The headline in yesterday’s News Miner was somewhat relieving in announcing that the Interior’s gas project is still be moved forward. With the extent of the State’s fiscal difficulties, it was easy to imagine that there may be a retreating of support but that doesn’t seem to be the case. In the last year of Governor Parnell’s administration an assistance package with varying parts worth over $50m helped proponents get a foothold on pulling gas off the North Slope, compressing it close by and trucking it down to Fairbanks. Then crude oil prices dropped, and of course with an ongoing decrease in Alaskan production of oil the following revenue levels dropped drastically….
Looking back on an article three years ago posted on the Baker Institute’s site (http://bakerinstitutealaska.tumblr.com/post/28618970341/alaskas-natural-gas-is-the-export-window-still) it was clear at the time that supporting gas production was thought of as a post oil “exit strategy” for exactly those times when oil revenues would drop for the state. Yet interestingly the article also predicted:
“Baker Institute analysis projects that Alaskan LNG may have trouble competing effectively with stranded Canadian natural gas proposed for export via British Columbia and could someday face additional competition for Asian markets from Argentinian shale gas“.
Of course, in part due to the drop in crude oil prices, shale gas is having a difficult time in the current oil producing market. We shall see in the future if global shale ends up being a threat -if, or when, the market recovers to $100/barrel levels.