Alaska's North Slope gas pipeline project faces big challenges

The proponents of a multibillion-dollar North Slope gas pipeline got a sobering report Tuesday from a global energy consultant who ticked down the many obstacles to the project's success.

Chief among those obstacles is cheaper gas from other places: massive unconventional gas basins in the Lower 48 that are conveniently located next to major metropolitan areas, said the Calgary-based consultant, Gerry Goobie of Purvin & Gertz Inc.

"They could eat Arctic gas's lunch. I'm not saying they will, but they could," Goobie told an audience of more than 100 people at the Alaska Oil & Gas Congress, a four-day conference under way this week in downtown Anchorage.

Goobie predicted that the competition among gas suppliers would be "fierce" and that the North Slope project would not succeed unless its costs are tightly controlled. That statement echoed the mantra often repeated by Tony Palmer, a vice president for TransCanada Corp., one of the companies seeking to build a gas pipeline from the North Slope to Alberta.

Palmer agrees that the project's costs will make or break it, and his company is spending millions to deliver a new cost estimate by the end of March. But he's more optimistic about the North Slope project's ability to compete.

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