KU alumnus touts pipeline plan

News show features Hoglund's proposal to help fight rising gas prices

Kansas University alumnus Forrest Hoglund believes he has a way to help combat rising natural gas prices, and Sunday night he told a national television audience about the controversial plan.

Hoglund, a 1956 KU graduate and a prominent benefactor to the university, was featured Sunday night on CBS’ “60 Minutes” for his plan to build a pipeline to pump natural gas out of existing oil fields in northern Alaska.

The longtime oil and natural gas executive has formed a new company, Arctic Resources Co., to build a $7.8 billion, 1,665-mile pipeline. It would provide access to a natural gas field that could double U.S. gas reserves during a time when increasing demand is leading to predictions of higher natural gas prices.

The plan, though, has landed Hoglund in the middle of a political battle that stretches from Alaska to Washington, D.C., and is a major part of a proposed federal energy bill being debated by Congress.

“Alaska is using some pretty hardball political tactics on me,” Hoglund said Monday from his Houston office.

Alaskan politicians have opposed the plan because only a small part of Hoglund’s pipeline would run through the state. Instead it primarily would be built offshore and through Canada.

Alaskan leaders have proposed a $14.6 billion, 3,490-mile pipeline that would go through the heart of Alaska and boost the state’s economy by adding construction jobs. The Alaska-backed plan has been winning support in Congress, largely because the state has two of the most powerful lawmakers in the country, Sen. Ted Stevens, chair of the Appropriations Committee, and Rep. Don Young, chair of the House Transportation Committee.

“I think if you are really interested in having some highways in your state, you’re not going to buck the chairman,” Hoglund told “60 Minutes” correspondent Lesley Stahl on Sunday’s broadcast.

But Hoglund said lawmakers should reject the Alaskan route because it was twice as long and twice as expensive as his proposed pipeline. That would hurt taxpayers and natural gas consumers, he said.

Kansas University alumnus Forrest Hoglund and CBS News correspondent Lesley Stahl discuss Hoglund's plan to build a .8 billion pipeline to pump natural gas out of Alaska. Hoglund's plan was featured Sunday on 60

Taxpayers would be on the hook because Alaskan officials have included tax subsidies to help support oil and gas companies if the price of natural gas falls below a certain level. Several major oil companies have supported the plan because of those subsidies, which are absent from Hoglund’s proposal.

Consumers would take a hit from the Alaskan pipeline because Hoglund thinks the construction price will be more than the estimated $14 billion, largely because it must cross 900 miles of mountains. His plan calls for a pipeline that doesn’t travel through mountains.

He also said the high cost of the pipeline would mean gas companies would have to pay high prices to use the line to transport the gas to the lower 48 states. Those high transportation costs would discourage gas companies from developing new wells in the area, so consumers would still suffer from increasing prices because natural gas supplies would remain tight.

Hoglund hopes the “60 Minutes” story will create enough of a buzz on Capitol Hill to stall the proposed Alaskan pipeline. He said Alaskan officials last year were close to gaining approval until a Wall Street Journal editorial about Hoglund’s project created enough questions by lawmakers to stall it.

The Bush administration also has questioned the Alaskan plan and expressed a willingness to study Hoglund’s proposal. Bush, though, has said he wants an energy bill to sign, and political observers have said it was unlikely that he would veto the bill over the pipeline issue.

Business experience: Current chairman and CEO of Arctic Resources Co., former corporate vice president of natural gas and gas liquids for Exxon Corp., former president and CEO of Texas Oil and Gas Corp., former chairman of Enron Oil and Gas Co.Kansas University connections: 1956 engineering graduate; current chairman of KU First, the university’s major capital fund-raising drive; major financial donor for the Hoglund Brain Imaging Center at Kansas University Medical Center and Hoglund Ballpark

“I don’t know how it is going to come out,” said Hoglund, who has been working on the project for about three years. “It’s all down to the point of whether the administration is willing to hang in there on it.

“If we could block this in Congress one more time, that would be two times in a row Alaska has lost, and we think they may change their mind if that happened.”

Alaska Gov. Frank Murkowski said Alaskans were firmly in favor of the state’s pipeline proposal, which is also known as the southern route.

“We have said that if Alaska gas is going to be utilized, it’s going to go through the southern route so Alaskans can benefit to some extent,” Murkowski told Stahl. “As far as Alaska’s concerned, it’s simply not negotiable.”