Natural gas pipeline will not solve all problems

By Brad Foss The Associated Press

WASHINGTON – A $25 billion pipeline carrying natural gas from Alaska to the lower 48 states would play an important role in satisfying the nation’s long-term supply needs, but experts say it will not reverse America’s rising dependence on imports or cause fuel prices to plunge.

Alaska moved the project to the front burner on Tuesday when it reached a tentative pact with three oil companies to build a pipeline to transport up to 4.5 billion cubic feet of natural gas a day – an amount equal to 7 percent of present U.S. demand.

Still, the project could be a decade or more away from completion. Even after an anticipated multiyear design phase, some knotty economic and political issues will need to be hashed out, starting with getting the necessary environmental, right-of-way and construction permits from U.S. and Canadian authorities.

The oil companies – Exxon Mobil Corp., BP PLC and ConocoPhillips – and their contractors also would need to recruit some 4,000 workers to build the pipeline and get steelmakers to roll out enough high-strength, 52-inch diameter pipe for the 3,600 mile-long project.

The pipeline’s cost was estimated in 2001at $20 billion. But BP spokesman Daren Beaudo said yesterday the cost has escalated to between $25 billion and $30 billion because of “the cost of raw materials, particularly steel.”

Until recently, natural gas prices were too low to justify the massive investment needed to deliver the fuel from Alaska’s North Slope to the lower 48.