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Can the so-called "all-Alaska pipeline" really provide more benefit to the state than the Dalton and Alaska highways pipeline proposed by the North Slope producers?

One of of the world's leading ship and cargo brokerage firms doesn't think so. A recent issue of the Poten & Partners newsletter on liquefied natural gas issues reports that: "Even assuming markets could be found and producers dragged on board, the LNG project would be hard pressed to compete on fundamentals due to its high price tag."

(OK....so let us say the AGPA price tag is $20 Billion today. With $18 Billion in Fed loan guarantees. And could break ground in 4-5 years. That is very possible. Remember, AGPA has all the senior permits in hand. And, yes, the LNG tankers will be built outside. But let us go inside the numbers. The conditioning plant on the Slope is roughly $3 Billion. For both projects, it must be a "facilitie(s) that would be fabricated elsewhere and assembled here (VOT)". 800 miles of 48"pipe to Valdez is about $6 Billion. The liquefaction plant in Valdez is another $4 Billion. Another $3 Billion for incidentals. Now we are at a total of $16 Billion. That leaves $4 Billion for those "tankers that would be built outside the state". Built where? San Diego, maybe? Using American shipyards and workers? Now does that sound so bad? (AGPA has a deal with TOTE to do just that!). And I think at $ 400 million a copy, you could build 10. Way more than needed for the Valdez project. That total in 2012 numbers is about $20 Billion. Same as the Highway, according to them publicly. So that $ 4 Billion spent for LNG tankers "outside" is only about 20% of the entire project and all spent in America. Contrast that with all the tens of $billions our 3 Producers are investing in LNG Super tankers to bring their Foreign LNG to the U.S. At distances of 10,000 and 12,000 miles. (Valdez is just 2,500 to L.A.) Those new tankers are sure not being built in America. Providing American jobs. Now as for "facilities that would be fabricated elsewhere and assembled here". The Highway Line requires 24-28 Compressor stations. Won't those also be "facilities that would be fabricated elsewhere and assembled here"? Also, the proposed 52" or even 54" pipe has never before been milled. One estimate has it using the Planets entire steel output of one year to mill that much pipe. Will China, India, Europe, Russia and the U.S. all stand aside for Alaska/Canada that entire year? Won't those plants and mills for that 52"/54" pipe, which do not exist today, be built/milled in many Foreign countries and thus must also fall under "facilities that would be fabricated elsewhere and assembled here"? Answer us that VOT.)

New York-based Poten & Partners is a highly regarded worldwide firm that provides brokerage and consulting services to oil companies, ship-owners, maritime agencies, financial institutions and shipping ventures.

The firm's newsletter said that the pipeline/LNG project being pushed by the Alaska Gasline Port Authority has major obstacles in its way, especially its high cost relative to the amount of gas it could ship to market.

(Both the Highway and AGPA now propose the exact same volume of gas, 4.5 bcfd. So for $20 Billion, AGPA says it can deliver gas by 2012. Now, what is the cost and timelines of the Highway project? BP says they will come on line in 2016. Others say 2017. For this scenario, let us be kind and use 2015. The cost bandied about today is $20 Billion also. Same as AGPA (but I put their number in 2012 numbers). This $20 Billion Highway number is expressed today in 2001 numbers. I can prove that from the Producer statements I have in hand. Who out there really believes that a Highway project breaking ground in say 2012, will cost $20 Billion??? I will conservatively guess $30 Billion. Minimum. And then, if it is fair for the Voice of the Times to attack LNG tanker costs as a huge "extra" cost of the AGPA project, then I can point out that by their own (Producers) admission, the Highway project is currently short 15 tcf of gas. And no one is drilling for gas yet. They need to find that gas to do their own project they have stated publicly. That cost? $1 billion per 1 tcf discovered and produced. Total: an additional $15 billion dollars. Using the VOT logic, I get to add that to the cost of the Highway project. So now. $30 billion (2015 numbers) plus $15 billion comes to $45 Billion to deliver the same volume that AGPA can deliver some 5 years earlier. Albeit not at full capacity in the initial start up. But that is the same for the Highway. It might take the Highway 3 years to even reach full 4.5 bcfd throughput. And because AGPA starts out at a much lower ramp up, it doesn't need that extra 15 tcf. I would say, as the VOT does today, that a major obstacle to the Highway is also "its high cost to the amount of gas it could ship to market".)

The authority claims the motherhood title of "the all-Alaska pipeline" though much of the investment would be in tankers that would be built outside the state and facilities that would be fabricated elsewhere and assembled here.

(reread all the above again)

The Poten & Partners newsletter noted that: "Proponents say the project's difficulties could be overcome if Juneau pledged its royalty gas, agreed to invest $4 billion in the venture and forced the producers to sell it gas." But it said even those provisions would not be enough to tip energy economics in favor of the authority's pipeline/LNG project.

Another advantage to the Alaska Highway line is that a portion of the gas it carries could be used to fill a growing need for gas fuel in development of Alberta's tar sands industry.

(OK.......let us now ship our Alaskan gas (at such high volumes as to impact oil loss here ((the AOGCC is working on this critical analysis)), resulting in lost oil revenues to the State???) so that Canada could use "a portion of the gas it carries could be used to fill a growing need for gas fuel in development of Alberta's tar sands industry". Let me get this correct. The VOT is now advocating using our gas to help Alberta's tar sands industry instead of getting gas to South-central with a spur line for our own use AND to jump start our own expanded petrochemical industry here and provide in-state propane for cheap rural use and our own valuable export?)

The newsletter said the bottom-line consideration and the one most likely to tip the scales in favor of the producers' line "is that the (Alaska Highway) pipeline makes the most money for the state."

(I don't think so. Someone prove it. $20 Billion in 2012 vs. $45 Billion in 2015? It is not just about the "most money" for the State, It is about the most maximum benefits the soonest. The greatest obstacle Alaska faces is not doing any project at all. And if we do not capture market share by 2010-2012, Alaska's gas may not be marketed for a long, long, long time.)