JUNEAU, Alaska — The proposed large-diameter natural gas pipeline will be 42 inches in diameter, run about 800 miles, have five take-off points for in-state use and will cost between $45 billion and $65 billion.
That’s according to a letter signed by North Slope producers and TransCanada in response to a deadline set by Gov. Sean Parnell to select concept design for a large-diameter natural gas pipeline.
Speaking to the Fairbanks Economic Development Corp. annual investor luncheon, Parnell called the development a critical next step in bringing Alaska’s natural gas to market. The event was broadcast live on the Internet.
“It’s very good news; it’s the first time in the state’s natural gas history that the companies who can build, fill and operate a large-diameter pipeline have come together and selected a pipeline concept,” Parnell said.
It was what the letter was missing — the route of the pipeline, where it meets tidewater and where the take-offs would be located — that left some lawmakers and pipeline experts dissatisfied with the announcement.
“I want to know where the endgame is,” said Sen. Click Bishop, R-Fairbanks. “There’s a lot of gas so maybe Valdez will be the terminus, but at 800 miles, it could be Point MacKenzie or Valdez.”
Last year, TransCanada and Exxon said it was considering 22 possible endpoints, including Cook Inlet, Prince William Sound (including Valdez) and other places in Southcentral. It was hoped Friday’s announcement would have settled it.
“I’m still cautiously optimistic,” Bishop said. “I’ve been down this road before. We’ve all been down this road before. I’m truly enthused that the producers and TransCanada have met the governor’s goals and that they’re in lock step.”
Bill Walker, the general counsel to the Alaska Gasline Port Authority and vocal advocate for a large-diameter pipeline ending in Valdez, had harsher words about the announcement.
“There’s no announcement to do anything,” he said. “There’s so much that’s not said that it’s sad. This is what we’ve been waiting for?”
Walker said the pipeline announcements are generic to the point of telling Alaskans practically nothing. The letter also lacked an update on the project timeline or the market for gas.
The letter details a 42-inch pipeline with a capacity of between 3 billion to 3.5 billion cubic feet, will run 800 miles and will require up to eight compressor stations. It calls for a 150- to 250-acre treatment plant on the North Slope and five off-takes for in-state gas usage.
As far as an export terminal, it does say such a plant will require between 400 and 600 acres, two 160,000 cubic meter storage tanks and one loading jetty with two berths.
The letter, which is signed by Exxon Mobil, ConocoPhillips, BP and TransCanada, also makes mention of gas and oil taxes, a contentious issue of the session and one of Parnell’s top priorities.
“As outlined in our October 1, 2012, report a competitive, predictable and durable oil and gas fiscal environment will be required for a project of this unprecedented scale, complexity and cost, to compete in global energy markets,” the letter states.
While the desire for a concrete update is understandable, Federal Pipeline Coordinator Larry Persily said the scant details likely are caused by the vast size of the project and the effort it takes to get four companies to agree.
“I have no doubt that most Alaskans will be disappointed about there not being more specifics,” he said. “No doubt after 40 years Alaskans are wary about incremental project updates, but that’s the nature of a $65 billion project,” he said. “This is a huge risk to undertake a project of this size.”
Persily noted that the announcement means that a full summer of field work, as requested by the governor, is still on track. He said it’ll be best if Alaskans reserve judgment on the project until then.
“Let’s face it, the oil and gas industry is never going to win an award for sharing information with the public,” he said. “Yes, it’s frustrating but there is some progress in there.”
Hearing the news, the key backer of the state’s effort to build its own natural gas pipeline, Rep. Mike Hawker, said it’s evidence that the state should continue moving ahead. The Anchorage Republican lawmaker is the prime sponsor of House Bill 4, which grants powers to the state’s Alaska Gasline Development Corp. to build a small-diameter pipeline for in-state use.
“Our communities, Fairbanks especially, have been waiting for gas for 30 years,” he said. “The limited announced progress from this concept selection document is exactly why we’re moving forward with House Bill 4.”
Hawker said he remains cautiously optimistic about the prospect of a large-diameter line, but he said Alaskans can’t wait much longer.
“It was a very preliminary concept selection, very broad, very high-level,” he said. “I think if anything, what we saw today still raises the question of how long do Alaskans have to wait to see a real project materialize here.”