Alaska Governor: Send our gas to Asia

The governor of Alaska is saying publicly what we’ve known for some time — that his state’s bonanza of natural gas is best shipped to Asia. Gov. Sean Parnell is asking oil companies that control Alaska’s gas equivalent of 6 billion barrels of oil — BP, Shell ExxonMobil and ConocoPhilips — to explore the details ...

Getty Images
Getty Images
Getty Images

The governor of Alaska is saying publicly what we've known for some time -- that his state's bonanza of natural gas is best shipped to Asia. Gov. Sean Parnell is asking oil companies that control Alaska's gas equivalent of 6 billion barrels of oil -- BP, Shell ExxonMobil and ConocoPhilips -- to explore the details of shipping the largesse across the Pacific. Yet the companies continue to be slow off the mark, and may still have their eye stubbornly on the hopelessly glutted Lower 48 U.S. states, according to Rebecca Penty of the Calgary Herald.

Unlike the estimates under circulation regarding the Western Hemisphere's oil reserves, this side of the globe definitively does have an embarrassing surplus of natural gas. It's this surplus that has stranded Alaska's North Slope riches. It's not needed in the continental U.S., which is replete with both conventional and shale gas.

Much new gas is being directed to China -- from Qatar, Australia, Turkmenistan and probably from new discoveries in eastern Africa. Russia would like a deal to ship nearly the equivalent of China's entire current annual gas consumption. Yet Parnell is betting that the increased supply would not glut Asia, but trigger a demand chain reaction and further boost China's shift to gas, which seems to be a reasonable economic calculation. If that happens, it would shake up geopolitics since less coal might be burned than is projected, hence reducing expected emissions of CO2.

The governor of Alaska is saying publicly what we’ve known for some time — that his state’s bonanza of natural gas is best shipped to Asia. Gov. Sean Parnell is asking oil companies that control Alaska’s gas equivalent of 6 billion barrels of oil — BP, Shell ExxonMobil and ConocoPhilips — to explore the details of shipping the largesse across the Pacific. Yet the companies continue to be slow off the mark, and may still have their eye stubbornly on the hopelessly glutted Lower 48 U.S. states, according to Rebecca Penty of the Calgary Herald.

Unlike the estimates under circulation regarding the Western Hemisphere’s oil reserves, this side of the globe definitively does have an embarrassing surplus of natural gas. It’s this surplus that has stranded Alaska’s North Slope riches. It’s not needed in the continental U.S., which is replete with both conventional and shale gas.

Much new gas is being directed to China — from Qatar, Australia, Turkmenistan and probably from new discoveries in eastern Africa. Russia would like a deal to ship nearly the equivalent of China’s entire current annual gas consumption. Yet Parnell is betting that the increased supply would not glut Asia, but trigger a demand chain reaction and further boost China’s shift to gas, which seems to be a reasonable economic calculation. If that happens, it would shake up geopolitics since less coal might be burned than is projected, hence reducing expected emissions of CO2.

If Parnell is right, ExxonMobil is the clear candidate to carry out Parnell’s wishes. The company is in partnership with TransCanada, the Canadian pipeline company, in plans to export the North Slope gas, though they have not figured out a destination. Earlier this year, they failed to win a critical-mass of shipping commitments from Alaskan gas producers for either of two alternative lines — a 1,700-mile line from Prudhoe Bay to Alberta, Canada, from which the gas would feed into existing lines to the U.S.; and an 800-mile pipeline to a liquefied natural gas facility to be built at the Pacific port of Valdez for onward shipment to Asia.

An ExxonMobil spokesman referred queries to TransCanada, which I emailed but did not manage to connect with. In remarks last week, TransCanada CEO Russ Girling suggested that the partners are still looking at the Lower 48 states, though that could change. Unlike Parnell, he seemed in no rush. "The producers will have to sort out where they want that gas to go, over time," Girling was quoted as saying by the Calgary Herald.

Parnell is right — the writing appears to be on the wall. Alaska’s gas is headed to Asia.

<p> Steve LeVine is a contributing editor at Foreign Policy, a Schwartz Fellow at the New America Foundation, and author of The Oil and the Glory. </p>

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