By ANNE SUTTON , 01.27.09, 11:04 AM EST
AP
Alaska lawmakers worried about sinking prices for natural gas were told to take the long view when considering the economics of a pipeline tapping North Slope gas reserves.
TransCanada Corp. (nyse: TRP - news - people ) Vice President Tony Palmer, who is leading the company's effort to build a multibillion-dollar Alaska gas pipeline, said the project is moving forward as planned despite the economic downturn that has depressed energy demand and prices.
"This project cannot swing with the wind of gas prices month by month. They need to look at what long term gas prices are, and is this project economic in those long term forecasts?" Palmer said following a presentation to the House Resources Committee on Monday.
Many forecasters believe gas prices are about bottomed out, Palmer said. Monday's price of $4.50 per million cubic feet is roughly a third of where prices were a year ago. Palmer said prices are more likely to average $6 or $7 per million cubic feet.
Palmer said his company remains focused on factors that it can control: keeping construction and other costs down and staying on schedule, which will ultimately determine the cost of shipping the gas to market. If the cost of shipping remains under $3 per million cubic feet as planned and natural gas prices rise at least moderately, Palmer said producers and state government will do well.
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