November 21, 2003
Murkowski discussed the growing US demand for natural gas, which will increase from its present rate of 22.4 tcf per year to about 32 tcf per year in 2020. Natural gas drillers today must find enough gas to replace 13 bcf per day, as reserves drop. He noted that on the North Slope, Alaska producers currently re-inject 8.5 bcf/day back into the Prudhoe Bay fields.
"Alaska is currently assessing two main gas delivery systems," Murkowski said. He described the highway route, following the oil pipeline to Delta Junction, and then down the Alaska Highway into Canada, and the proposed liquified natural gas line which would move natural gas from Prudhoe Bay to either Kenai or Valdez for conversion to LNG and shipment by tanker.
"Each of these routes and combinations of routes brings with it its own unique set of costs, benefits, and financial opportunities," Murkowski said. "With the federal energy bill, the highway route will have the benefit of loan guarantees, accelerated depreciation, tax relief for conditioning facilities, and expedited court and permitting procedures. LNG proposals could have the benefit of a Port Authority structure, which would exempt the system from federal tax and FERC regulations."
Murkowski also noted the excellent relationship Alaska has with its Canadian neighbors, "including a treaty in place and years of development work completed by TransCanada."
"Literally 30 years of work have been put into bringing Alaska's tremendous gas resources to market," Murkowski said. "This has always been a big challenge, and often we have been told to wait for the market to welcome us. Now the time has come Alaska gas can finally find its way to all its natural markets in Alaska, Canada, the US, and even beyond to the Pacific Rim."
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