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Alaska Stands to Profit from Gas Pipeline

Published On: Dec 24 2013 01:45:17 PM AKST   Updated On: Nov 25 2013 10:10:00 PM AKST

Although it’s still too early to give the exact number, tens of billions of dollars could be generated from the production of natural gas in Alaska. The state constitution requires 25 percent of royalties to be deposited into the Alaska Permanent Fund.

Less than a year after a multi-billion dollar project laying the groundwork for a natural gas pipeline was passed by the Legislature, officials got a look at a 188-page report detailing how much the state could make in royalties.

The study outlined two scenarios, both of which are risky.

"If we take it in kind, that means we have to go find buyers for it,” said Department of Natural Resources Commissioner Joe Balash. “We have to find a way to get it from the fields in Prudhoe Bay and Point Thomson, all the way down to Southcentral."

It would take a lot of work on the state’s behalf to find buyers for its share of the natural gas.

The state can instead choose to take its share of the gas "in value," shifting the job of selling the gas to companies such as BP, ConocoPhillips and ExxonMobil -- a move which could backfire if the producers can't find a buyer.

"We want to start off getting our gas in value,” said Rep. Chris Tuck (D-Anchorage).  “We don't want to get into selling the gas ourselves; we don't want to get into the marketing of that, trying to find a buyer for long-term purposes."

Tuck, a member of the House Resources Committee, saw the report for the first time Friday.

"Pricing is definitely going to be a risk,” Tuck said. “Supply is going to be a risk, demand is going to be a risk, but studies have shown that demand is only going to go up, and there's going to be a lot of reserves depleted worldwide."

It could be seven to 10 years before gas is flowing through the line, and there's no telling how much natural gas prices will fluctuate between now and then.

"The resources belong to the people of Alaska under our constitution -- not just the people who are here today, but the people who will be here tomorrow," Balash said.