Alaska’s Natural Gas Is Good

I had the opportunity to attend the winter committee meetings of the National Association of Regulatory Utility Commissioners this week in Washington, D.C. There were three full days of committee meetings on natural gas. Sunday set the stage for the week as there was much interest on recent studies related the abundance of natural gas in the United States. Much of the focus over the past year has been on shale formations and the assessment released by the Potential Gas Committee (PGC) in 2009. The assessment found that the United States possesses a total natural gas resource base of 1,836 trillion cubic feet (Tcf) and a total available future supply of 2,074 Tcf-the highest resources evaluation in the PGC's 44-year history, equaling about 100 years of supply. Americans consume an average of 22 Tcf per year.

It did not take long for the question to arise that with all this new natural gas available is there a need for an Alaska natural gas pipeline? The answer during Sunday's Subcommittee on Gas discussion was an unequivocal yes! Natural gas is the cleanest source of all hydrocarbons. With many of the nation's coal facilities 25 years of age and older, natural gas is the preferred future energy source for electric power generation. Moreover, municipalities throughout the country are looking to power their automobile fleets with clean burning natural gas. The message is clear; we need all the natural gas we can domestically produce to ensure the energy security of the United States. Finally, no matter what committee was in session-all roads led to job creation and the natural gas industry is part of the solution not the problem.

On Tuesday, the Committee on International Relations and Committee on Gas joined together to discuss natural gas as it relates to the United States and Canada. The panel discussion was chaired by the Honorable Gaetan Caron, Chairman and CEO of Canada's National Energy Board; and included panelists Bob Pickett, Chairman of the Regulatory Commission of Alaska; Jon-Paul Therot, Chairman of the Quebec Energy Board; and Phil Moeller, Commissioner of the Federal Energy Regulatory Commission. I must make the qualifying statement that the government officials from the United States and Canada were not speaking or otherwise representing the official positions of their respective boards, commissions and agencies.

It was an excellent panel discussion. FERC Commissioner Phil Moeller articulated that an Alaska natural gas pipeline is needed. He stated that regardless of what people think about natural gas it will become part of the electricity generation mix. Mr. Moeller even addressed the estimated price tag of the gasline that is approaching $40 billion. He did this by recalling his trip to Alaska's North Slope in the summer of 2008. During a break while visiting various facilities in Deadhorse, he and his colleagues sketched out a "back-of-the-envelope" calculation on the natural gas that is basically being produced but re-injected back into the reservoirs. They figured based on market prices at the time that Alaska producers were re-injecting nearly $35 billion per year back into the reservoirs every year.

Alaska's Bob Picket started off his presentation with a simple but resounding, "Alaska gas is good." He focused his comments on two main points: (1) our relationship with Canada is something the United States should not take for granted; and (2) unconventional gas is not a killer of an Alaska natural gas pipeline. His opinion was that Canada and the United States are the best of trading partners and energy is a key factor in the relationship. If it were not for Canada, the United States would be at the complete mercy of overseas nations for our vital energy supplies. Canada is #1 when it comes to working with the United States. On the same token, it was pointed out that the United States, with its increased domestic production of natural gas, is increasingly exporting more gas to Canada each year. The relationship between the two nations is invaluable. When it came to the discussion of natural gas, whether related to unconventional gas plays or the Alaska natural gas pipeline, Mr. Pickett, was firm, "The natural gas industry creates jobs; it is the cleanest of all hydrocarbons; the gas is domestically produced; it is integral to our energy and economic security; and we need to utilize it more." The loud and clear message delivered by Chairman Picket was, "It is time to stop treating natural gas as an orphan and stop leaving natural gas out of the policy discussions in the United States."

Alaska's natural gas is good!