An article in today’s (February 9, 2011) Fairbanks News-Miner reports on a study by Roger Marks for the Office of Federal Coordinator, Alaska Natural Gas Transportation Projects. The article, authored by Dermot Cole, is available here.
The lead paragraph does a good job summarizing the study’s conclusion: “If the state wants to subsidize a gas pipeline, it could get far more benefit out of using its resources to help the economics of a large-scale pipeline instead of putting money in a small-diameter line from the North Slope to Anchorage.” The full study is here.
My immediate reaction is that the study provides a good analysis as far as it goes. However, the study necessarily accepts as a boundary that the instate line (due to provisions built into AGIA) is limited to 500 MMcf/d. If AGIA is terminated (as it should be), those limitations are eliminated and a different discussion around the instate line becomes possible.
Given that limitation, I would not rely at this point on some of the other conclusions contained in the study (for example, that hydro may be a preferable alternative for Southcentral) until the smoke clears on whether the 500 MMcf/d limitation is terminated. If the limitation is terminated, the discussion around potential options will change. Alaska shouldn’t lock into other alternatives until that fundamental issue is resolved.