Mike Navarre. Northern Gas Pipelines Photo by Dave Harbour


Larry Persily, former federal coordinator of the Alaska gas line projects office, currently serves as Chief of Staff to Kenai Peninsula Borough Mayor Mike Navarre.

We have always respected both of these individuals.

No one has more to gain than they do from a successful Alaska LNG project that is currently designed to terminate in their Borough.  The employment, tax and general economic benefits of such a project would be enormous.

But they are honest individuals, for they support a project that would be economically feasible and in the public interest, not a failing gas monetization project.

Earlier this week, Persily gave this speech to the Alaska Support Industry Alliance in Fairbanks, which you may download here.  Here is a link to our report of another recent Persily speech to the Alliance.

We commend the Kenai Peninsula Borough for striving for a project that is right for both their own constituents and for all Alaska citizens.  -dh





Larry Persily. Northern Gas Pipelines photo by Dave Harbour

Americans can thank their lucky stars that uneconomic gas pipelines have not been built!

But Alaska’s governor seems dedicated to subsidizing a gas pipeline/LNG project when prudent private sector  investors say, “Not now; this is not the time!”

Commentary by Dave Harbour

Larry Persily served in the Obama administration as federal coordinator of the Alaska Gas Line Projects office overseeing processes named in the Alaska Natural Gas Transportation Act of 2004.  Your author was involved in creation and passage of the Alaska Natural Gas Transportation Act of 1976, some of whose principles are repeated in the 2004 act.  (See left column.)

We now know that had several thousand miles of new, high pressure gas pipelines been constructed to transport Alaska and Mackenzie Delta gas following passage of the two acts, investors might well have lost their shirts.  Taxing governments like Alaska could have given up some share of royalty gas for a pittance price, if that.

Shortly following passage of the 1976 act, early in the next decade, natural gas prices tumbled.  Shortly following passage of the 2004 act, natural gas prices tumbled as the incredibly inventive oil and gas industry evolved a decades-old fracking technique into a truly productive phenomenon.

Furthermore, had the gas volumes been harvested and virtually given away at fire sale prices, perhaps, the gas would have been unavailable to continue supporting various tertiary recovery techniques resulting in an extremely productive era of oil production from 1980 to the early 2000s.

So here we are today in Alaska, sitting on 35 trillion cubic feet (Tcf) of North Slope natural gas without a North American market–without justification for pipeline transportation through Canada into the Lower 48.

All eyes are now on Asia, a market that has traditionally paid high prices for liquefied natural gas (LNG is gas pressurized and maintained at a temperature of -260 degrees).

But in recent years, due in part to two phenomena, Asia is bargaining to reduce the price of existing and new LNG contracts.  They are making fewer long term arrangements — upon which expensive LNG projects are financed — and increasing the number of short term purchases of LNG at what are known as “spot prices”.  A spot price is the price LNG can be bought/sold at this specific time at a certain place and price.

The two phenomena resulting in low LNG prices, noted above, are: a still expanding shale gas industry resulting in more supply, and a huge backlog of new LNG projects largely conceived when LNG prices were higher and long term contracts were more the norm.  That backlog of projects includes several in Canada and a number in the Lower 48…not to mention Australia, the Russian Far East, Indonesia and the Middle East.  Many of the LNG projects that are operating, are striving desperately to be more efficient in this low price environment.  Investors have abandoned or put into cold storage many other LNG projects.

Alaska’s project is still ‘alive’ but only with government subsidies and is corrupted by economics and politics.  Some of the most successful oil & gas producers on the globe, BP, ExxonMobil and ConocoPhillips, have withdrawn from active participation in their North Slope gas monetization project, proclaiming that, “the time is not right”.  We have concluded that, “the time may not be right” for a generation or more, unless a new, more economic scheme is identified, perhaps like this one (Link here and scroll down for ‘comments’).

(Note other FLNG references below.)

The economic corruption rises from the fact that even a third grade math student can understand; for, particularly in a low price environment, Alaska LNG — when burdened with an 800 mile pipeline cost — cannot compete on even ground with tidewater projects found in more friendly climates that mostly offer lower labor costs.

The political corruption flows from Alaska’s socialist administration bent on following in Venezuela’s footsteps: owning the means of production (and/or transportation).  Alaska’s administration, headed by Governor Bill Walker, continues to support the spending of hundreds of millions of dollars on a Quixotic, Alaska pipe dream which carries with it a number of Solyndra-like results.

In conclusion, Dear Readers, Alaska ultimately benefited by not seeing construction of gas pipelines in the 1980s and the early 2000s.  And, an Alaska LNG project has never yet proven to be feasible.  Alaska’s citizens will surely benefit by seeing its state leaders bidding adieu to the latest LNG-pipedream as soon as possible.

Private enterprise projects run by temporarily elected officials and temporarily appointed bureaucrats are destined for failure.

We side with our fellow citizens who urge patience as more competent, competitive private industry minds continue to consider a truly feasible way to monetize Alaska North Slope natural gas in an ever changing, risky environment.

9-22-15 BP’s US and Alaska Economic Reports – Northern Gas Pipelines


Sep 22, 2015 – While potential gas pipeline investors cannot commit to the Alaska gas … and Vitol to become the top merchant trader ofliquefied natural gas as a …. Floating LNG storage, regasification ships gain in popularity ….. Comment …

5-17-17 Alaska LNG Project: Not Now Says Expert – Northern Gas …


May 17, 2017 – Northern Gas Pipeline file photo by Dave Harbour …. The 1,600-foot-long Shell floating LNG production vessel is set to start production in 2018.

8-21-17 This Week’s Relevant Energy Links – Northern Gas Pipelines


Aug 21, 2017 – Shell waits to see if floating LNG facility is cost-effective … With an ambitious plan to double its volume of liquefied natural gas imports this year, …

Floating LNG | Shell Global

www.shell.com › Energy and innovation › Natural gas

Prelude is Shell’s first floating liquefied natural gas (FLNG) facility. … The advanced design of facility’s on-board LNG plant packs a typical land-based LNG plant into a fraction of its normal … It also eliminates the need for long pipelines to land.