Wednesday, March 11, 2009

Reality Check

Alaska lawmakers got a gas pipeline reality check this week in Washington DC (LINK to the full story in the News Miner)

Rep. Jay Ramras, R-Fairbanks : “I’m concerned if it’s left up to the economics of the project, it is probably not going to happen. It’s quite doubtful.”

Rep. Mark Neuman, R-Anchorage, said an estimated trillions of cubic feet of shale formation gas has been located within the past few years.

Denali’s vice president for external affairs Scott Jepsen: “We have a long-term view. The gas pipeline has to be economical, and it has to be able to compete with other sources of natural gas. Long-term, we do believe there is space (for Alaska gas).”
A year ago the $500 million AGIA inducement sounded like a lot money - now it make take a whole lot more to get moving on the gas pipeline. Or maybe fiscal certainty?

Would knowing the future tax rates help free market forces finance a pipeline? That would beat the penniless beggar approach. The time has come to re-think the inducements and tune up the project economics on a free market basis.

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