No shortage of backup plans for Alaska's gas

While Alaskans wait for a decision on whether a 4-foot-diameter gas pipeline will be built between the North Slope and North American markets, Gov. Sean Parnell has pledged his ongoing commitment to studying a "Plan B" linking energy-hungry residents with their resource.

Two voter-created authorities are forging ahead on related plans of their own -- in some cases tied to the success of the state-sanctioned Alaska Gasline Inducement Act project, and in other cases assuming failure.

The state has planted its full weight -- and $500 million -- behind a large-diameter pipeline proposed by TransCanada through the Alaska Gasline Inducement Act. The Canadian pipeline building company plans to lay out expected tariffs and take bids on pipe capacity during an open season May 1 to July 31.

A separate project by major oil companies BP and ConocoPhillips, dubbed Denali, also plans an open season in 2010.

The open seasons are major milestones in gauging the interest of companies with the North Slope gas to send down the line, and of potential gas buyers. Most players expect the three major companies -- ExxonMobil, BP and ConocoPhillips -- to bid on space contingent on resolving longstanding tax and money matters with the state's government. Those issues could take months or even years to work out. In the meantime, AGIA requires TransCanada to plug along on the pipeline plans to the point at which the company is ready to apply for a federal construction certificate and sanction the project -- a point that's never been passed without commercial backing before.

That magic moment when Alaskans can absolutely count on a gas pipeline, or project sanctioning, won't be reached until 2014, leaving people starved for affordable, reliable energy in a state with some of the highest prices in the nation.

That's too long to wait without some certainty, says Bill Walker, gubernatorial candidate and longtime supporter of an all-Alaska pipeline straight to the tidewater port town of Valdez.

"We have for far too long relied upon third parties to take our resources to market, on their time and on their schedule, rather than on our own," Walker recently told reporters, calling that transfer of control the "fatal flaw" of AGIA.

In the meantime, Parnell has directed a state team to continue hammering out cost estimates and engineering matters on a smaller gas pipeline, called a bullet line, which would shoot straight from the North Slope to Fairbanks and on to Southcentral. And the Alaska Natural Gas Development Authority is pursuing several angles as directed by former Gov. Sarah Palin, including a line that would carry Cook Inlet gas north to Fairbanks and a plan to process propane for use in far-flung rural villages that will never see offtakes from a large line.

Straight from the Slope

Knowing that new exploration in Cook Inlet was tapering off and that existing fields weren't drawing out enough gas to meet the needs of Southcentral during peak demand times, natural gas utility Enstar began studying a bullet line.

That work drew state participation under Palin. During the last legislative session, she named a new czar, Harry Noah, to evaluate in-state options and convinced lawmakers to allocate $7 million to the project. His task: Develop engineering, cost estimates, rights-of-way and permitting for a bullet line, a package that could be auctioned off to a build-ready private party.

The in-state gas concept hit a wall recently with Noah's abrupt resignation. Parnell's senior policy adviser on in-state energy, former state Sen. Gene Therriault, told a group of resource development professionals last week that the governor remains committed, but cushioned expectations.

"I assure you, the governor is committed to continuing to do the necessary work," Therriault said. "There are some that have already jumped to conclusions ... that in fact the bullet line is our salvation."

He doesn't know where the basis for that argument comes, he said, and pointed to the end analysis of how much gas will cost, delivered, for a final say on the project's economics.

Noah's work turned out preliminary estimates at the end of October indicating a 24-inch-diameter line would run just shy of $4 billion. Providing a series of milestones are met, Noah expected gas could flow by 2015.