WOOD MACKENZIE STUDY SHOWS AN ALL-ALASKA GASLINE PROJECT COULD GENERATE UPWARDS OF $400 BILLION IN REVENUES TO THE STATE
July 29, 2011
The report concluded that due to Alaska’s competitive advantage and strong price forecasts for the Asian energy markets, the All-Alaska Gasline could generate State revenues of $3 billion the first year, increasing annually to $5 billion in Year 5 and up to $24 billion in Year 30. Wood Mackenzie estimates the project could generate between $75 to $419 billion in total State revenues over a 30-year life. Currently, the State of Alaska receives approximately $5 billion annually from oil revenues.
“The economics for LNG from Valdez are superior to the comparable projects,” AGPA General Counsel Bill Walker said. “This independent, objective analysis proves what Alaskans need to know: while oil has historically been the driver of State revenues, it is our natural gas that can propel Alaska into economic prosperity and provide low-cost energy for our homes and businesses throughout the State, not just the population centers.”
Walker also noted that while the TransCanada/Exxon open season under AGIA has a Valdez LNG option that it is not the All-Alaska Gasline project. The All-Alaska Gasline Project is predicated on state ownership of the gasline as infrastructure that would be built and operated by the private sector. Walker has previously acknowledged the benefit of state ownership, which also underpins the small-volume “bullet line” study recently released by the Alaska Housing Finance Corporation CEO/Executive Director and Alaska Gasline Development Corporation President Dan Fauske.
“The real benefit of the LNG project, paid for by long-term contracts in the Asian markets, is that all Alaskans can benefit from our resources,” Walker said. One example Walker cited is that the LNG project anchored in the Asian markets wouldproduce low tariffs making gas available in Fairbanks for under $5.00/mcf, as opposed to the current price of approximately $24/mcf. Walker also noted that low instate pipeline tariffs would make affordable compressed natural gas and propane available for Alaska communities along the coast and river systems. “Plus, a large-volume line provides a premium gas market opportunity for new oil and gas exploration on the North Slope and will put much needed additional oil into TAPS, which will continue to decline if we don’t work together to encourage new development,” Walker added.
Walker noted that while this report by Wood Mackenzie focuses on the export market opportunity, AGPA will now develop an analysis that focuses on the benefits of the project to in-state gas consumers given the robust economics of the LNG export project. Another report focusing on in-state economic impact will be released after preparation.
With 600 professionals in over 20 offices worldwide, Wood Mackenzie is an internationally-recognized leader in commercial energy project analysis and provides strategic advice to the world’s leading companies. AGPA sought this analysis for the purpose of helping Alaskans, the Administration, and the Legislature understand the difference between the rising demand for LNG in the world marketplace as opposed to the oversaturation of the natural gas markets in Canada and the Lower 48 in light of abundant supplies of shale gas.
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