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The battle over who gets to ship out Alaska's natural gas is starting to heat up. The 49th US state is facing off with the oil majors over control of substantial and, so far, untapped gas reserves. Both sides are even pushing their own plans for the duelling pipelines.
There is a lot at stake. Alaska stands to reap substantial financial benefits from piping natural gas to the rest of North America, the oil companies are hot to get their hands on another energy source and, quite frankly, more supply in the market should eventually benefit consumers.
After all, estimates are that 4.5 billion cubic feet of gas could be pumped out of Alaska's North Slope daily, there are proven gas reserves of 35 trillion cubic feet and some estimates run as high as 200 trillion cubic feet of undiscovered gas.
Right now, any natural gas pumped on the North Slope is reinjected into existing oil fields in order to push crude towards the surface. So why the two competing pipelines?
Republican Alaska governor Sarah Palin, a native of the northernmost state, pushed through the Alaska Gasline Inducement Act earlier this year. It was designed to protect Alaska's interests in the creation of a gas pipeline, since many in the state feel that sweetheart deals the state has given oil majors in the past has not paid off well for the state.
Helping push the Act through, despite some highly vocal opposition from Exxon, ConocoPhillips and British Petroleum (BP), was the indictment of Alaska representative Vic Kohring, a republican from Wasilla and chairman of the House Special Oil and Gas Committee who allegedly accepted bribes along with other state officials. A few days later two oil company executives pleaded guilty to offering those same bribes.
Also, a privately negotiated gas pipeline deal between ConocoPhillips, Exxon Mobil, BP and former Republican Alaska Governor Frank Murkowski was tossed out after he lost to Palin in the 2006 election. That cherry of a deal would have frozen oil taxes for 30 years and gas taxes for 45 years - worth about $10 billion - and didn't even guarantee a pipeline would ever be built.
The upshot is that Alaskans have felt pretty short-changed by the oil companies.
The general feeling in the state now is that if Alaska doesn't have firm control of the gas pipeline, the oil companies will be able to demand any concessions they like, including substantial tax breaks.
And their opposition to Palin's proposed pipeline has started to heat up. In addition to laying down a competing plan for a gas pipeline named Denali, and blanketing state radio waves with advertisements for it, ConocoPhillips and BP have both intimated that they may refuse to sell their gas to Palin's pipeline, which will be run by Canada-based TransCanada Corporation.
I was glad to see Palin put her foot down early on, threatening to revoke multi-billion-dollar leases. Happily, this is in line with the leases they signed, which include a duty to produce natural gas if it is profitable. Even Exxon has subtly hinted that it understands this to be the case.
Most Alaskans, myself included, see no reason that our state should make any more concessions to oil companies. Why should they get massive tax breaks and control of our natural gas pipeline as oil and gas prices maintain record high prices and companies rake in massive profits?
Most Alaskans I've talked with stand behind Palin's Alaska Gasline Inducement Act and want to see the gas pipeline built. We know the oil isn't going to last forever, and want to have a new project on the horizon to keep revenue flowing into state coffers.
The writer is a freelance journalist based in Alaska, USA.
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