AGPA News

Over the Top Route Minimizes Natural Gas Benefits to Alaskans

December 19, 2011, by Bill Walker

Article VIII, Sections 1 and 2 of Alaska's Constitution mandate that Alaska's resources are to be developed to the maximum use and benefit of its people.

Following the discovery of oil on Alaska's North Slope in the late 1960's, we Alaskans held our breath watching the daily progress of the ice breaking oil tanker, the SS Manhattan, as it carried a single barrel of North Slope crude oil towards the New York Harbor. Although it ultimately reached its destination, we cheered at the announcement that this route was a non-commercially viable option for moving Alaska's oil off the North Slope.

Soon thereafter the construction of the Trans Alaska Oil Pipeline commenced and thousands of Alaskans went to work. All of the development resulting from the construction of the oil line and the decades of commercial activity across Alaska are a direct consequence of that oil line running 800 miles through Alaska. Development for the "maximum benefit of Alaskans" was accomplished.

This same rationale led Senator Ted Stevens to secure the passage of federal legislation to prevent Alaska's gas from being taken off the North Slope via Exxon's proposed "Over the Top" gas line destined for Canada without traversing Alaska. The Alaska Legislature passed a similar law for the very same reason. Just like the oil, if Alaska's gas left Alaska from the North Slope via an over the top gas line or an LNG tanker, the benefits to Alaskans would be minimal. Fortunately our delegation and legislature have long recognized this option would not deliver the "maximum benefit of Alaskans".

Alaska's historical approach is not an anomaly. Alberta long ago passed a law requiring that natural resources could not leave the province without first being made into a product. This value added requirement created the bulk of Alberta's natural resource jobs.

It is with this backdrop of history that I was shocked to learn from a Houston oil and gas reporter in a recent interview that there are current elected officials in Alaska considering options whereby Alaska's gas would be transported directly from the North Slope. Are these officials not aware that for decades we fought united as Alaskans for as much benefit from the development of our resources as possible and passed laws to ensure that happened? It is for the jobs and lower cost of energy that we must continue to fight that fight.

The recently released Wood Mackenzie report showed that LNG from Valdez could be delivered nearly 1/3rd cheaper to the Asian market than that from the LNG project being developed in Kitimat, B.C. Canada. While Kitimat is signing up customers, are we really considering a project that would not bring Alaska's gas through Alaska?

Clean burning natural gas delivered to Alaskans from a large volume line with an LNG export component would be magnitudes cheaper than any other option. Without this, how do we get affordable energy into the Interior communities? How do we protect against another run at mothballing our Interior military bases due to high energy costs? How does LNG leaving Alaska's North Slope help the cost of energy in Bethel? This winter it is anticipated that the cost of heating oil in Bethel will exceed $40/mmbtu as compared to less than $3 for the same unit of energy in the Lower 48.

It is not just the amount of money that goes into state coffers that defines the "maximum benefit to Alaskans". The quality of life for Alaskans as measured by employment and affordable energy for homes and businesses must also be of primary concern.

In 2002, 138,000 Alaskan voters (62%) were right when they voted for the All Alaska gas line. They are still right today. And I am confident they join me in urging our elected officials to not embark on yet another study that will ultimately conclude that a deep draft LNG tanker could not load LNG from the North Slope's ice packed, shallow shores. Exporting Alaska's jobs and future off the North Slope leaving behind no relief from high energy costs and a high unemployment rate offends Alaska's constitution and the very people it was intended to protect.

A good start on gas line: Parnell now should get out of AGIA

November 17, 2011, by Bill Walker

Gov. Parnell recently acknowledged that, because of shale gas developments, Alaska must change course and export its gas to premium Asian markets. Owners of Lower 48 and West Coast Canadian liquefied natural gas receiving terminals are likewise accepting market realities and converting their LNG receiving facilities into export terminals. Consequently, Parnell now agrees that it is time for Alaska to build a gas line to tidewater to export LNG to Asia.

While the governor's laudable change of position was met with widespread support among Alaskans, close on its heels came the thudding response from TransCanada CEO Russ Girling.

Girling said TransCanada would continue to focus on a Canadian project and that the North Slope leaseholders, not the state of Alaska as the resource owner, are in the driver's seat to decide when and how Alaska's gas will go to market. Girling's comments sounded all too similar to those made by his predecessor, Hal Kvisle, the week after the award of the $500 million Alaska Gasline Inducement Act license to TransCanada in 2008. Kvisle pronounced what some have called the AGIA project motto, "Nothing goes ahead unless Exxon is happy with it."

The primary purpose of AGIA was to take the ironclad control of Alaska gasline development away from the leaseholders who have repeatedly stated they will not allow a project to go forward until Alaskans make significant, and irrevocable concessions on oil and gas taxes. Yet shortly after the AGIA contract was awarded, ExxonMobil partnered with TransCanada to become a primary beneficiary of the $500 million AGIA license dollars. Now Trans-Canada and ExxonMobil doggedly stay the course to permit a gasline into the collapsed North American gas markets where, according to the U.S. Department of Energy, due to vast amounts of shale gas, gas will remain at low prices for the next 100 plus years. And while ExxonMobil warehouses Alaska's resources, it develops less economic LNG projects around the world to serve Asian markets.

The comments by TransCanada's CEO should serve as a clarion call for Alaska to maintain control of as much gas on the North Slope as possible. Currently the state of Alaska controls the largest share of the gas reserves, but that will change if our officials return the Point Thomson Unit to ExxonMobil as is anticipated.

TransCanada and ExxonMobil will continue to resist Gov. Parnell's call for a gasline to tidewater for LNG shipment because it does not go through Canada and because it would be in direct competition with ExxonMobil's many other worldwide LNG projects.

If there was ever a time for Alaska to retain control of the Point Thomson Unit, it is now.

Additionally, the state must take the wheel and exercise the off-ramp provision of AGIA whereby it is allowed to terminate the relationship if an arbitrator determines the Canadian project is no longer economic. Requesting this evaluation merely begins a process for acquiring the crucial fiscal and market information needed to assess the state's options to either remain in AGIA or exit it with no penalty. The state needs to begin that process now so that it, as the party with the largest commercial stake, can take control of the project and get it moving forward.

In summary, the first step to constructing a gas line is recognizing Asia, and not North America, is the proper market. The second step is to retain control of the Point Thomson Unit and re-lease the field with explicit requirements as to how and when the gas will be marketed to Asia. The third step is to exercise off ramp in AGIA.

The fourth step is for the state to take control of establishing the commercial terms and setting the project development timeline. Gov. Parnell has reversed course and taken the first step and that is good. He must now demonstrate the courage and leadership required to take the remaining steps necessary to secure the state's economic future.

Alaska Must Move Quickly to Secure Asian Markets

November 15, 2011, by Bill Walker

While Governor Parnell's recent shift towards building a gasline to tidewater for LNG shipment to the lucrative Asian markets is good, with this shift must come a commitment to aggressively pursue Alaska's LNG export project given the worldwide race to get LNG into the Asian markets by securing long term contracts now. There is more natural gas worldwide than there is market demand. Once the "no vacancy" sign goes up in the Asian markets, Alaska's gas, Alaska's future and the hope of cheap energy for Alaska's homes and businesses will be stranded. Alaska must move quickly to ensure that does not happen.

Report from U.S. Senate Energy and Resource Committee Hearing on LNG Export

November 15, 2011, by Bill Walker

Last week I attended the U.S. Senate Energy and Resources Committee hearing, a committee which Senator Murkowski co-chairs. The topic of the hearing was LNG Exports from the United States. Witnesses testifying included representatives from the Federal Energy Regulatory Commission (FERC), Department of Energy/Office of Fossil Energy, Shell Oil and a representative from the public utilities department from a municipality in Ohio.

From some of the senators who participated came concern that the export of LNG from the U.S. could cause the cost of natural gas in the Lower 48 to increase. Actually, at the North American Gas Forum held in Washington D.C. in early October, where I presented the Alaska LNG project overview, we were told by industry and government representatives that yes, if 6 billion cubic feet of natural gas was exported from the Lower 48 each day, it could raise the cost of natural gas by $.09 per mcf (thousand cubic feet). By contrast, I have informed our delegation that with the large volume All Alaska Gasline/LNG export project, the cost of energy in Alaska would drop by as much as 80% in the Fairbanks area and up to 65% in communities such as Bethel. Once again, this underscores just how much Alaska's energy situation differs from the Lower 48. I was pleased with the opportunity post hearing to meet with Senator Murkowski's staff as well as with Senator Begich to further discuss the way forward with the All Alaska Gasline/LNG project.

Alaska's Municipalities Endorse All-Alaska Gasline

November 15, 2011, by Bill Walker

Some very exciting news this week. The Alaska Municipal League (AML),at their annual conference held in Fairbanks, passed Resolution No.2012-01 endorsing and encouraging the building of the large volume All Alaska Gasline /LNG project. This organization, which consists of 140 cities and local governments across the state representing 97% of all Alaskans, clearly recognized how this is the gasline project that would benefit ALL of Alaska's communities.

This week I am in Rome participating in the World LNG Summit. I will report what I learn in next week's edition as to the market opportunities that await Alaska's gas if we act deliberately and expeditiously to secure our place as a world energy leader.

Governor Parnell Acknowledges Importance of Asian Markets

October 31, 2011, by Bill Walker

My phone was ringing off the hook last Thursday following Governor Parnell's announcement acknowledging the importance of the Asian markets to the commercialization of Alaska's natural gas. I was very pleased with his announcement and responded accordingly to the media inquiries. However, given the 30 years of working on this effort, I also recognize that it will take more than an acknowledgement of market changes for Alaska to finally reap the benefits of our natural gas.

I would like to think that the good work recently completed and released by Wood MacKenzie (Wood Mac) for the Alaska Gasline Port Authority (AGPA) may have played some part in this shift by the Governor. I was pleased the Governor, Commissioner of DNR Dan Sullivan and Commissioner of Revenue Brian Butcher all accepted my offer to meet with them individually to discuss the Wood Mac report on the competitiveness of LNG from Valdez to the Asian markets.

What is clearly evident from the Wood Mac report is that Alaska does not have to give up anything in the way of incentives or concessions for this LNG export project to be profitable to all participants. I am hopeful that Alaska will not shift back into the incentive/ concession mode, instead of taking control of the process and announcing Alaska's intention to own the pipeline infrastructure ourselves thereby signaling to the world that Alaska's gas in finally available to the world markets.

Alaska is Asleep at the Switch on Natural Gas

October 12, 2011, by Bill Walker

I am perplexed by the lack of industry acknowledgement of Alaska's vast resources of natural gas. This omission was clear at the North America Gas Summit in Washington, D.C. I was there as a representative of the Alaska Gasline Port Authority to present the all-Alaska LNG project.

Bill Walker speaks at North America Gas Forum

October 11, 2011

North American Gas Last week Alaska Gasline Port Authority Board members Merrick Peirce and Dave Dengel, along with Bill Walker attended the North America Gas Forum in Washington D.C. where Bill had been invited to present the All Alaska Gasline/LNG project. The Forum presenters/attendees included natural gas/LNG leaders from North America and beyond. It was made abundantly clear by all presenters that the Lower 48 could not be a market for Alaska's gas as presenters explained why their proposed Lower 48 LNG export projects were bound for the premium Asian markets. Presenters also acknowledged the numerous advantages held by Alaska's LNG project such as already discovered conventional gas (vs shale gas), high BTU content gas(wet gas) and close proximity to the market, to name a few.

Message from Talkeetna's Institute of the North's Alaska Dialogue

Each September for the past ten years, Alaskan leaders have gathered at the Talkeetna Lodge to address significant issues facing Alaska. Founded by Governor Wally Hickel, this year's Institute of the North's Alaska Dialogue addressed the critical issue associated with the declining throughput of oil in the TAPS pipeline.

After two days of presentations and round table discussions it was the consensus of the group of approximately 150 Alaskans that the best way to get more oil into TAPS was to commercialize the gas on the North Slope so companies exploring for oil would have a market opportunity for the commercialization of the gas that is often discovered along with the oil. This would be a significant incentive for more North Slope oil and gas exploration. There was much discussion about delivery of LNG from Alaska to the lucrative Asian markets as one option for the gas, particularly in light of growing demand in that part of the world. Once again the Dialogue with representatives from all over Alaska and from many segments of industry, education and government proved a solid focus group for strategizing on the issues and solutions that impact each and every Alaskan.

Walker to Speak at North American Gas Summit

Washington D.C., October 3-5

Anchorage, Alaska-The Inaugural North American Gas Summit to be held in Washington D.C. on October 3-5 will feature an "Alaska Spotlight" on opening day. Bill Walker, General Counsel for the Alaska Gasline Port Authority, will present the proposed All-Alaska Gasline LNG plan in the context of rising Asian gas prices, lower shipping costs and geographic proximity to the market.

Norway Can Teach Us To Control Resources

September 10, 2011. Anchorage Daily News Compass Piece by Bill Walker

Gov. Walter Hickel founded the Institute of the North, which organized last week's Norway Policy Tour. Hickel long advocated that Alaska, as owner of its natural resources, must take control of its resource development for the benefit of all Alaskans. I was privileged to participate with the legislators and community leaders from Kotzebue, Nome, Bethel, Dillingham, Southeast, Kenai, Kodiak, Wasilla, Fairbanks and Anchorage who met with ambassadors and top-level government and industry officials to learn about the Norway "model" of government-owned and developed oil and gas resources. Having traveled with the late Gov. Hickel to China in 2008, I know he would have been the first to enlist for the Norway trip, keeping with us even on the 18-hour days visiting industry headquarters and facilities across Norway.

Differing gas line visions share virtue of state in driver's seat

July 30th, 2011, www.adn.com

Dan Fauske, head of the Alaska Gasline Development Corporation, and Bill Walker, general counsel to the Alaska Gasline Port Authority, provided reports on two very different megaprojects this month. But they have one element in common that should both appeal to Alaskans and get us off the dime: Both argue for state ownership of a pipeline to tap Alaska's treasure of North Slope gas. Both require Alaskans' initiative to secure our own energy and wider economic future.

All-Alaska Gasline Project could generate upwards of $400 Billion - AGPA Press Release

July 28, 2011

Wood Mackenzie Study shows an All-Alaska Gasline Project could generate upwards of $400 Billion in revenues to the state.

Benefits of the Richardson Highway Corridor

July 2011

The Alaska Legislature has spent considerable public dollars to fund a bullet line that is not what Alaska voters demanded in a free and fair statewide election. The "bullet" line bypasses Fairbanks, Valdez, and the entire Richardson Highway corridor. It does not bring affordable gas to Alaska's key military bases. It does not provide affordable energy, and it does not bring Alaska important new revenue from LNG export- as the voter mandated project does.

Click here to read a recent letter prepared by the Fairbanks Economic Development Corporation with the work of Dr. Paul Metz, that demonstrates the clear benefits of the Richardson Highway corridor.

Port Authority begins statewide distribution of LNG articles

June 2011

The Port Authority has begun a statewide distribution of LNG articles to Alaskans. The world is entering the "Golden Age of Natural Gas" according to the U.S. Department of Energy and many countries, including Western Canada and the U.S. in the Lower 48, are racing to get their natural gas shipped as liquefied natural gas ( LNG) to the premium Asian markets. The AGPA Board felt it was important that this information be available to Alaskans. It is disappointing that the State has budgeted $60 million to be paid to ExxonMobil and Trans Canada to continue studying a gasline route into Canada, the very same route recently rejected by both BP and ConocoPhillips ( the Denali Pipeline Project) due to abundance of low priced natural gas in the North America.

The Board welcomes new Board Member Steve Haagenson from Fairbanks. Steve replaces Mayor Luke Hopkins who resigned in an effort to more fully advocate for the All Alaska gasline. We are so appreciative of all the time volunteered by Mayor Hopkins. Steve Haagenson is a Fairbanks resident, was the former CEO of Golden Valley Electric. Steve also served as the Energy Czar in the Palin Administration. Steve brings a vast background of knowledge regarding energy issues to the Board.

You may read our LNG News here.

Valdez City Council approves significant funding for AGPA

May 2011

The Valdez City Council approved providing significant funding for AGPA at the May 2, 2011, Council meeting for continued work on the All Alaska Gas Line.

The AGPA board and Bill Walker provided a public project update in Fairbanks. The update focused on the economics and benefits of the large diameter gas line to Valdez. The board invited public comments and questions from participants. Assembly members Diane Hutchison and Tim Beck provided input as well as Mike Prax, a former FNSB assemblyman. Tim Beck stressed the importance of getting low cost gas to Eielson AFB and related a conversation he had with Sen. Murkowski where she reiterated the importance of reducing Eielson's high operational costs to avoid a re-listing for a BRAC closure.

In-state gas line and facilities could cost from $6 billion to $11 billion

July 2010

Fairbanks Daily News-Miner Columnist Dermot Cole reports on the staggeringly high cost of the bullet line from a recently released report. The report provides insight on how much gas prices will rise with the bullet line. Dermot Cole also reports how the bullet line bypasses Fairbanks and requires a special spur line to get gas to Fairbanks.

Rockies Express Pipeline

July 2010

How hard is it to build a gasline, really? Read about the newly completed Rockies Express gasline project. At 1,679 miles long, twice the length of the All Alaska Gasline, it was completed in only three years for about six billion dollars.