Alaska Producers Envision LNG Export ‘Mega Project’

Special to Pipeline & Gas Journal
November 2012, Vol. 239 No. 11

Team Of 200 At Work
Already, Exxon Mobil, Conoco Phillips, BP, and TransCanada say they have a team of more than 200 people working on the Alaska LNG project. BP has the lead role on the commercial side, with Exxon the technical lead.

"There are always bumps in the road, and certainly no guarantees. There are no guarantees now," Natural Resources Commissioner Dan Sullivan said. "But we've already traveled a good distance in a short amount of time since that state of the state, and our intent is to keep that pedal to the metal working with all key stakeholders and to try to realize this very significant opportunity."

Sullivan said the state has a sense of urgency and is pushing for accelerated work. For instance, development of North Slope gas was held up for years by litigation over the huge, remote Point Thomson oil and gas field, operated by Exxon Mobil. Settlement of that dispute earlier this year included an incentive for a pipeline investment decision by mid-2016, which fits the new timetable, Sullivan said.

But that still puts off a decision on whether to build the pipeline for four years. Construction would be five or six years from now, under the timeline. And in the meantime, competing LNG projects around the world are moving ahead.

The energy companies are calling for "competitive and stable fiscal terms" from the state. Parnell had said that if the companies met his benchmarks, then the state could look at gas taxes next year. He has failed in his attempts this year and last to get an oil tax cut passed.

The world's largest LNG plants — in Australia and Qatar — can make 15-16 million metric tons of product annually. A plant planned for construction in Louisiana will be a little larger. The Gorgon plant under development in Australia is estimated to cost about $40 billion.

A recent LNG conference in Valdez was focused on the benefits and attractions of building an export terminal at the port city for shipping orth Slope gas to Asia. But several speakers acknowledged the problems in getting anything built anywhere in Alaska to move natural gas to market.

Divisive Communities
"There is a great division among communities," Rep. Don Young (D-AK) told the audience via video link from his congressional office in Washington, DC. Alaska municipalities need to get together on a single LNG project rather than battle for the role of host city, Young said.

Alaskans need to figure out how to get it done without dividing the state, he told the 120-plus attendees at the Sept. 13-14 Alaska LNG Summit 2012 sponsored by the Alaska Gasline Port Authority. The authority, comprised of the city of Valdez and the Fairbanks North Star Borough, has been pushing since 1999 for a large-volume North Slope gas pipeline leading to an LNG export terminal in Valdez and against other proposed Alaska gas projects.

But building a pipeline from the North Slope to Southcentral Alaska to feed an LNG plant on the Kenai Peninsula is worse than doing nothing, said Craig Richards, an Anchorage attorney who shares a practice with Alaska Gasline Port Authority general counsel Bill Walker.

This so-called bullet line, promoted by many Alaska legislators including Republican House Speaker Mike Chenault would prevent a bigger pipeline from getting built for a decade, Richards said. In addition to pushing for a bigger line to Valdez over the Kenai Peninsula, Richards is no fan of the major North Slope producers owning the pipeline and LNG terminal.