As Google says, “the wind cries for transmission.” But the opposite is true as well: without new wind and solar energy projects, we would not need to build so many new transmission lines. Each...
expectations of nation building in a frontier region.
First, by giving the state of Alaska the right to interrupt the certification process to require studies of local gas needs, and how those needs might be met by through local exploration and development (perhaps even creating new retail gas utilities), Congress has added uncertainty to a project already fraught with risk.
Also, by forcing FERC's open-season solicitation process to boost competition among firms in the oil and gas exploration and development sector, Congress is swimming upstream against a current of petroleum industry consolidation. The Prudhoe Bay field once claimed some 17 different companies with oil and gas leases; Point Thomson, to the east, had 26. Now each counts only five. That total includes the "Big 3" (BP, ConocoPhillips, and ExxonMobil), which own the Trans Alaska oil pipeline (TAPS), and nearly all of the 35 Tcf proven gas reserves in the state.
These so-called "big three" would prefer that Congress and FERC step out of the way. Just let us get our own financing, they would say, based on our own credit standing. Let us plan and build the project to just the right scale needed to accommodate the proven gas reserves that we already own on the North Slope. Then, if more gas is found later on, somewhere else in Alaska, we'll deal with that when the time comes.
That's likely the best way to get the pipeline up and running, with the least fuss, but that isn't the way that Congress wrote the law.
Instead, by forcing the project and the FERC rules to foster competition, Congress has emboldened the state of Alaska to demand a laundry list of rights for its local citizens and companies:
No preferential presubscription deals for "anchor" shippers; Guaranteed future access to pipeline capacity rights, even for gas deposits as-yet undiscovered; Rolled-in pricing for future pipeline expansions (anticipated to serve those undiscovered fields); Equal standing for short-haulers in the bid evaluation process, even if capacity prices or transportation rates are keyed to distances or pipeline zones; and Term limits on capacity reservation contracts, so that today's winning bidders who hold the proven leases (read "the big three") can't monopolize capacity and shut out developers 20 or 30 years down the road, when, as anticipated, wildcatters discover more gas across the State.
Most observers expect that Big 3 will sponsor and build the initial pipe.
In April 2002, presenting the results of a $125 million feasibility study, the big 3 Alaskan oil majors said it could take five to six million tons of steel and more than 50 million construction man-hours to build a 3,600-mile-long pipeline to bring Alaskan gas to the lower 48. That's 1,800 miles ($7 billion to $10 billion) to Alberta, and then another 1,800 miles of new pipeline from western Canada to reach markets in eastern Canada, the American Midwest and Pacific Coast. That also would assume a 52-inch pipe carrying (in its initial stage) between 4 and 4.5 Bcf/day, with a likely transportation cost of $1.98/Mcf to Chicago, plus an added