Wednesday, November 25, 2009

Good Article on Alaska Pipeline

For the past year, I've noted the uncertainty that increased natural gas supply from shale has created for the development of a new natural gas pipeline from Alaska to the Lower 48.  Building a pipeline to supply gas to an amply supplied region just doesn't make much sense on the surface.  The project, called AGIA, or Alaska Gasline Inducement Act, became a featured project of the former Palin administration and was touted on the McCain-Palin campaign trail, shedding lots of light on the project.  Since then, the landscape has changed.

I happened upon a very interesting article that gives some more history and context regarding the proposed pipeline.  Perhaps most interesting is the position in which Alaska now finds itself.  The state is highly dependent on oil and gas revenues, which flow royalties into the Alaska Permanent Fund that funds infrastructure improvements and provides some income directly to state residents.  But because of its remote location, pipelines are the lifeblood of the state's energy industry and control of these pipelines is becoming a bigger issue.  With the declining oil fields of the North Slope, some estimate that in the next decade the Trans-Alaska pipeline will not have strong enough flows for operations to remain economically feasible.  Gas is abundant but without a means to sell it to the world, it will remain an untapped resource.  But with the control issues between the state and the producers along with the supply/demand/pricing issues of the Lower 48, the project remains in limbo.

It's a complicated situation, and the article helps make some sense of it.  Or it might just complicate matters.

2 comments:

Anonymous said...

Just wanted to say Happy Thanksgiving to you and those you care about and thanks for taking the time to publish this blog.

Robert Hutchinson said...

Thanks to you for reading it.