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Policy: Environment & Energy

Alaska gas project dwarfs proposed Keystone XL pipeline

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Opinion,Op-Eds,Alaska,Keystone XL,Energy and Environment,Oil

With the rest of the nation consumed in a debate over building the final leg of the $5 billion Keystone XL pipeline, very little attention was given to a historic announcement made last month by Alaska Gov. Sean Parnell.

Parnell announced plans to take a $5.75 billion stake in the construction of a natural gas and infrastructure project estimated to cost $45 billion. The pipeline would stretch 800 miles from the North Slope down to Nikiski on the Kenai Peninsula. And once completed, Alaska would be positioned to take advantage of one of the world's largest untapped natural gas reserves sitting just along the shore in the Beaufort Sea.

Certainly, the public has every right to be wary that this time is no different from any of the previous attempts to extract the gas. For the last 40 years, Alaskans have heard about this reserve and, due to varying circumstances, witnessed many failed attempts to build the pipeline and processing facilities to get that gas to the people of Alaska and out to a broader world market.

As someone who worked on energy issues during the Nixon administration, I remember how Alaska had just discovered Prudhoe Bay, North America's largest oil field, in late 1960s, but had to wait until the Arab oil embargo in the 1970s spurred Congress to approve construction of the Alyeska Pipeline. We've seen many of these attempts through the years.

But this time just feels different.

Since the state legislature enacted oil tax reform in spring 2013, we've seen major oil and gas companies make new investments in Alaska. Now the state legislature is crafting new legislation to make official the state's stake in the LNG project. With just the hint of certainty from the state, and as a result of the oil tax reform passed last year, new projects and new investments have been announced for the North Slope.

Take the Point Thomson project as just one example.

After years of delay, there have been some incredible milestones for the natural gas condensate project operated by ExxonMobil. An airstrip was built; gravel pads are being expanded to make way for construction of a new central pad; and infrastructure is being installed to support a new pipeline that will connect into the Trans Alaskan Pipeline System. All of the work is being done to tap into the reserves there – about 25 percent of known gas reserves on the North Slope.

Without the prospect of eventually developing this natural gas, that Point Thomson investment makes no sense.

This new Alaska LNG project would also be one of the world’s largest infrastructure undertakings. If the Keystone pipeline will generate upwards of 40,000 new jobs during its construction process, imagine how many new jobs a $45 billion project would create.

And this would provide energy security for generations of future Alaskans. In a state where energy development accounts for nearly 90 percent of yearly state revenue, this project will ensure the next generation of economic security as well.

For places like Nikiski and the greater Kenai Peninsula, which have seen its economic situation decline in recent years as native Alaskans flee for better economic opportunities, this project will bring jobs and economic development in desperate need of both.

For all the hope and potential, it could be for naught if Alaskans elect this summer to repeal its oil tax reform. A little-known initiative has put last year’s oil tax reform on the August 2014 ballot. With oil and gas inextricably linked, from both a production and investment standpoint, repealing that legislation could have a profoundly negative impact on the potential for gas.

As someone who has spent a lifetime working in energy and following Alaskan development, this exciting time is definitely different. The governor and state legislature should be commended for their steadfast commitment to their state, their constituents and the country as they secure a bright and prosperous future for generations of Alaskans to come.

Jack Rafuse is a former White House energy advisor to President Richard Nixon and was later a long-time member of the Unocal management staff. Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions for editorials, available at this link.
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