Persily says Alaska needs a gasline more than producers

Larry Persily speaks to the Juneau World Affairs Council on Thursday. (Photo by Casey Kelly/KTOO. Click to enlarge)

The federal coordinator for Alaska Natural Gas Transportation Projects says Alaskans need to stop thinking of natural gas as the next oil.

Larry Persily says the difference between the gas that would go into a line from the North Slope, and the oil currently filling the Trans-Alaska Pipeline, is that the state needs a natural gas project more than producers or world markets need Alaska’s gas.

“We need the gasline for the decades of affordable fuel it’s going to provide to Alaskans – natural gas for railbelt communities, hopefully propane for everyone else,” says Persily. “We need to accept that we need a line for the jobs, for the tens of billions of dollars in investment that it will bring along, and for the additional barrels of oil that it will put into TAPS that will accompany all of that exploration and development for gas. And after all those good things, there will be some tax and royalty dollars too. Not nearly as much as oil, but it will be a thick icing on the sweet cake.”

Right now Persily says economics and Alaska politics are standing in the way of a line being built.

When the legislature passed the Alaska Gasline Inducement Act in 2007, the idea was that North Slope natural gas would be sold in the continental United States. But with cheap and plentiful reserves of shale gas now available in the Lower 48, some state leaders – including Governor Sean Parnell – have decided to refocus efforts on exporting liquefied natural gas to the Pacific Rim.

Persily says just because the bottom fell out of the U.S. market, doesn’t mean Alaska will suddenly be able to export its gas. For one thing, there’s just as much competition in Asia as there is domestically. For another, there are certain restrictions placed on exports.

“You have to get an Energy Department license. Anybody who’s followed the battles in Nikiski, where Cook Inlet gas, ConocoPhillips has been fighting with the Department of Energy to get their license renewed over the years. You have to show the Department of Energy that you can take those BTUs, ship them overseas, and it will not hurt American consumers, it will not hurt the American economy,” Persily says. “Alaska gas needs a second approval under federal law. You also have to show, to export gas off the North Slope overseas, you have to show that it is not going to harm what’s called the Alaska natural gas transportation system – the pipeline route along the highway to the Lower 48. That’s the law that passed Congress in ’77. There’s that protection in there. It doesn’t mean you can’t, it’s just these are the hurdles you face.”

Persily says it’s time for state leaders to decide the best way to get Alaska’s vast supply of natural gas to market. The problem is that those same leaders keep falling in love with different projects.

“I’m sort of surprised we don’t have a collective case of sexually transmitted disease because we’ve hopped in and out of bed with our favorite project over the decades so many times,” he says.

Persily dismisses talk that Alaska has missed its window of opportunity as far as gas is concerned. He says the market is constantly evolving, and demand for Alaska gas will be realized one day.

“As to which market? Where it goes? I think we need to petition ourselves, get certificates, get designs, position Alaska for a couple of years, see how the markets play out,” says Persily. “And then hope that the state can work out a fiscal deal with the producers to let them take the risk to get it built into long-term what will be a profitable market.”

Persily spoke last night (Thursday) to the Juneau World Affairs Council.