Alaskan Gas Producers Studying Exports To Asia-Pacific

February 2012, Vol. 239 No. 2

Alaska may still get a natural gas pipeline though it’s possibly going to be directed in a different route than was originally envisioned. The chief executives officers of ConocoPhillips, BP and ExxonMobil met Jan. 5 with Gov. Sean Parnell to discuss building a pipeline from the North Slope to a liquefied natural gas plant in the middle part of the state before exporting the gas to the Asia-Pacific region, according to news reports.

James Mulva, CEO of ConocoPhillips, was quoted as saying after the meeting that this prospect holds the greatest potential for commercializing natural gas from the North Slope. Among those at the meeting were Rex Tillerson of ExxonMobil, and Bob Dudley of BP.

Parnell has said he wants the producers to back a project that would allow for LNG to be shipped overseas if the market for gas is no longer viable in the Lower 48. According to the Anchorage Daily News, such a project would have to come about under the framework of the Alaska Gasline Inducement Act (AGIA), which gave TransCanada Corp. an exclusive state license to build the pipeline and up to $500 million in reimbursable costs.

TransCanada has been working with ExxonMobil to advance a longer line into Canada that would deliver gas to North American markets, but it also has proposed a shorter line that would allow for LNG exports from Alaska. TransCanada has been unable to sign up producers for the original plan, which could cost up to $40 billion.

Dudley told reporters he thinks it would be possible for the companies to come together under terms of AGIA. He said there would have to be adjustments to tailor it to an LNG option, if that route is chosen.

Tony Palmer, TransCanada’s vice president for major projects development, said they recently began talks with BP, ExxonMobil and ConocoPhillips about the LNG option. The Anchorage newspaper quoted Palmer at saying that TransCanada will proceed with making a filing to federal regulators for the Canada option later this year, in keeping with the terms of AGIA. The company would need state approval if it changed course and went with the LNG option, he said.

Meanwhile, Petroleum News reported that congresional budget cutters have severely trimmed the budget of the 11-person federal agency created to expedite permitting and construction of an Alaska natural gas pipeline. The coordinator’s office is now supposed to receive $1 million for fiscal year 2012, which runs through September, a huge drop from $4 million it received in each of the two preceding budget years.