Tuesday, December 15, 2009

Alaska gas line coordinator nominee’s daunting task

Larry Persily obviously isn’t afraid of a big challenge. There aren’t many bigger than keeping the proposed natural gas pipeline from Alaska moving forward when shale gas formations in the Lower 48 states promise abundant domestic supplies and prices are depressed.

Alaska’s congressional delegation applauded US President Barack H. Obama’s nomination of Persily on Dec. 9 to be the project’s new federal coordinator. Assuming that he’s confirmed by the US Senate early next year, Persily will need to go to work immediately to convince policymakers beyond Alaska that the project is not just necessary, but a vital component in the long-term US gas picture. That’s an exceptionally hard case to make now that so much attention is being paid to shale gas resources which are much closer to major markets. But it could be crucial.

Markets change. The very shale gas resources which look so promising today were considered inaccessible 20 years ago. Technology changed that and they are slowly being developed in many instances. Questions have arisen about impacts in regions where there hasn’t been oil and gas activity previously, but producers, property owners, and state officials are addressing the issues.

Potentially robust demand is a significant variable, particularly if gas emerges as the primary fuel for power generation and an eventual backup to wind, solar, and other alternatives which could contribute significantly, but intermittently. A significant push to reduce US emissions of carbon dioxide would potentially accelerate gas demand growth.

Backers of a gas pipeline from Alaska essentially say that the project could be strategically important and economically sound by the time it would be built and ready to operate. The Obama administration has indicated that it considers the project an important part of its overall energy strategy, but other politicians outside Alaska aren’t talking it about it much these days. The key could be the companies which have put forth the two proposals to build it. So far, all of them are still on board.


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