The Alaska Natural Gas Pipeline Project
A $30 billion deal to construct a new Alaskan pipeline is in place that will send untapped natural gas directly into American and Canadian markets.
A deal initially discussed by oil giants BP Amoco, ConocoPhillips and Exxon Mobil would have enabled construction on a new Alaska Gas Pipeline that could ultimately extend as far south as Chicago. As proposed it was estimated to take more than ten years to complete, and the first phase alone could have seen spending in excess of $600 million. If and when completed, the Alaska Gas Pipeline will be the largest private construction project ever.
The Alaskan Gas Pipeline started out as a joint venture with proposed funding coming from state and private resources.
A proposal was first submitted in November 2007 by ConocoPhillips to former Alaskan governor Sarah Palin, but was rejected because it was outside the bid requirements of a new Alaskan law passed in May of that year.
Another proposal was filed in January 2008, which was turned down by Palin citing that the deal would limit Alaska's regulatory powers on the pipeline. Seeing no other option, ConocoPhillips then moved forward with the deal by contacting BP Amoco with an offer to become an investment partner in the pipeline.
Ultimately, however, TransCanada - together with ExxonMobile - got the nod. Read about their Alaska Pipeline Project here.
The idea behind the Alaska Natural Gas Pipeline project is simple: find a way to extract Natural Gas from the north slope and inject it into American and Canadian markets to generate revenues and bolster the available natural gas supply. Alaska's North Slope, the source of the Natural Gas reservoir, is currently producing 731,000 barrels per day. The proposed pipeline deal would increase total production by almost 1000 times what production is now. Additionally, natural gas is currently being extracted from the North Slope, but it is not being processed and shipped to market. Rather, the natural gas is currently being used to extract more oil by being pumped into existing oil fields, which increases pressure in the reserves and allows more oil to be extracted. The pipeline would allow the three oil companies, who already hold a lease on approximately 35 trillion cubic feet of natural gas in the North Slope, to sell the processed natural gas.
Recent advances in fossil fuel economics has made the project a reality, as profits generated from the gas pipeline project would exceed the overall cost of the project as gas prices continue to rise to record highs. The pipeline would allow companies to gain access to resources that are within America's borders, which would lessen our dependence on oil and natural gas overseas in politically unstable climates. Early projections estimate that when the pipeline's construction is finished, it will be capable of transporting over 4 billion cubic feet of natural gas per day into markets that are constantly looking for more supplies of natural gas as known reservoirs diminish. This pipeline will give Americans confidence in a domestic source of energy that could supply upwards of 6 to 8% of overall consumption in the United States.
The initial plan is to have the Alaska Gas Pipeline extend to Alberta, Canada, where the natural gas will then be fed into existing markets and pipelines. The overall Alaska Gas Pipeline "system" is going to be the product of several other "mega-projects." Initially, the mined gas will undergo treatment at a gas treatment plant in northern Alaska that is capable of removing carbon dioxide impurities in 4.5 billion cubic feet of natural gas per day. After being treated, the natural gas will then be transported through a large diameter, high-pressure, chilled pipeline to Alberta through the "Alaska to Alberta Pipeline System." From Alberta, the natural gas resource could be transported an additional 1450 miles through the "Alberta to Market Pipeline System" onto Chicago, or transported through an already existing pipeline system where the processed natural gas would enter markets throughout Canada and the United States for consumption.
The physical pipeline itself is a buried steel high-pressure line with a diameter of 48" to 52". Along the proposed path will be 24 compressor stations and the pipeline will allow for an overall capacity of 4 billion cubic feet per day. The design plans accommodate future expansion and in state gas take-off. Engineers estimate that the pipeline has a operating life of 35 years and optimistic plans say that if the construction to Alberta is successful, the option remains to extend the natural gas pipeline as far south as Chicago.
Alaskans welcome the pipeline project because it will increase state revenues and will also provide long-term job security for residents.
Immediate effects on the Alaskan economy include an explosion of available jobs. For the Alaskan portion of the gas pipeline, estimates report that the pipeline will take 5,880-construction man-years and 32 operating man-years to complete and operate. The North Slope Gas Treatment Plant would take 1,150 construction man-years to complete and 76 operating man-years to operate. In-State Module Fabrication would take 5,000 construction man-years to complete. Effectively, this means that there is a need for about 6,500 oil jobs in Alaska plus thousands of other jobs on the pipeline that extend outside of Alaska. Additional immediate benefits to the pipeline involve training opportunities for young Alaskans and the economic benefits from an increase in jobs would create a shockwave that would fuel Alaska business. The Alaska Natural Gas Pipeline would also give Alaskans additional access to gas and the gas pipeline project would enhance investment in exploration.
Long-term benefits of the Alaska Natural Gas Pipeline include a significant revenue increase for state and local needs, additional creation of oilfieldjobs and careers, 50,000 indirect jobs, new economic opportunities and access to a long-term gas supply for Alaskan homes, businesses and industries. Additionally, the Alaska Natural Gas Pipeline would extend the life of the trans-Alaska oil pipeline for more than 20 years, which would create even more jobs.