There will be three distinct phases of economic impact from Pipeline Construction Jobs that will bring Alaska’s natural gas to market, the preconstruction phase, the construction phase
and the operating phase.

The Pipeline Construction Jobs involves spending a tremendous amount of money over a roughly five-year period, perhaps in excess of $25 billion. Not all of that money will be spent in Alaska but estimates are that at least $7 billion would be spent on the Alaska portion of the proposed project.

The operating phase

Would generate a much more limited impact in terms of spending but would enable the marketing of natural gas that would generate revenue to the resource owners.

The state could potentially generate in excess of $2 billion per year in revenue to both the general and Permanent Fund assuming a conservative long run average gas price in the $4.50 per mmbtu range.

The Pipeline Construction Jobs companies would enjoy at least as much revenue, some of which would be reinvested in exploring for and developing oil and gas reserves in the state. Construction Phase According to a study prepared for the Municipal Advisory Group (MAG) established under the Alaska Stranded Gas Development Act (SGDA), Information Insights has estimated that project construction will result in 3,695 new pipeline construction jobs, 475 other new construction jobs and 255 new jobs in the truck and rail industry.

The Pipeline Construction Jobs spending will result directly in an additional 649 jobs in the state’s 15 most impacted support industries and a further induced effect on the 15 most impacted sectors of an additional 1,250 jobs.

This results in a grand total of an additional 6,324 jobs in the 15 most important sectors in the economy for every year of construction. Looking at all sectors in the economy, the gas pipeline will generate a total of 7,059 jobs either directly or indirectly and an induced impact of 2,248 jobs, for a total of 9,307 jobs annually in the economy as a result of project construction.

There will be an increase in demand for basic public services and, as a result, there will be
direct municipal impact assistance from the gas pipeline project sponsors. The additional spending will generate more local sales taxes that should also help cover increased public
spending requirements. Some believe there should be less stress on the public sector than during the Trans Alaska Pipeline System (TAPS) construction because the economy is more
mature and considerably larger.

This is probably correct, but the effects on the smaller communities along the pipeline route will still be large. Long-Term Operations Once the pipeline goes into operation, the North Slope gas fields will begin to spin off significant revenue. An expandable pipeline will finally enable the marketing of gas reserves on the North Slope.

As a result, we expect a new exploration boom finding and proving up some of the 200 tcf of technically producible gas reserves that are thought to exist on the North Slope. This was our experience with the oil pipeline; this is what we expect with the gas pipeline. Some of this new exploration and production boom will be the result of reinvestment of gas revenue, and some will be the result of new players.

The search for both gas and oil will accelerate once a gas pipeline is in place since there will be pipelines available to carry both to market. This will strengthen the Alaska petroleum economy well into the future, providing economic benefits far beyond just those we expect from the
Pipeline Construction Jobs and the marketing of the 35 tcf of currently proven gas reserves.

The state treasury will net something in excess of $2 billion per year from the gas Pipeline Construction Jobs project if delivered natural gas prices average $4.50 per mmbtu. Should prices come in averaging $7.00 per mmbtu, annual revenues would average $3.5 billion.

This will help keep state taxes low and state services at the level Alaskans have come to expect in terms of quality of infrastructure, education and safety. The ability to access the gas for in-state use should help assure a dependable source of energy to residents and commercial and industrial users remain low in Alaska.

Low taxes, sound infrastructure, competitively priced energy and a vibrant oil patch will provide a healthy climate for sound economic growth and long-term prosperity for the citizens of Alaskans.