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Alaska Gas Pipeline Prospects Difficult to Assess With 2018 the earliest year that an Alaska pipeline could start delivering gas to market, predicting whether the project makes economic sense requires taking the long view.
While some skeptics say the continental U.S.’s supply of shale gas as well as competition from imported LNG will make it hard for Alaska gas to ever compete, North Slope producers are betting that gas demand will continue to rise and that prices will ultimately rebound.
Tony Palmer, a vice president at TransCanada Corp., recently told a press conference, reported by the Anchorage Daily News, that whichever party ultimately builds an Alaska pipeline will need to keep costs low and stick to a tight construction schedule, rather than spend resources worrying about factors beyond its control—such as whether lease holders on the North Slope will be willing to commit their gas to a pipeline delivering to a potentially saturated market.
At the moment, gas supply is at a record high and prices are very low. But new trends in energy consumption—from the more extensive use of gas to back up intermittent renewables on the grid, to its gradual adoption in vehicles and industrial processes—suggest that demand isn’t likely to go away.
The U.S. Energy Information Administration projects that demand for natural gas will increase by 2.5 trillion cubic feet annually between 2009 and 2040. Furthermore, gas in shale plays, while abundant, is expensive and requires a lot of water to extract—and possible regulation to protect drinking water supplies could impact it even further. That would seem to indicate there’s likely to be demand for the 1.6 trillion cubic feet per year an Alaska pipeline could supply to the U.S. market. |
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