“This is a project that’s going to be around long after everybody in this room is long gone. I don’t mean to be morbid,” said Fauske.
If all goes well, the ASAP project would send gas down the pipeline by 2019, relieving Cook Inlet Gas shortages that could be felt in the next three or four years.
Power companies are already planning to import liquefied natural gas until a long term solution is found, which will make the cost of power and heating more expensive for Southcentral.
Fauske and his project managers took time to address fears that ASAP would squelch exploration for Cook Inlet gas.
They told the chamber that even if there was a significant discovery in the Inlet, there would not be enough gas to meet demand.
“You hit 2018. What happens to the price of gas?” said Fauske. “In this community, we view 2018 as the ‘shoe’s gonna drop,’ because prices will go (up), and supply is going to be very, very minimal. So Alaskans have an opportunity to make a decision.”
That decision is one Bill Walker says should be made with a bigger picture in mind. Walker ran in last year’s Republican primary for governor and campaigned hard on building a large-volume “All Alaska Pipeline,” which would run from the North Slope to Valdez.
“We are limiting ourselves to a very small volume line,” said Walker. “That’s not the Alaskan way. That’s not the Alaska I grew up in.”
The ASAP line would be 24-inches in diameter. Walker says a 48-inch line would be needed to carry the volumes of gas needed for LNG exports.
“We’re trying to figure out what we should be doing on a small volume, when we should be doing something that benefits all of Alaska, that puts billions of dollars into the state coffers.”
Walker says the state the 7.5 billion dollars would be better spent in a large diameter line, preferably to Valdez.
The ASAP project did not look at building a 48-inch line, because of restrictions under AGIA, the Alaska Gasline Inducement Act, an agreement the state signed with Transcanada. AGIA limits the amount of gas an in-state line can ship.
A line to Valdez is one of the AGIA options, in addition to a pipeline across Canada and down to the Lower 48. But so far, Transcanada has not said whether it has secured the necessary gas contracts to finance the pipeline.
Lawmakers have looked to the stand-alone line as an insurance policy, in case no pipeline to the Lower 48 is built. But some have argued that it’s more like a big gamble with taxpayer’s money.
The ASAP project is not a done deal. Just as in the Transcanada and Denali project proposals, the stand-alone pipeline would have to conduct open seasons to find producers willing to commit their gas to the project.
ASAP managers told the chamber they’re moving forward on that. They hope to have environmental impact statements completed by next year, as well as some of the key permits necessary.
“I think this is really significant,” said Michael Rocereta, the commercial manager for the ASAP project. He told the Chamber, ASAP will be giving producers information about potential customers this week, something the producers have requested.
“It’s really interesting what we have developed in view of supply and demand, a view of what our customers will be, a view of what our solutions are for a project like this,” said Rocereta.
Fauske told the chamber that state ownership of a project like the pipeline could be a good thing. “A lot of people say state government can’t own stuff. Yeah, you can.”
Fauske gave a list of state-owned businesses from the Alaska Housing Finance Corporation, to the Permanent Fund Dividend, to the Railroad and the Ted Stevens International Airport. He says the key to success is to have someone else operate the line.
Fauske says, he still hopes AGIA turns out to be a success, but says ASAP is the next best option, because it will not only deliver gas that is cheaper than LNG imports, but create construction jobs.
Some critics question whether the gas from a stand-alone line would actually cost less, not without ongoing subsidies from the state. Others, including Alaska’s Federal Pipeline Coordinator, warn that subsidizing a smaller line could jeopardize chances to build a big line.
But in the meantime, ASAP has 200 million dollars set aside in the state budget to continue its work, work that Fauske is needed to keep Alaskans from being left out in the cold.
“We’re going to be in our basements burning our Permanent Fund checks to stay warm, while all this gas is sitting out there.”