Saturday, August 15, 2009

Palin’s appointment is going to haunt Parnell

Last year, Sarah Palin appointed a pipeline czar. Harry Noah, who was Executive Director of Mental Health Trust Lands, was appointed by Sarah to the newly created position of natural gas pipeline czar. The position was charged with overseeing the development of natural gas pipelines and moving Alaska’s gas to market. Harry is a miner without oil and gas experience, but is someone who has ties to Dep. Commissioner Marty Rutherford, Dept. of Natural Resources (DNR).

Rutherford was a former lobbyist for TransCanada. She has worked for the State in one capacity or another from the Knowles Administration through the Palin Administration, and now is one of Parnell’s upper echelon DNR staff. This individual, like Noah, has no oil and gas experience, but has been continually put in positions to influence oil and gas decisions.

The problem for Parnell is, that Noah’s post duplicates the voter created Alaska Natural Gas Development Authority’s (ANGDA) portfolio. ANGDA was created with the approval of Proposition 3 by 62% of Alaskans voting in the 2002 election.

What was ANGDA’s mandate?

To develop and market Alaska’s natural gas resources both in-state and for export, including the building of a natural gas pipeline to Valdez.
Then Gov. Frank Murkowski, who had campaigned on his own pipe dream, did not support ANGDA. Gov. Murkowski tried to give ANGDA the cold shoulder. He initially refused to fund ANGDA. Murkowski was finally forced to give the voter created authority an office and a meager budget to begin the job of getting Alaska’s gas to market. Murkowski then proceeded to continue to ignore ANGDA for the rest of his tenure as governor.
ANGDA remained in the shadow of the Murkowski pipeline to nowhere dream for the rest of the Murkowski Administration.

Sarah Palin, running against Murkowski in 2006, supported both an all-Alaska pipeline route down TAPS to Valdez and ANGDA as the vehicle to get our gas to market and to build the pipeline. During the gubernatorial campaign, Sarah criticized Murkowski’s pipe dream. ANGDA was mentioned prominently in many of her speeches on natural gas issues.

The looming Cook Inlet natural gas shortage was also a topic spoken of by our former Governor as an example of ignoring the obvious.

Once in office, Sarah Palin did a Frank Murkowski with her AGIA plan, which became the third such plan to build a large capacity (>4bcf/day) pipeline through Canada. This plan, like those of her predecessors, served to increase Canadian job opportunity, both in Alaska and Canada.

Earlier this year, Sarah appointed Harry Noah as her pipeline czar. Shortly thereafter, ANGDA’s funding was cut by the Palin Administration.

Since, the ongoing row between ANGDA and Noah has become more obstructionist on Noah’s part.

In creating the pipeline czar position, Gov. Sarah Palin did exactly what she campaigned against: duplication of mission, and an unnecessary growth of government.

As reported in the Copper Center Record in April of 2009, ANGDA has evolved into a highly respected professional organization with innovative ideas to get Alaska’s gas to market and to make use of the abundant propane that is part of our natural gas deposits for home and business heating in the Bush.

The core of ANGDA’s strategy has been to engage the private sector’s participation in its plans. The propane initiative has a commitment for propane production from the North Slope producers. Private companies will transport, distribute and sell the propane. ANGDA is conducting seminars so that electric utilities will be able to bid intelligently on natural gas supplies during the upcoming open season.

ANGDA has completed both the rights of way and economic studies for the Glenn-Richardson highway route for a 24 inch natural gas line to Palmer’s Enstar Hub. This route will take off from either the AGIA pipe at Big Delta or from an all-Alaska pipe to Valdez at Glennallen.
The economics of gas delivery are tied to volume. Taking off of either proposed big pipeline projects gives south central Alaska gas customers the best pricing for delivery. The cost of our gas will be included in the transport of the larger volume, thereby reducing the cost of any gas delivered to south central.

Pipeline Czar Harry Noah wants a 24 inch pipeline from the North Slope down the Parks Highway to Anchorage. The low volume of approximately 500 million cubic feet per day in comparison to the rates for transporting 2.5 bcf per day through an all-Alaska pipeline to Valdez will result in south central gas customers paying double or more on their gas rates to provide Fairbanks with essentially, the cheapest gas in the State. This is because Fairbanks gas would have the least cost for transport. Those of us in south central and on the Kenai would pay more because of the distance transported.

ANGDA’s position is that if the Open Seasons in 2010 for the Alaska-Canada pipe projects (AGIA and Denali) are a bust, then an in-State "bullet line" from the North Slope through Fairbanks down into south central Alaska should be considered. Until then, it makes the most economic sense to bring a spur line down the Richardson and Glenn highways off of any of the proposed large diameter pipeline projects to the gas hub at Palmer.

Presently, projects under consideration are Conoco-Phillips Denali project and AGIA (TransCanada and Exxon).

TransCanada and Exxon have recently expressed interest in an all-Alaska pipeline to Valdez and LNG terminal option, given the Canadian LNG terminal project at Kittimat, B.C. (This is what the Alaska voters created ANGDA to do in 2002.)

ANGDA has already completed much of the work in evaluating the Parks route. ANGDA’s work with that of the U.S DOE in 2005, private oil industry in the mid- 1990's, and the 1988 Federal Environmental Impact Study completed by the former Yukon Pacific Company (YPC) all concluded that while the Parks Highway route and the Richardson/Glenn are about equal in cost of construction, the Parks route has permitting and engineering hurdles yet to be addressed.

The Parks Highway route would require rights of way through State and federal parks and wildlife refuges, including major salmon tributaries. This route would be a lawsuit magnet by the environmental anti-development groups. Further, the route presents major engineering challenges along the route near Cantwell, Denali, and at Hurricane Gulch that have yet to be addressed.

The only route that will get natural gas to south central in a timely manner is the ANGDA route down the Richardson/Glenn Highway corridors. This route has none of the Federal or State environmental or engineering impediments. This route uses the existing TAPS oil corridor to Glennallen. The last 150 miles from Glennallen to Palmer is the only segment not in the TAPS right of way. In 2005, ANGDA acquired the State of Alaska Conditional Right of Way for last 150 miles to Palmer from Glennallen . Therefore, the route proposed by ANGDA has none of the impediments of the Parks Highway route. Both routes use the TAPS corridor right of way north of Fairbanks.

The ANGDA preferred route will provide the cheapest gas to Alaskans.

Pipeline Czar Harry Noah now intends to duplicate the work on the Parks Route with additional studies at additional State expense. Baker Engineering is contracted to repeat much of what has already been accomplished by ANGDA, the feds and YPC.

Playing against all of this is the looming shortfall in Cook Inlet natural gas supplies. The specter of rolling brown outs and blackouts during peak winter months are being publically discussed for the first time. The lack of sufficient supplies of Cook Inlet natural gas to fuel both homes and Chugach’s gas turbines at Beluga Point was openly and harshly discussed at a recent Regulatory Commission of Alaska (RCA) meeting reported by the Petroleum News. The power utilities were criticized for not having any contingency plans for such an eventuality.

Yet, the reality is, this is a looming situation known for years. It is the result of the politics of oil in Alaska, and a lack of concern by Alaska’s Legislature and governors, including Sarah Palin.

As previously reported, Marthon Oil complained to the Anchorage Chamber of Commerce earlier this year about declining gas supplies and the intransigence of the Regulatory Commission of Alaska (RCA) in issuing new drilling permits for exploration, making it difficult for the oil company to plan and allocate drilling resources. Just 7 new wells were drilled in Cook Inlet last year.

Over 10,000 new wells were drilled in Alberta alone last year. That volume of new wells is considered a bad year for oil and gas in Alberta. Down from 13,000 the year before and 18,000 the year before that.

ANGDA was created by the voters in 2002 to do what Harry Noah was charged with under the Palin Administration. Gov. Sean Parnell is continuing that mistake.
Sarah Palin’s Harry Noah may be the albatross impeding the Parnell Administration’s attempt to get Alaska back on the oil and gas development map.

The voters knew what they wanted in creating ANGDA. We wanted an all-Alaska natural gas pipeline. However, three governors and the Legislatures of those years all failed us.

The Canadians are moving swiftly to tie up Asian gas markets for their LNG facility under construction at Kittimat, B.C.

Funny, the Canadians can export natural gas to Asia cheaply, but Alaska cannot.

Why?

Both Sarah Palin and Frank Murkowski attempted to thwart the will of the people by impeding ANGDA’s mission.

The specter of rolling brownouts and blackouts in the middle of winter in Alaska’s most populated region is real.

Parnell needs to eliminate the position of pipeline czar, and let ANGDA do its job. If he continues to allow Noah to create conflicts with ANGDA and to further delay the opportunity to put Alaska’s North Slope gas to best use, Parnell may very well have to answer to the people in 2010.

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