According to a December 27, 2009 Toronto Star article, the proposed 760-mile Mackenzie Valley Natural Gas Pipeline from northwest Canada's Beaufort Sea coast to Alberta had an estimated cost (in 2003) of as low as C$2 billion. Costs had swollen to C$16.2 billion by 2007, (amounting to about C$21 million per mile) and were "expected to rise further if shovels ever turn the ground." This 30-inch pipeline would only have a third or less of the capacity of an Alaska-to-Alberta pipeline, and it would span less than half the Alaska line's minimum distance.

In 2006, about a year before Canada was learning more about the Mackenzie Valley costs, I was learning (from a PR person at a company advocating an Alaska-to-Alberta natural gas pipeline), that a 54-inch, 3500-mile pipeline from the North Slope to the Chicago area would cost about $30 billion. More recently, proposals like the Denali project have indicated $30 billion would only buy a 48-inch pipeline from Arctic Alaska to near the Alberta border -- in a couple years a conceptual $30 billion project had scaled back nearly 50 percent, and the capital cost had inflated from about $8.5 million per mile to about $14 million per mile -- and they would now use a smaller diameter pipe with less capacity. Without construction starting any time soon, I realized a large natural gas pipeline from our North Slope to anywhere could easily end up costing $30 million to $50 million per mile or more, and smaller intrastate pipelines could also become very expensive.

Although the trans-Alaska Pipeline System (TAPS) is an oil pipeline, not a natural gas pipeline, that huge project may give some insight into another large natural gas pipeline proposal -- from the North Slope to Valdez. TAPS, constructed between 1975 and 1977, cost about 8 billion dollars or about $10 million per mile -- this might inflate to about $35 million dollars per mile today. How would a similarly routed natural gas pipeline compare? And would we be allowed to export LNG to foreign countries? TAPS used domestic materials, including the 48-inch pipe, but many of the raw materials for a modern project would come from Offshore -- if the dollar were to decline, expenses would increase.

The public and our legislature may be hearing (and accepting) exceedingly optimistic low estimates from competing advocates trying to advance pipeline proposals or other agendas. Advocacy-based pipeline cost claims could mislead Alaskans and result in disastrous strategic planning miscalculations by our State, with long term consequences to our future and prosperity. A severe error (like State financing or ownership of an unsuccessful project) could have extreme financial consequences. Our legislature may reduce oil production taxes to try to stimulate a natural gas pipeline project, but if they rely on dated information and rosy cost projections from lobbyists, we may sacrifice revenues for nothing more than a prospect that, due to true cost, wouldn't have a snowball's chance in summer of ever becoming tangible.

Natural gas pipeline route selection has become an election issue, with at least one candidate advocating a specific pipeline proposal. I'd like to receive as much unbiased information as possible about all the options -- especially if I'm asked as a voter to choose a pipeline project. Our state seems divided -- with different groups advocating separate interests -- and it seems like too many folks have already decided on specific proposals even though we're lacking competent, unbiased, global perspectives and assessments. Even AGIA's assumptions and situation have changed after recent North American natural gas discoveries.

Upcoming pipeline open seasons may tell us more, but they will not provide much information about ultimate capital costs, and it is likely there will be plenty of contingencies and parachutes within any open season proposals to allow bidders to bail out if costs rise -- open seasons won't guarantee success.