Alaskans can perhaps be excused if they happen to have a muted response to Gov. Bill Walker’s signing of an agreement Thursday in Beijing regarding construction of an 800-mile natural gas pipeline from the North Slope and the sale of most of that gas to China.
Alaskans have been hearing about a North Slope natural gas pipeline for more than four decades.
Nevertheless, the agreement between the state of Alaska and Alaska Gasline Development Corp. and the government-owned petroleum company Sinopec, China Investment Corp. and the Bank of China — signed in the presence of President Donald Trump and Chinese President Xi Jinping — does renew hope for this long-sought project.
The agreement is, in reality, a framework in which the parties agree to work toward the possibility of building the pipeline.
Gov. Walker touted the agreement in more definite terms, saying it “will provide” Alaska an economic boom comparable to that of the development of the oil pipeline in the 1970s.
But the caveats were clear in statements of AGDC President Keith Meyer and the official statement of Sinopec.
Mr. Meyer said the agreement “brings the potential customer, lender, equity investor, and developer together with a common objective of crafting mutually beneficial agreements leading to increased LNG trade between Alaska and China.” Note the word “potential.”
And this from Sinopec: “Sinopec is interested in the possibility of LNG purchase on a stable basis from Alaska LNG.”
The bottom line is that the parties are going to work together to see if they can get a pipeline built and gas produced in a manner that benefits all sides.
That’s good. And seeing progress of most any sort is what Alaskans should want.
But numerous questions remain and many details have yet to be worked out in the $43 billion non-binding agreement.
For example, is it smart to lock up 75 percent of the gas supply with a single customer, in this case China?
Is China just trying to play Alaska against Australia, which has sharply increased its natural gas production through several projects.
Is it, from a national perspective, wise to provide such a massive amount of a U.S. natural resource to a nation that increasingly sees itself as supplanting the U.S. as a world leader?
And, perhaps the biggest of all: Will the oil companies that hold the North Slope leases find it in their best financial interest to develop and sell the gas?
Remember, BP, Conoco Phillips and ExxonMobil haven’t shown much interest lately in developing the North Slope. It was during the administration of former Gov. Sean Parnell, whom Gov. Walker defeated in 2014, that the three companies seemed ready to build the pipeline on their own.
Back then, momentum toward a pipeline seemed great. The state government, the oil companies and pipeline builder TransCanada were all in agreement. Preliminary engineering work was underway and a decision on whether to build was set for 2019.
Gov. Parnell issued an exuberant statement stating that, “For the first time we have alignment among the necessary parties … for a project that will create thousands of jobs and provide fuel to Alaska homes and businesses for decades.”
Nothing came of it, which is why Alaskans might be skeptical of this week’s news about an agreement with China.
Even so, and although many questions remain and much work lies ahead, it is encouraging to see that Alaska officials remain committed to getting the North Slope natural gas into the market and into the hands of anxious customers.
— Fairbanks Daily News-Miner, Nov. 12