This is an excerpt from EERE Network News, a weekly electronic newsletter.

February 08, 2006

FERC: Alaska Gas Pipeline Planners Need Financial Certainty

The proposed developers of a pipeline to deliver natural gas from Alaska need greater regulatory and financial certainty to proceed with the project, according to the Federal Energy Regulatory Commission (FERC). FERC issued its first biannual status report to Congress on February 1st, as required by the Energy Policy Act of 2005. At present, there are three potential projects being seriously considered for bringing Alaskan natural gas to the lower 48 states. Two follow the same path: paralleling the existing oil pipeline at first, then following the Alaska Highway into Canada and connecting to the Alberta Hub, a natural gas facility about 80 miles west of Edmonton. The third proposal is for a pipeline from Prudhoe Bay to Anderson Bay—near Valdez, Alaska—where a liquefied natural gas (LNG) facility would export the gas to worldwide markets.

As discussed in the report, a successful Alaska natural gas pipeline will have to overcome a variety of significant impediments presented by the tremendous size, scope, and cost of any such delivery system; the long lead-time needed to develop such a project; unique environmental and competitive conditions; and the project's international scope. Because of these obstacles, potential project sponsors agree that before they can move ahead, they need assurances that the project will be economically feasible and require fiscal certainty regarding Alaska state tax and royalty payments. They also need the United States and Canada to address jurisdictional, permitting, and financing issues. According to FERC, these impediments are being addressed by legislative initiative and other governmental action, both at the federal and state level. See the FERC report (PDF 57 KB). Download Adobe Reader.