Breaking deadlock on natural gas in Alaska
By Dale McFeatters
This year may go down in energy circles as the year of the pipeline. Political circles, too.
When the administration temporarily blocked completion of the northern portion of the Canada-to-Gulf Coast Keystone XL oil pipeline, Republicans quickly seized on the issue as an example of President Barack Obama's supposed antipathy to oil and gas drilling.
This week, Obama surfaced in Cushing, Okla., the terminus of the pipeline project, to boast that his administration has added enough new oil and gas pipelines "to encircle the Earth and then some."
He said he had ordered his administration to make speedy completion of the southern portion of the pipeline a priority. Clearing the way for construction of the southern portion is largely a matter of filling out the paperwork. Trickier is the more important northern portion, which is being held up because it must cross environmentally and politically sensitive parts of Nebraska.
Obama, or his successor, may soon find himself faced with a more critically important pipeline decision.
When oil was discovered on Alaska's North Slope, so was natural gas ― a lot of it, 35 trillion cubic feet of proven reserves, one-eighth of the U.S. total, and another 236 trillion cubic feet of likely reserves.
Unfortunately, there was no immediate and economically practical way to bring it to market. First, there was the question of raising the enormous amounts of capital required to build such a project and, second, there was a need for price guarantees to ensure its profitability.
So the gas still sits there. Meanwhile, the output of the older North Slope fields, which provide 90 percent of the Alaska state government's revenues, is slowing down. There was a certain desperation to Sarah Palin's chant, "Drill, baby, drill!"
There is still on the table a plan to build a natural-gas pipeline from the North Slope to Alberta, Canada, and from there to the American Midwest. But the phenomenal increase in the amount of gas being derived from shale in the Lower 48 has again put that plan on hold.
A likely agreement among oil majors BP, ExxonMobil and ConocoPhillips may result in construction of a gas pipeline from the North Slope to the state's southern coast to produce liquefied natural gas for sale to China and other Asian nations. The estimated cost: $40 billion to $50 billion.
There may be grumbling about selling to China a natural resource that once seemed in short supply. But, happily, we have plenty of gas of our own ― and we need the money.
Breaking ground for the project will make a great visual for somebody in this year of the pipeline.
Dale McFeatters is an editorial writer for Scripps Howard News Service (www.scrippsnews.com).