The latest

The latest news coming out on the Alaska Gas Pipeline is not good. Former Governor Frank Murkowski says AGIA is dead. The worst news I've heard is the Denali Pipeline is reducing staff down to a skeleton crew.

The pundits and politicians carry on about bullet lines, in-state lines for an LNG terminal, and even building a petrochemical industry in Fairbanks. The value of these proposals range from "Almost feasible" to "Complete rubbish". The report on the in-state gas line shows that the idea lacks economies of scale. The idea of an LNG terminal at Valdez falls into the "almost feasible" category, but continues to fail to gain traction in the marketplace.

The bright side: Development and expansion of production of tar sands continues. Communities in the lower 48 complain and protest new tar sand pipelines, but the economics are good for squeezing oil out of sand in Canada. The process requires lots of energy - energy that could come from inexpensive Alaskan natural gas.

The other bright note: Lower 48 natural gas is so cheap that LNG import terminals are being modified to export LNG (example: Cheniere Energy Sabine Pass). Moves like this signal a bottom in gas prices - I hope more Gulf Coast LNG plants can sponge up shale gas for export.

Bottom Line: I'm still in the "wait and see mode" but the project is drifting into oblivion. I'm beginning to think that external events will determine the fate of the project.