Gas Supply: Too little, Too late?

Deck: 

GAS SUPPLY

Fortnightly Magazine - September 2004
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GAS SUPPLY

Pipeline and LNG terminal developments may arrive too late to prevent a natural gas disaster.

 

For exactly two months, MidAmerican Energy sponsored a $6.3 billion project to bring stranded natural gas from Alaska's North Slope to an adjoining pipeline in Canada. But when Alaska's Department of Revenue rejected MidAmerican's proposal for an exclusive partnership to develop the pipeline, the company pulled out.

"We believed our request to be the state's sole development partner for the initial project development period was reasonable, given the magnitude of the risk involved," says Robert L. Sluder, president of the project company, Alaska Gas Transmission Co.

The Alaska pipeline is not dead; Other companies, including a consortium of oil majors, comprised of BP, ConocoPhillips, and Exxon Mobil, are nursing their own plans to bring North Slope gas to the lower-48 states. But MidAmerican's abortive attempt exemplifies the on-again, off-again saga that has been played out around the project for the last three decades.

Despite its enormous gas resource, the North Slope thus far has been too remote to develop economically. Oil rigs in Prudhoe Bay currently produce significant amounts of natural gas, but with nowhere to sell it they simply inject the gas back into vacated wells, forcing out additional crude oil.

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