Processing Magazine

In-State Natural Gas Pipeline Could Cost $7.5 Billion

July 6, 2011

According to the Associated Press, a natural gas pipeline project meant to meet energy needs in Alaska''s most populous region could cost $7.5 billion and require that the state cover much, if not all, of the construction costs. It will now be up to lawmakers and Gov. Sean Parnell to decide whether it makes sense for the state to move ahead with the project or if the state should wait to see if a major line, capable of carrying gas to North America and perhaps overseas markets, is doable. Neither Parnell nor several lawmakers speaking during Tuesday''s teleconference from Anchorage suggested this had to be an either-or situation. But given that both projects could require significant state investments to make them viable, that could end up being the case. The report, released by the Alaska Gasline Development Corp., makes an argument for public ownership of a smaller, in-state pipeline, saying it would provide the lowest tariff. The report noted that state financing of a line through issuance of debt could result in a downgrade of the state''s high bond ratings, but the development agency would demonstrate to rating agencies the "credit positives" of this project. The $7.5 billion price tag was given with an uncertainty range of plus or minus 30 percent.