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Thread: The Alaska Stand Alone Gas Pipeline/ASAP Project

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    Default The Alaska Stand Alone Gas Pipeline/ASAP Project

    I happened to see a presentation on this today at one of the local Chambers of Commerce. It was very interesting and kinda sad. It was stated that even with all the energy Alaska has, because it's not readily available to its citizens that Alaska is equal to third world countries with development and available resources by 2015. People cannot afford housing and utilities and it's getting worse. Because of this the economy could be declining because the next generations cannot afford to live here.

    At the presentation there was lists of chambers of commences, cities and companies that supported it.

    http://www.agdc.us/2011/07/alaska-st...-july-1-2011/#

    I kept in the back of my mind that the person doing this presentation works for it and of course is going to make it sound like it’s the best thing since sliced bread. But I am curious about the opinions of people here. So far from what I have studied it looks like a good thing. I wanted to get some opinions before I do this.

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    Member cdubbin's Avatar
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    The gas pipedream....er, pipeline, idea has been tossed around up here since the 70s; IIRC, it was a good part of QuitterGirl's gubernatorial campaign platform....unfortunately, probably not gonna happen anytime soon...
    "– Gas boats are bad enough, autos are an invention of the devil, and airplanes are worse." ~Allen Hasselborg

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    Lightbulb

    Stacey,


    I know too little of the subject to offer an intelligent comment, but I suspect the root question is one of marketability versus production costs. Keep in mind that the population of Alaska is only 600k—not even equal to the suburbs of Dallas-Ft. Worth—with very limited potential for local consumption. Any sizable development of our natural gas must find sufficient markets in order to subsidize production costs and show a profit.


    Moreover, the subject quickly becomes political when discussed among Alaskans. Sent you an email suggesting discussion in a more global context.


    John


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    Quote Originally Posted by cdubbin View Post
    The gas pipedream....er, pipeline, idea has been tossed around up here since the 70s; IIRC, it was a good part of QuitterGirl's gubernatorial campaign platform....unfortunately, probably not gonna happen anytime soon...
    Well.. if this upcoming HB 4 can pass.. it's a great possibility towards having gas start flowing by 2015 or 2016. They just need to get support for it..

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    Quote Originally Posted by Marcus View Post
    Stacey,


    I know too little of the subject to offer an intelligent comment, but I suspect the root question is one of marketability versus production costs. Keep in mind that the population of Alaska is only 600k—not even equal to the suburbs of Dallas-Ft. Worth—with very limited potential for local consumption. Any sizable development of our natural gas must find sufficient markets in order to subsidize production costs and show a profit.


    Moreover, the subject quickly becomes political when discussed among Alaskans. Sent you an email suggesting discussion in a more global context.


    John

    Yes.. right now.. but the economy is growing. All around me I see houses being built. Part of the problem is sustainability. I notice that people are retiring here versus starting a fresh long life here. Maybe that's just my perspective right now. However it was the same problem in CT. Everything is so expensive that everywhere you look you see houses for sale. Everyone is leaving because it's too hard to sustain a happy, healthy life above water. I am noticing that here. I've been looking over the price of electricity and it seems like it's done up a dollar every year for the past few years.. and that won't stop until there is change. Change doesn't magically happen.. it has to be sought after..

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    Member cdubbin's Avatar
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    Quote Originally Posted by MountainGirl View Post
    Yes.. right now.. but the economy is growing. All around me I see houses being built. Part of the problem is sustainability. I notice that people are retiring here versus starting a fresh long life here. Maybe that's just my perspective right now. However it was the same problem in CT. Everything is so expensive that everywhere you look you see houses for sale. Everyone is leaving because it's too hard to sustain a happy, healthy life above water. I am noticing that here. I've been looking over the price of electricity and it seems like it's done up a dollar every year for the past few years.. and that won't stop until there is change. Change doesn't magically happen.. it has to be sought after..
    You should check out what's happening in Homer with the gas line that's just been approved to come from Anchor Point; basically, the city will levy a rather burdensome assessment on each and every property owner to pay for the pipe. The assessment must be paid whether or not the owner chooses to hook up to the system. http://www.cityofhomer-ak.gov/naturalgas
    "– Gas boats are bad enough, autos are an invention of the devil, and airplanes are worse." ~Allen Hasselborg

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    Cool Subsidizing seniors . . .

    Quote Originally Posted by MountainGirl View Post
    . . . I notice that people are retiring here versus starting a fresh long life here. . .

    Yes, that is an interesting phenomenon, and I wonder what drives it. Consider—for seniors:


    * Virtually no property tax

    * Free hunting and fishing license for life + having someone hunt & fish for you by proxy

    * Free registration of one vehicle per person (including the road whale parked in the lower-48)

    * Permanent fund dividend (It is legally possible to live outside the state for the six months of winter and still collect a PFD)


    Now if those economic factors are driving the surge in retired residents, it's only a question of if or for how long the state's infrastructure can subsidize such freebies.

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    Quote Originally Posted by cdubbin View Post
    You should check out what's happening in Homer with the gas line that's just been approved to come from Anchor Point; basically, the city will levy a rather burdensome assessment on each and every property owner to pay for the pipe. The assessment must be paid whether or not the owner chooses to hook up to the system. http://www.cityofhomer-ak.gov/naturalgas
    At least gas is going to be available. I live just off the sterling highway outside city limits and will never see it come to my house a tap off is $20.00 a foot so for about 30 thousand I can get connected.

    I paid about four bucks a gallon for fuel oil last fill up. I think I will be burning oil till I move.

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    Quote Originally Posted by retiredinhomer View Post
    At least gas is going to be available. I live just off the sterling highway outside city limits and will never see it come to my house a tap off is $20.00 a foot so for about 30 thousand I can get connected.

    I paid about four bucks a gallon for fuel oil last fill up. I think I will be burning oil till I move.
    If the state is going to start hooking up communities that are far from gas. This business of charging big rates to hook those close to gas has to become more reasonable. They want 80k to hook up our subdivision and we do all the leg work. Guess what you still gotta buy gas from the utility that has the monopoly. If the state and boroughs didn't always get these grandiose plans they might have more luck solving problems. How to you eat an 800 lb bowl of pudding? The State of AK answer-one bite!!!!
    Life is not a journey to the grave with the intention of arriving safely in a pretty well preserved body, but rather to skid in broadside, thoroughly used up, totally worn out, and loudly proclaiming-----WOW-----what a ride!
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    Quote Originally Posted by jkb View Post
    How to you eat an 800 lb bowl of pudding? The State of AK answer- one giant suck!!!!
    Fixed it for you...

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    Quote Originally Posted by Marcus View Post
    Now if those economic factors are driving the surge in retired residents, it's only a question of if or for how long the state's infrastructure can subsidize such freebies.
    That is a great point..

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    Quote Originally Posted by jkb View Post
    f the state and boroughs didn't always get these grandiose plans they might have more luck solving problems.
    I don't understand this. Do you mean if they stopped trying to focus on this large scale pipeline and came up with smaller community ideas that perhaps something more efficient could be done?

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    Quote Originally Posted by cdubbin View Post
    You should check out what's happening in Homer with the gas line that's just been approved to come from Anchor Point; basically, the city will levy a rather burdensome assessment on each and every property owner to pay for the pipe. The assessment must be paid whether or not the owner chooses to hook up to the system. http://www.cityofhomer-ak.gov/naturalgas
    That is a great point. I am writing to the project head right now and asking about the conditions, fees and estimated cost to the individual would be.

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    The only viable option would be a large diameter pipe that allows for a significant export of natural gas. Whether the route through Canada to the Upper Midwest or a line to tidewater for LNG export, the only economically feasible project would be one that moves and sells a large volume of natural gas with a handful of takeoff points for in-state use. Chambers of Commerce and other in-state interests like to tout a small diameter line for obvious reasons, but the economics don't pencil out - unless, of course, consumers are willing to pay energy rates that are many times more expensive than what they pay now. Forgive the pun, but it's a pipe dream.

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    Quote Originally Posted by Brian M View Post
    The only viable option would be a large diameter pipe that allows for a significant export of natural gas. Whether the route through Canada to the Upper Midwest or a line to tidewater for LNG export, the only economically feasible project would be one that moves and sells a large volume of natural gas with a handful of takeoff points for in-state use. Chambers of Commerce and other in-state interests like to tout a small diameter line for obvious reasons, but the economics don't pencil out - unless, of course, consumers are willing to pay energy rates that are many times more expensive than what they pay now. Forgive the pun, but it's a pipe dream.
    Can you explain why the economics don't pencil out? Researching the energy costs right now, it looks like it's going up a dollar a year. So it seems to me that by the time (and if) this gets running, costs are already going to be extremely high. Especially since the demand is higher than the resources available.

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    There are actually a couple of things going on regarding gas pipelines and the cost of energy in Alaska.

    While gas has always been cheaper than oil to heat homes and produce electricity, up until about 5 years ago, oil prices really weren’t that bad. Most areas outside of the Cook Inlet region rely on diesel for electricity and fuel oil for heat. It’s the only form of energy that can be easily moved around in remote areas due to the fact that it is liquid (easy to transfer) and contains a lot of energy by volume. But now, oil prices are very high and likely won’t come down much or for long. That’s making it tough to keep your lights on and home warm.

    Gas out of Cook Inlet was ridiculously cheap for a long time. That’s why we had a fertilizer plant that used huge amounts of gas and could make a profit even though it was far from markets. We have been the only state to export LNG to other countries but the last of those ships sailed out of Cook Inlet at the end of this summer. For communities hooked up to that gas, we had been paying some of the lowest gas rates to heat our homes in the entire country. The easy gas is now gone and things won’t be the same from here on out.

    For years, people were pinning their hopes to replace Cook Inlet gas on a big pipeline moving huge amounts of gas off the North Slope to make it economical to tap off of to bring some of that gas down into the south central region. That option would also supply gas to communities like North Pole and Fairbanks who don’t have access to much gas right now. However, with fracking and the crash in lower 48 gas prices, that pipe dream has gone up in smoke. All along, Valdez and several communities have been pushing for a big pipe to Valdez and an LNG export facility to sell the gas to Asia where prices are much higher. However, we need an 800 mile pipeline to get that gas to tidewater to move the LNG overseas, whereas, there are a lot of places with gas right near the coast. So, I don’t see North Slope gas as being competitive once a bunch of other LNG export facilities get built (and there are a lot in the works).

    Then there is the “bullet line” option, a much smaller pipe to bring North Slope gas into the rail belt. The problem is simply cost. Just the transportation fee, the cost of paying for building the pipe and running it, is more than the total cost we currently pay for gas delivered to our house here in Anchorage. Once you commit to something like that, you are locked in for decades. All that is being weighed against the prospect of discovering more gas in the Cook Inlet region which would alleviate much of the concern for those of us currently using Cook Inlet gas. However, that option leaves other places like Fairbanks still in the cold.

    And, none of that really addresses the problem for bush communities who pay very high prices for fuel oil to heat their homes and diesel to run generators for electricity. So, they aren’t at all excited about using any state money to back one of those projects.

    And, there is also the fact the oil companies are using the possibility of them building a big gas pipeline as a bargaining chip for lower oil taxes.

    So, with all the competing interests and options there are all kinds of activity and options but not much is really getting done to solve the problem.

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    Quote Originally Posted by MountainGirl View Post
    Can you explain why the economics don't pencil out? Researching the energy costs right now, it looks like it's going up a dollar a year. So it seems to me that by the time (and if) this gets running, costs are already going to be extremely high. Especially since the demand is higher than the resources available.

    I think it works like this, Stacey: Say it cost $10,000,000 to build the pipeline.


    Now try to amortize that cost over 600.000 people.


    Now try to amortize that cost over 600,000,000 people.


    Not sure about all that . . ask those kinds of questions in your inquiries. Too, oil and gas are global products, bought and sold in the global marketplace and not in terms of local, flea markets. A new oil or gas field in Uzbekistan affects the price of gas and oil in the North Sea, Argentina, and the North Slope.

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    Mountaingirl,

    You have to consider the cost of the pipeline construction/maintenance versus the market you are supplying with it (who's paying). A vast majority of the cost to build a pipeline will be the same whether it is a 2-inch diameter line or a 10-foot diameter line. The only real difference is in the physical material which really is only a small part of the overall cost. You still need pretty much the same permits and environmental studies. You still need the same equipment to dig and backfill a trench. You still need the same manpower to monitor/maintain the line. The big difference is that you may only have 20-30 thousand people you are delivering to and who would be paying for the line unless you somehow convince the rest of the state (still a small number when compared to other places) to subsidize the project that is only benefiting a small number of people. What Brian stated as the only economically viable option really is that. It provides the opportunity to transport the goods to a worldwide market in a big enough volume where the cost of constructing it can be spread over 10's or 100's of millions of consumers. For a small diameter pipeline, the cost per person who is benefiting from it would not catch up to the increases in energy costs they see with whatever their source is currently for decades, if it ever did.

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    Quote Originally Posted by anchskier View Post
    . . transport the goods to a worldwide market in a big enough volume where the cost of constructing it can be spread over 10's or 100's of millions of consumers. . .

    Isn't the global market currently glutted with low-cost natural gas?


    Even if Alaska could get its gas to market, could it be sold at a price that would justify the cost of getting it there?

  20. #20

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    Quote Originally Posted by Marcus View Post

    Isn't the global market currently glutted with low-cost natural gas?


    Even if Alaska could get its gas to market, could it be sold at a price that would justify the cost of getting it there?
    That is true. I was really just pointing out that getting the gas to the worldwide market is probably the most economical option, not necessarily one that we would come out ahead on. Just a lot better than only delivering it to a small, local market.

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