Wednesday, October 22nd, 2014

The Obameter

Work to build natural gas pipeline from Alaska


"Will work with the Canadian government, state of Alaska, oil and gas producers, and other stakeholders to facilitate construction of the pipeline. Not only is this pipeline critical to our energy security, it will create thousands of new jobs."


Subjects: Energy

Updates

Pipeline project faces hurdles, but Obama's kept promise to keep pushing for it

During the 2008 presidential campaign, Barack Obama promised to "work with the Canadian government, state of Alaska, oil and gas producers and other stakeholders to facilitate construction of” an Alaska natural gas pipeline. "Not only is this pipeline critical to our energy security, it will create thousands of new jobs," he said.

The Alaska Pipeline Project would construct and operate a pipeline for moving Alaska North Slope gas to market. Its main elements are a 48-inch-diameter gas pipeline that would run either to the northern part of the Canadian province of Alberta or to the port city of Valdez in southern Alaska. (This is not to be confused with the Keystone XL pipeline, which would carry petroleum rather than natural gas and which Obama, in a controversial decision, moved to deny a key approval in January 2012.)

As we noted when we last checked this promise about two years ago, efforts to bring natural gas to markets farther south have met with cost, political, and environmental hurdles over the last 30 years. In 2008, the state of Alaska approved legislation to award a license to TransCanada Alaska to develop and build a natural gas pipeline Alaska also pledged up to $500 million in state support for the project. The Federal Energy Regulatory Commission ultimately will have to approve the pipeline.

Under the project's official timeline, construction would begin in 2015, with the pipeline ready to deliver the first natural gas by 2020. Since that's well after Obama will be leaving office, we can't rate this promise based on whether or not the pipeline is built.

Instead, we will rate Obama on whether he has worked to "facilitate construction of” the pipeline.

As we noted in our previous update, Obama discussed the matter with Canadian Prime Minister Stephen Harper during his first presidential visit to the country in February 2009. More recently, he wrote a letter to the Alaska Oil and Gas Congress in support of an Arctic pipeline. "I share with you the anticipation that a North Slope natural gas pipeline could finally be on its way south to serve North American markets," he wrote. "In addition to energy security, the pipeline would provide short and long-term economic benefits far beyond the tens of thousands of construction jobs it would create. The nation's electrical utilities, manufacturers, businesses and homeowners will all live better with affordable, domestic natural gas supplies.”

The primary player within the administration has been the Office of the Federal Coordinator for Alaska Natural Gas Transportation Projects. This office was established by Congress in 2004 "to expedite and coordinate federal permitting and construction of a pipeline and enhance transparency and predictability of the federal regulatory system to deliver natural gas from the Arctic to American markets.” It works with more than 20 federal agencies, as well as the Canadian government, the state of Alaska, tribal governments and other stakeholders.

Obama nominated Larry Persily to head the 10-person office on Dec. 9, 2009, and Persily was confirmed by the Senate on March 10, 2010. Previously, Persily had worked on Alaska oil and gas issues for three Alaska governors and the Alaska state legislature and before that was a journalist.

The office's website offers links to dozens of speeches and presentations about the Alaska pipeline project, mostly by Persily, to governmental, industry and citizens groups.

"I didn't take the job because I love summers in Washington or traffic on the Beltway,” Persily said in a speech to the Alaska Support Industry Alliance in Anchorage on Oct. 7, 2010. "I signed on to see if we can get this project under way. An Alaska gas line would be good for the country and good for the state — and good for the producers when market prices finally recover. The president understands this and supports an Alaska gas line.”

In remarks at the Juneau World Affairs Council on Jan. 19, 2012, Persily said that "it's time to divert some of that gas into a pipeline to ship to customers, somewhere, anywhere. The older North Slope fields are producing much more water and gas than oil as they age; the equipment to process and reinject all that gas is maxed out; and we'd be a lot more attractive as an investment opportunity for oil and gas companies if they could sell their gas along with the oil.”

So Persily's office has been active in pushing the initiative. Much of the rest of the U.S. role now rests with FERC. The project has slowly moved ahead at FERC, though as an independent federal agency, FERC is not directly answerable to Obama (and, as a result, not a factor in our ruling).

FERC staff participated In 24 public open houses in Alaska between March 2011 and June 2011. In August 2011, FERC announced that it would prepare an environmental impact statement on the project, with the document possibly finished by late 2013. And in January and February 2012, FERC began consultations with native Alaskan tribes and other groups to determine the impact of the project in Alaska.

None of this is to suggest that the project will have a glide path to completion. In addition to the sheer size and complexity of the project, both technically and politically, the pipeline's usefulness is closely linked to the state of the energy economy.

"A rapid and largely unanticipated increase in natural gas production from U.S. shales has lowered natural gas price forecasts for the foreseeable future,” the Congressional Research Service wrote on June 17, 2011. "Given this drop in prices, Arctic natural gas projects may not be economically viable at present.” Indeed, a competing pipeline project known as the Denali pipeline was discontinued in May 2011.

"TransCanada officials have stated that they remain committed to developing their Alaska pipeline project, although some industry analysts are skeptical,” CRS wrote.

It's clear that the natural gas pipeline is nowhere near completion and faces significant hurdles. But Obama promised to "work with the Canadian government, state of Alaska, oil and gas producers, and other stakeholders to facilitate construction of” an Alaska natural gas pipeline. Occasionally by himself, and more often through Persily and his office, Obama has pursued this goal. We rate it a Promise Kept. 

Sources:

Office of the Federal Coordinator for Alaska Natural Gas Transportation Projects, About Us web page, accessed Feb. 16, 2012

Office of the Federal Coordinator for Alaska Natural Gas Transportation Projects, "Alaska Pipeline Project" (web page), accessed Feb. 16, 2012

Office of the Federal Coordinator for Alaska Natural Gas Transportation Projects, "A guide to Alaska natural gas projects” (web page), accessed Feb. 16, 2012

Office of the Federal Coordinator for Alaska Natural Gas Transportation Projects, "Speeches & Presentations” (web page), accessed Feb. 16, 2012

Larry Persily, "Alaska's natural gas: Does any country need it? Remarks at the Juneau World Affairs Council," Jan. 19, 2012

Larry Persily, speech to the Alaska Support Industry Alliance in Anchorage, Alaska, Oct. 7, 2010

Barack Obama, letter to the Alaska Oil and Gas Congress, Sept. 27, 2010

Platts, "ConocoPhillips hasn't scrapped Alaska gas pipeline: spokesman," Sept. 29, 2010

Congressional Research Service, "The U.S.-Canada Energy Relationship: Joined at the Well," June 17, 2011

White House, statement by the president on the Keystone XL Pipeline, Jan. 18, 2012

The pipeline process is inching along

Barack Obama talked a lot about building a natural gas pipeline from Alaska to the Lower 48 while he was campaigning. Building the pipeline is no small task. And by the end of his first year in office, Obama has made some -- albeit relatively small -- progress on the issue.
 
The natural gas pipeline has a long history and has been under consideration in one form or another for decades. Efforts to bring natural gas to markets down south have met with cost, political, and environmental hurdles over the last 30 years. In 2008, the state of Alaska approved legislation to award a license to TransCanada Alaska to develop and build a natural gas pipeline from Prudhoe Bay to a market hub in Alberta, Canada, where it would either connect to the existing North American distribution system or continue southeast to Chicago. Alaska also pledged up to $500 million in state support for the project. Meanwhile, ConocoPhillips and BP have formed Denali Pipeline to develop another pipeline without financial support from the state of Alaska.
 
The Federal Energy Regulatory Commission will ultimately have to approve the pipelines. Both TransCanada Alaska and the ConocoPhillips/BP partnership are putting together proposals, and the Federal Energy Regulatory Commission reports that it has had multiple meetings with Alaskan and Canadian officials on the matter in the last year.

Of course, the process is complicated by the fact that the Alaska line will cut directly through Canada. Obama discussed the matter with Canadian Prime Minister Stephen Harper during his first presidential visit to the country in February 2009.

"It's a project of great potential and something I'm very interested in," Obama told the Anchorage Daily News on Feb. 11, 2009. "As I mentioned during the campaign, I actually think that for us to move forward on the natural gas pipeline as part of a comprehensive energy strategy -- that includes both more production as well as greater efficiency -- makes a lot of sense," he said.
 
So, Obama has repeatedly said he supports the pipeline, whatever form it ultimately takes. But the process is long, involved and far from over. As a result, we'll move Obama's pledge to build a natural gas pipeline to In the Works.

Sources:

The state of Alaska, Frequently Asked Questions Regarding the Alaska Gasline Inducement Act ("AGIA") and the AGIA Process, accessed Jan. 4, 2010

The Anchorage Daily News, Obama calls Alaska gas pipeline promising , Erika Bolstad, Feb. 11, 2009

Congressional Research Service, The Alaska Natural Gas Pipeline: Status and Current Policy Issue s, Sept. 18, 2008
 
Eighth Report to Congress on Progress Made in Licensing and Constructing the Alaska Natural Gas Pipeline , August 26, 2009