable This Year.  Pipeliners will require fiscal clarity in Alaska in addition to Congressional action discussed herein at length.  Gas tax and royalty stability applies directly to gas pipeline decisions.  More indirect but of no less importance to large investors will be Alaska's commitment in dealing with its $1 billion/year deficit.  With only a few days remaining in the legislative session, the Governor and lawmakers have precious little time to resolve the budget crisis and affirm the fiscal responsibility of state government.  Absent action now, a special session may be ahead.   -dh)   

4-6/7-02 Weekend Updates: Sat. 00:20, 12:46, 13:27, 14:14, 20:13, 23:23; Sun. 01:04,12:43 ET- Juneau Empire Op-Ed by Ray Metcalfe (Photo)-In 1974, Saudi Arabia established "OPEC-Terms," a tax equaling 85 percent of the profits the oil companies received from the sale of OPEC oil, plus a 20 percent royalty. ...  Had our oil tax been what should have been over the past 25 years, Alaska's Permanent Fund, and your dividend would likely be three times what they are today.... Tax oil not me!

"Investors are Watching"

The reason Northern Gas Pipelines has continually linked Alaska state budget issues to gas pipeline issues is highlighted above.  What oil wealth Alaska enjoys today results from tax and regulatory rules established in the past.  The editorial (above) in some cases equates tax policies of monarchies where oil & gas are produced in huge volumes near tidewater locations, with North American private companies competing in a free market to transport oil and gas from remote areas in harsh climates to tidewater through hundreds of miles of pipelines.  Based on certain financial assumptions, Alaskan investment occurred.  Were those assumptions more rigorous and the tax climate less attractive, companies could have made different investment decisions.  Knowing for nearly 30 years North Slope production would decline, leaders (including the Op-Ed writer, a former legislator and candidate for governor) and greedy constituents have taken some but insufficient steps to defend against fiscal calamity.  The state is spending about $1 billion/year more than it takes in.  The savings accounts funding the deficit will be depleted in two years.  Nero fiddles while the fiscal chasm approaches.  Those with current investment in the state and those considering Alaska as an investment destination are watching, concerned.  More and more respected economists are warning of the risks of investing in Alaska.  The Op-Ed writer quoted above, represents a mindset that has already taken seed and could become more widespread: "We can't solve our budget challenges, so let's be more like Arab oil barons, correct this inequity and tax what's left of Alaska's oil patch to make up for our own deficiencies.  Establish a gas reserves tax.  Increase severance, income and property taxes. Never mind stability.  Never mind investment climate.  Never mind the free market.  Never mind establishing rules and respecting them.  Tax oil not me.  Never mind the future."    Northern Gas Pipelines urges leaders in Canadian provinces, territories and First Nations to carefully study the Alaska model.  Too much dependence on any cyclical industry can surface the baser human survival instincts when production and demand cycles turn lower.  By 2005, will Alaska have kept implied promises to its investors and solved its fiscal crisis through creativity and--if necessary--sacrifice?  Investors are watching and Alaska's new generation will pay or profit from today's decisions.  {Thanks to readers for editorial comments....-dh}   *  Yesterday's suggestion by Alaska's Natural Resources Commissioner that the state is open to establishing tax certainty for pipeline investors jumps higher on the priority list in wake such editorial comment.  It also begs the question that, "If tax certainty is justified for gas pipeline investors, why should it not be expected for other  investments?  Wouldn't northern citizens prefer to be known for fiscal responsibility than as fiscal risks?  -dh)


"ANWR: Push-Pull Polls"

Coverage by MSNBC of the USGS Report on Wildlife in the ANWR Costal Plain contains another poll 'opportunity'. Our informed readers may vote at this website address:  This is a classic 'push/pull' poll; by providing selective headlines and inaccurate photos editors build the case for a 'no' vote.  Title of this 'objective reporting' and poll is, "Arctic refuge drilling risky".   Who would want to 'drill' the musk oxen (huddled pitifully together against human attack) and Brooks Range mountains (that would be totally unaffected).  Who knows that the ANWR work translates to an environmentally sensitive production area of 2,000 acres of 19 million ANWR acres?  Who knows that exploration would be in winter months when caribou and other migratory species are absent?  MSNBC's headline should read, "We support dependency on foreign energy imports and urge reconciliation with Iraq."  Bad outcomes are cultivated when good men and women do nothing.  -dh  (Further Notes: We do not object to any citizen opposing development on aesthetic grounds.  We do oppose promoting anti-development agenda for political or fundraising gain when facts are not used or misrepresented and energy security is at risk.  We hope readers appreciate that unlike MSNBC and some other media, we identify editorial comment and do not disguise it as an objective headline or poll.  Please review the original  USGS Report on Wildlife in the ANWR Costal Plain and cover memorandum, indicating that depending on the scenario, environmental effects could range from low to high.  Certainly, regulators would not permit a 'high impact' scenario and knowledgeable readers know the purpose for such studies is to help regulators identify how to mitigate or minimize environmental effects.   It further states that the scenarios used by the authors did not necessarily correspond with the {extremely modest} development scenario which Congress is now considering and that further information will be produced within two weeks.)

3-28 Updates: 00:08, 03:30, 04:23, 05:00, 12:15, 13:17, 14:33, 16:54, 17:22, 19:51 ET- Focus On The Big Picture: Softwood Tariffs & Gas Pipelines, (Reference: News stories here.)

Arctic Gas Pipelines Are Only Part of the Big North American Picture

All of us agree in principle that the best individual decisions are made when we understand the 'big picture'.  We all subscribe to 'not making a decision in a vacuum'.  In practice, however, policy makers are pursuing Alaskan, Provincial, Territorial, Canadian, U.S., gas pipeline, softwood export and ANWR issues fairly independently.  Ultimately the issues will be joined to one degree or another and the sooner policy makers realize that and act swiftly on it, the better chance we all have for returning to an atmosphere of cooperative interdependence which has served Americans and Canadians so well until now. 

Principal issues to be resolved in the interest of joint gas pipeline projects, include:

  • Gas Pipeline Routing.  Alaskan leaders desperately want an Alaska Highway routing, as do Yukon officials, and are facing huge financial challenges requiring new revenue.  NWT and Canadian/U.S. federal leaders want a free market routing decision.  We don't yet know what some key private sector players want but must especially respect the final judgment of potential investors.  Aboriginal First Nations indicate support for development but not all agreements are in place.  Recent Canadian court decisions expanding Aboriginal sovereignty have introduced new elements of uncertainty (i.e. Haida and Treaty 8 Tax decisions).  (Photo-Enbridge map overlay)

  • Tariffs.  The U.S. government is under constituent pressure to protect jobs and by its action has put the Canadian government under similar pressure.  Constituent noise and anguish will not die down until the issue is resolved and, until it is, Canadian softwood sector advocates may pressure for employing retaliatory tools, including gas pipeline leverages that could possibly affect project economics.  The issue may grow to include other products and trade issues if discord is not soon resolved.

  • ANWR.  The U.S. administration supports a modest 2,000 acre development in the 1.5 million acre coastal plain area of a 19 million acre refuge.  The Canadian administration opposes it.  Approval of ANWR could make North America, as a whole, less dependent on foreign imports and could result in additional throughput for a gas pipeline.

  • Gas Pipeline Fiscal Clarity.  The softwood tariff issue has demonstrated that unexpected issues between neighbors can obfuscate project economics now or later.  Accordingly, the big picture should include the assurance of gas pipeline fiscal clarity in Alaska, Canada, the provinces and territories, First Nations and the Lower 48.  Effort should be made now to remove from the table any future potential for disturbing project economics once steel is frozen into the permafrost and gas is flowing.

As one non-omniscient observer, Northern Gas Pipelines will at least open the dialogue by suggesting that the above issues must be resolved by international agreement or by amending existing ones.  For the U.S. Congress to resolve the gas pipeline issue this Spring without regard to the outcome of the other issues is to work in a vacuum, however well intentioned.   Accordingly, we respectfully suggest the following:

  • President Bush and Prime Minister Chrétien to appoint a temporary "North American Trade Cooperation Commission"

  • Mission of the Commission: to investigate omnibus compromise and resolution of the above issues in a joint recommendation to their respective governments.

  • Co-Chairs of the Commission, appointed by their Chiefs-of-State would lead the effort.  One thinks of experienced, respected diplomats like Henry Kissinger and equally qualified Canadian statesmen, unbiased by current events and dedicated to North American unity.

  • Commission members could include objective, distinguished and qualified representatives from both countries: Federal energy/Aboriginal/northern affairs executives, Parliament/Congress, economists, energy experts, trade representatives, NEB/FERC, retired judges.

  • Operations.  On a six month fast track, the Commission would organize, investigate, take testimony, form draft recommendations, resolve differences, and present a single final recommendation supporting its mission.

Alternatively and more simply, we would prefer to see President Bush and Prime Minister Chrétien meet in a private place with their advisors, reach agreement, and quickly sell a unified view of the 'big picture' to the Parliament and to Congress.  The innocent child in us states, "ignore the problem and it will go away anyway."  The experience in us teaches, "confront and resolve the problem while there is still time; wasted effort is better than lost opportunity".  The pessimist in us asks, "what if we create a bigger problem than we're trying to solve?"  The optimist within replies, "we can reasonably predict disaster with no action; by trying and communicating, we have hope."    -dh

3-26-02:  (Reference: News Stories; PNA article by Gary Park, added 4-8-02)

Gas Pipeline/Softwood Statesmanship

Today we should focus on new developments in the US/Canadian softwood export/tariff dispute, discussed in these reports during the last few days.  In private email with friends in both countries recently, we have commiserated that the intense cooperation needed for construction of Arctic gas pipelines could well enter a new phase.  The current, myopic phase is, "What's in it for Alaska?";  the upcoming phase stimulated by bold U.S. actions may well be, "What's in it for Canada?".  To date, Canada has courageously supported its southern ally in the War on Terrorism, advocated free market principals for pipeline projects and fostered prodigious oil & gas exports to America.  It has exhibited none of the clamorous saber rattling pipeline policy so glamorous in Alaska.  Neither have we heard Canadian rumors of gas pipeline taxes, legislative mandates or add-on tariffs for Alaska gas.  While we have respected this mature approach, many have taken such good-will for granted.  The only 'fiscal clarity' concerns which potential, gas pipeline investors have mentioned to date apply to Alaska.  Ultimately, both governments may have to define and mandate 'fiscal clarity' at Federal and local levels.  We are sorry to see the outstanding relationship of these two largest trading partners threatened.  It is time for the two Federal governments to communicate and for statesmanship to prevail over politics on all fronts.  Absent action at the highest level, the option of discord could usher in a nasty new atmosphere created by government, founded on selfishness, not deserved by North American citizens, but which we are now forced to contemplate.  -dh


"Stroke of the President's Pen"

Last night the ANWR-adjacent "Northern Route" for Alaska North Slope gas hit a 3rd strike as we near the last inning.  The U.S. Senate unanimously reaffirmed a ban on 'over the top' routing as had the House earlier in H.R. 4, also mirroring Alaska law which rejected the route last year.  Assuming final passage of an energy bill this year, near term success of an Alaska gas pipeline now depends more heavily on enacting taxpayer-supported incentives than on fundamental project economics and marketplace competition.  Republican lawmakers seem unusually comfortable in this role while the ban strategy also complements Democrat and environmental ANWR positions.  The high-stakes outcome in the last inning later in 2002 will significantly impact Alaska's fiscal crisis and countless Canadian and Lower 48 constituencies with the stroke of the President's pen.  -dh  (Note: "Last night's action includes new provisions and re-enacts and rewrites provisions approved in earlier debate, including the northern route ban provision,"  Chuck Kleeschulte, in the office of Senator Murkowski, told Northern Gas Pipelines this morning.  We should have the new Title VII language available for your downloading later today.)

3-14-02:                                                 "Caveat Investor"               

Northern Gas Pipelines wishes for all pipeline advocates to be successful; we think the tried and true path to that end is in the marketplace. The timely and informed Chronicle piece above contains more fact than opinion and may reach receptive Congressional ears--as the U.S. Senate debates energy bill issues into next month--at the expense of an Alaska gas project.  While some of the facts presented are arguable, we predict the logic will be explored by other editorial writers and interest groups in days to come and could threaten the desire to free stranded Alaska North Slope gas this decade, wrecking state budget hopes as well.  This is so because well-intended Alaska leaders are bravely rejecting all pipeline route proposals but the Highway even while confronting fiscal insolvency (i.e. statements like, "...over my dead body...." come to mind).  If, as the editorial writers claim, a feasible Highway project can only proceed with taxpayer support and if taxpayers balk, Alaska will be left with fewer options as it comes to face to face with a dark fiscal destiny by 2004 (The phrase, "Re-establish the old personal income tax and quadruple it to make up the difference," comes to mind) .  The  Oligney/Economides editorial criticism could be overcome when route proponents announce the project will move ahead but we are told by potential investors that such an announcement must follow  a.  acceptable Federal expediting legislation; b.  resolution of Alaska fiscal clarity issues; and c. identification of an economically viable project (which is a primary point of contention).  None of the reasonable conditions has been met and if item 'c' depends on a gas price floor guarantee, the outcome is at further risk.  We do not share the mirth of many bystanders who are amused at Alaska's 'take it or leave it' bravado.  We do share the concern of some that free enterprise in Alaska is so seriously challenged as politicians seek boldly to direct private enterprise investment decisions.  We have even heard from some pipeline companies and contractors who could benefit by a government mandated routing that should the precedent be set their own project could experience future political challenge once steel is in the ground and hostage to hostile governance.  We fear that when government is emboldened to manipulate and dictate free market decisions in the professed interest "of the people", it is tricking the people into allowing the escape of freedom.  We fear the "land of opportunity" could become a land of government dictate and hope it never does.  We fear for the legacy of current leaders and for the future of our children that in such an environment investors could, indeed, beware.     -dh  (Reference to 3-14-02 news stories)

3-12-02:  'Tinkering with Mother Nature and Private Enterprise'      

Please note that the proposed well head price floor guarantee for Alaska gas has the attractive logic of providing tax credits at a time when consumer prices are low, seeming to justify Federal intervention.  Taxpayer and consumer classes of citizens are so closely aligned that Congress could conclude such market manipulation is appropriate in the face of Mid-East energy dependency.  But, giving Alaska gas an advantage brings new Arctic gas into the Lower 48 pipeline transmission grid, softening prices for Canadian and Lower 48 gas producers and pipelines.  Since government officials are attempting to mandate gas pipeline routing, they may be backing themselves into a position of having to provide Federal guarantees for a project investors have, under today's gas price and project cost scenarios, considered not feasible.  This strategy seems to have the support of environmental groups hoping to trade an Alaska gas pipeline for ANWR but may depend on classes of taxpayers and lower 48 pipeline and gas companies not rising to organize an opposition movement.  (Our commentary refers to March Congressional Action seeking to amend the Senate Energy Bill by providing certain gas pipeline incentives.)


Alaska Oil & Gas ReporterAlaska Journal of CommerceAlaska Oil & Gas Reporter

Feature Articles



Breaking News

Cover Story

North Slope

Cook Inlet



Natural Gas






About us

Contact us

Advertise with us





Field Updates






Industry News


Industry Directory

Special Section - Super Techs:
Alaska's Top Processing
Industry Professionals

Email Newsletter

Palm Pilot Delivery

Letter to the editor







Web posted Tuesday, February 5, 2002

Energy Talk: What is the best way to commercialize Alaska North Slope natural gas?

Most Alaskans favor highway route with LNG branch to Valdez

By Dave Harbour
Special to the Alaska Oil & Gas Reporter


photo: editor_comment


Dave Harbour

File photo

Well more than half of Alaska's residents, according to at least one poll, favor marketing Alaska's gas via a pipeline to an export LNG terminus in Southcentral Alaska. Many of us believe that even if it didn't make a dime of profit for companies or the state, this routing would provide other economic benefits: access to North Slope gas in-state, an army of construction jobs, much contracting opportunity and long term economic development along the right of way.

Alaska's political leaders and many of us also see value in an Alaska Highway route for the gas, as it would provide many of the benefits above.

Some envision a combo-project, with an Alaska Highway pipeline moving the bulk of gas reserves and a branch coming down to tidewater, feeding an LNG project.

Several Alaska voices have suggested that with coming federal clean fuels incentives, Alaska could best market gas by converting it to "clean diesel" using increasingly economical gas-to-liquids technology. In that form it could be shipped down the trans-Alaska pipeline system with the oil, avoiding all the political squabbling over gas pipeline routing.

Some see merit in a northern route that might maximize financial benefits to the state. At least one source claims state taxes and royalties could be as much as $200 million-$300 million per year more than a competing project would provide: about the amount that could be raised with a new personal income tax.

A voice in the wilderness or two have hinted that a three-four year construction boom is not nearly so valuable to Alaska as the volume of tax and royalty receipts over the 20-plus year life of a gas project.

In short, many of us have evolved into North Slope gas marketing experts, have developed an opinion and wish to not be confused by more facts. In fact, our minds are closed and if you challenge us we're liable to call you names and threaten social reprisal.

When asked to write this piece, my first reaction was, "Hey, I'm not an expert on this subject." Indeed, I'm disqualified from expertise on how to market North Slope gas for a couple of important reasons:


  • I'm not an engineering, financial or environmental expert and don't have the money or interest in hiring those with such expertise to advise me.


  • I'm not the owner of the gas. Well, you could say the state of which I am a citizen owns it. But to be honest I'd have to admit that on tracts in question, we leased "the exclusive right to drill for, extract, remove, clean, process, and dispose of oil, gas, and associated substances" to oil and gas companies who agreed to pay a bunch of lease sale dollars up front and then risk more exploration dollars. As part of that shrewd deal, in addition to collecting dollars, we preserved the in-kind or in-value ownership interest in one-eighth of the gas as it is produced. However, we did not retain ownership in seven-eighths of the produced gas or the decision on what route a gas pipeline would ultimately take.

    So, where does that lead me? Recognizing what I don't know, maybe I should inventory what I do know:


  • In a free country we enjoy free speech. So let us advocate our wants to our hearts' desire, hopefully with good will; we have the freedom to express our wants wisely or foolishly.


  • This is a land of ancient Native and later pioneers. After depleting its Prudhoe Bay exploration budget, ARCO in late 1967 agreed to drill one more hole. Without undertaking that risk, we'd not have had the famous 1969 Prudhoe Bay Lease Sale and the resulting development Š at least not when or on the scale that it occurred. And, we'd not then have had the oil pipeline incentive for passage of the Alaska Native Claims Settlement Act of 1971.


  • To have an exciting, prosperous future, we need more modern pioneers willing to take such risk and they need to know their contracts and investments will be respected.


  • Lastly, America has learned through trial, error and the mistakes of others that the free enterprise system is best. That system can only coexist with the rule of law, including contract law.

    My conclusion is that the best way to market Alaska's North Slope gas is to let free enterprise do the work with traditional government oversight. While some are tempted to give government a bigger role, that path is loaded with traps and snares and can only lead to an unhappy destination. Let's express our opinion but respect our contracts. Let's advocate our emotional objectives but be thankful for those willing to risk billions and encourage them. Finally, if we wish to change the rules under which private enterprise operates, let's change the law prospectively, not retroactively.

    Reputation and integrity count. In this highly competitive and sophisticated world many important eyes are watching. Whatever path we choose, we can be sure universal laws of cause and effect will reward or penalize the coming generation for the acts of this one.

    Dave Harbour, formerly employed by government and industry, is a private consultant. He operates a public service Web site: Northern Gas Pipelines,

    E-mail story to a friend
    Printer friendly format


  • © 2001 The Alaska Oil & Gas Reporter and Morris Communications Corp.

    "IT'S MY GAS!"  (Refers to news, 2-5-02)                

    Northern Gas Pipelines respects all elected leaders and project proponents; likewise, loyal readers know we hopelessly love fact, reason and logic.  We favor all northern gas projects, faithful that private enterprise and government regulatory process will produce the superior result.  We note the emotional good intent in words like, "Everyone must remember that this gas lies beneath the State of Alaska and belongs to the People of Alaska,"  and are anxious to find the origin of this 'fact' since 'everyone' is urged to believe it.   Several readers (i.e. producers are not among them) have asked Northern Gas Pipelines to supply the legal basis for such statements--also made by other elected leaders--as the State owns just 1/8 of the gas produced and lease documents do not stipulate a routing or prohibit a routing for that 1/8 or the remaining 7/8.  We shall continue looking.  After all, if one's lease sale terms proscribed what route he would use to move any oil & gas developed, he might well have offered lower bonus bids in the first place, forged different partnerships, or not bid at all.  We are sure documented authority or lease terms of which we are unaware exists, since contract violations could otherwise invite fairly embarrassing if not serious legal/financial implications for a state already operating with an approximate $1 billion/year deficit.    From our limited vantage point we envision progress in supporting Federal price floor* and expediting legislation; we see dangerous precedent for free enterprise investors in Alaska when government seeks to impose retroactive oil and gas lease agreement transportation route mandates (i.e. affronting 'fiscal clarity' & 'investment climate' goals.).  We'd love to see maximum, positive economic impact in Alaska and Canada; we'd also wish government not to become arrogant, thinking itself omniscient, omnipotent and socialistic enough to tell private enterprise what northern projects to build.  The argument regarding 'environmental risk' may turn out to be true; but science will tell us, not elected officials (See the NNS story below; if results are true, industry could have to modify or dispose of certain projects).  Unsubstantiated environmental risk charges regarding a fairly benign buried, refrigerated gas pipeline serve only to challenge one's credibility--except with environmental extremists--and fan fundraising flames for anti-ANWR advocates.  The permitting process will stop environmentally unsafe projects in their tracks.   Rational, due process, regulatory control of projects is the lawful system elected officials have constructed.  Emotional political rhetoric undermines deliberate, regulatory service and serves in the long run to repel what the well intended politician seeks: prosperity for his constituents, freedom for future enterprise and the rule of law.   {* A $1.25 wellhead price floor, provided by taxpayers when consumer prices are conveniently low, so substantially decreases the risk of a more expensive project that that it likely makes moot the unseemly effort required to prohibit a more efficient, politically unpopular route.  However, a price floor then embraces vast new consumer and taxpayer constituencies who will also desire the most efficient movement of Arctic gas.  One could envision a new stakeholder group organizing their own message in 2002, "My way or no way", positioning an entire nation against its largest state.        -          "Actions produce reactions."  "Experience is a dear teacher...."}   -dh)     *    Anchorage Daily News, by Liz Ruskin, Washington- ... The Foothills Pipeline Co. and its partners, who have a 25-year-old franchise to build a line following the Alaska Highway, are no longer opposed to new federal legislation the producers want that would promise speedy permitting for another applicant, meeting participants said. Until recently, the pipeline companies didn't want new laws undercutting the unique rights that Congress granted them in 1976....     *      OGJ Online, by Maureen Lorenzetti, Washington-Sen. Frank Murkowski Monday said he wants federal legislation directing North Slope producers and pipeline companies to build an arctic gas line paralleling the oil pipeline to Fairbanks and then the Alaska Highway....     *          Northern News Services, by Lynn Lau, Yellowknife - Researchers mapping the ocean floor around Tuktoyaktuk are investigating a natural phenomenon that may affect the construction of a proposed pipeline from Alaska.  Every year, drifting sea ice cuts into the ocean floor, creating gashes or "ice scours" in the ocean floor. Steve Blasco, a marine geologist with Natural Resources Canada Geological Survey, and his team are working to find out how deep those gashes run, and where they are most likely to occur.  In the first year of the five-year project, the group collected data around Richard's Island for three weeks last August. Richard's Island is the site of a potential oil drilling project. Blasco says initial data show that the gashes may run as deep as four metres....  (And here, NNS presents a roundup of chamber of commerce activities/priorities: Norman Wells, Fort Simpson, Fort Smith, & Kivalliq.

    2-1: (Refers to 2-1 story.)   "Where Would Alaska Get the Money?"

    Northern Gas Pipelines thanks Deputy Commissioner of Revenue Larry Persily for his cooperation and is pleased to provide our readers with a complete report, available for downloading here.  The Department completed this assignment with typical professionalism and it will be exceptionally useful to all students of northern gas pipelines.  *  Meanwhile, Alaska's  legislature is locked in the conundrum of resolving a plus/minus $1 billion/year deficit foreseen 20 years ago.  There are ironies:  One marvels that a state trying to steer clear of fiscal crisis would appropriate precious resources to study a multi-billion dollar government-funded pipeline investment.  At the same time, some state leaders are promoting new taxes and increasing dependence on an industry already relied upon for 80% of government expenses as they decry "dependence on oil income" and resist taxes on constituents.  Finally, a fiscally challenged state investigates ways of having what may be the only 'state owned' pipeline in North America, while not not enacting legislation to support companies willing to privately finance an economic gas pipeline project .  "Truth is stranger than fiction."  "Actions produce reactions."   "Experience is a dear teacher...."  -dh

    1-30: Fiscal Uncertainty?

    Harbour Op-Ed
    Compass - Anchorage Daily News

    By Dave Harbour

    (Published: January 16, 2002)

    Canada's goal of building a Mackenzie Valley gas pipeline seems within reach. Producers want to market more than 6 trillion cubic feet of Mackenzie Delta gas. Northern aboriginal groups want meaningful participation. The federal government wishes to monetize stranded gas and enhance northern economic development. The Northwest Territories government is executing a long-term vision of prosperity.

    Last week, parties moved closer to their shared goal with two announcements.

    Delta gas producers joined the Mackenzie Valley Aboriginal Pipeline Corporation to begin preparing applications to develop Mackenzie Delta gas and build a pipeline.

    Agencies of the federal government, Northwest Territories and Aboriginal First Nations released a draft "Cooperation Plan" outlining how they would coordinate response to a gas pipeline proposal.

    Today, northern route proponents plan to file a preliminary information package with Canada's National Energy Board.

    There's not unanimous support for the project within the aboriginal community and terms of both the producer-aboriginal agreement and government processes remain to be finalized. The good news is that Alberta projects will demand most of the Mackenzie gas, little affecting the Lower 48 market for Alaska gas.

    Alaska's gas pipeline goal lags behind Canada's. Alaska's leaders support a southern route (Alaska Highway) for the gas pipeline. A producer group has completed a year-long, $100 million-plus study to determine the feasibility of both northern and southern routes for 35 trillion cubic feet of North Slope gas; individual companies are studying the results. Polls conducted by a group favoring a liquefied natural gas project show a majority of citizens favor "someone" investing in that project. Meanwhile, gas-to-liquids technology becomes more economic. It could ultimately provide an alternative: converting North Slope gas to "clean diesel," moving it down the oil pipeline to Valdez and on to California.

    Where is wisdom and how can Alaska develop a common goal?

    Alaskans should continue advocating their desires, but recognize their limitations. Alaskans do not own the Prudhoe Bay gas: The companies purchased leases from Alaska granting the right to find, develop and market the gas. The producers' principal obligation is to pay taxes and royalties or royalties-in-kind on produced resources. The state retains important permitting authority in developing rights-of-way. In this give-and-take process, government and industry will find it in their long-term interests to work cooperatively.

    Producers have labored to make the longer, southern route economically feasible, but the jury is still out. Last week, Alaska Highway Project gas pipeline companies were in Alaska quietly visiting with producers and state officials. The ball is in motion.

    If a southern route is not feasible, there's another decision: Would Alaskans support a northern route, assuming even that is feasible? Or would Alaskans say they'd rather save the pipeline decision for the next generation to resolve?

    Contributing to a gas pipeline decision is the state's economic crisis. Within two years Alaska is projected to have a $1 billion-plus annual deficit, and no savings accounts to tap. If spending our savings legacy has not reflected our wisdom, it has afforded Alaskans the luxury of complacency . . . until now.

    Alaskans should recall the counsel of gas producers who have said that for any project to work, federal expediting legislation is needed along with fiscal and regulatory clarity from Alaska's government. Some have proposed that in this low-price environment a federally guaranteed price floor could support project economics. Thus far, neither the federal nor state government has acted. However, neither are we aware of any producer proposal for state fiscal clarity.

    Clear government policies are essential, supporting the sort of federal and state action the producers have suggested. Achieving that alone could bring Alaska stakeholders closer to a common goal.

    Dave Harbour is a public affairs consultant who publishes a Web site focusing on North Slope natural gas transportation alternatives. The Web address is:

    1-7: JUNEAU -- Bill Hudson says the permanent fund dividend is in danger.  But the longtime Republican representative from Juneau says the danger is not the Fiscal Policy Caucus, the bipartisan group of legislators he co-chairs. Rather, the threat comes from the possibility of inaction on a long-range fiscal plan in the 2002 legislative session, he said.     *     Today, Alaska Senate President Rick Halford (Photo-right, 12-14) and House Speaker Brian Porter (Photo-left, 12-14) will address the Anchorage Chamber of Commerce on budget issues, which we will report to you later today or tomorrow.  See our earlier story here.   (Comment:  Northern Gas Pipelines has advised readers that a critical aspect of any Alaska gas pipeline is the State's approach to solving its fiscal crisis.  The reason for this counsel is the fiscal clarity any gas pipeline operator/investor will reasonably require when, as of this date, state leaders are facing a +/- $1 billion/year deficit.  Within 2 years there will be no savings accounts to support what has become a practice in recent years of budget balancing using depleting savings accounts.  Solving the crisis calls for exceptional political courage and statesmanship since new or expanded oil industry taxes would only repel long term investment, exacerbating future budget woes, while imposing taxes on citizens or reducing services will more immediately threaten leaders at election time.  It is a much larger problem for Alaska than the mere challenge of creating a gas pipeline, as traditional state taxes would only reap about 1/4 of projected deficits from a gas pipeline even if it were in operation within 2 years, which it cannot be.  Accordingly, budget policy must be set without regard to whether a gas pipeline is ultimately built.  Lastly, the citizens must assume the primary responsibility and a disciplined role now, after years of demanding services for which the oil & gas industry paid, in a wholly unwholesome atmosphere of 'entitlement'.  The disciplined will of a strong majority of voters, would clarify the path for their elected leaders.  The disciplined pathway embraces sacrifice but leads to to fiscal survival; the historical, undisciplined road can point only to fiscal calamity and further gas pipeline delay.  This story in the Peninsula Clarion sets the stage for Governor Tony Knowles' upcoming State of the State and budget speeches scheduled for delivery to the Legislature, and subsequent action.   This page provides more reference to the state budget challenge and related gas pipeline economic issues.  -dh)      See this page for more....)


    Natural Gas & Oil Prices

    Upcoming Conferences: IOGCC, 5/11 -13;

    Newspaper Front Pages--WORLDWIDE

    Our view of South Central Alaska's imminent Energy Crisis

     Linking to Us!

    Founding Publisher's  2002 Editorials and 2001; magazine & newspaper articles; Seattle Chamber of Commerce Speech, 5-8-02, CBC Interview




    Yours is visit # Hit Counter to this website.

    Contact the Webmaster

    Site planning: September 2000 - Site construction initiated: January 1, 2001 - Site uploaded to Internet: March 31, 2001 - Founding publisher, 09-00/1-03 and 3-08/present


    © 2001-2002-2003-2004-2005-2006-2007-2008-2009 Northern Gas Pipelines 

    Web pages herein are protected by the Copyright laws of the United States of America and the Internet Copyright Act.

    This Website is provided as a public service.