The three major North Slope producers and a major pipeline company are getting together to look at a proposed multibillion-dollar project that could result in exporting Alaska natural gas to Asia markets, according to a letter sent to Alaska Gov. Sean Parnell.
“As a result of the rapidly evolving global market, large-scale liquefied natural gas (LNG) exports from south-central Alaska will be assessed as an alternative to gas line exports through Alberta,” the chief executives of ExxonMobil, ConocoPhillips and BP said in the letter.
“We are now working together on the gas commercialization project concept selection, which would include an associated timeline and assessment of major project components including in-state pipeline routes and capacities, global LNG trends, and LNG tidewater site selections, among others,” the letter said.
Parnell said the team includes TransCanada, a Calgary-based pipeline company that holds the state license to develop a gas pipeline from the North Slope. TransCanada has been working with ExxonMobil since 2009 to design and develop that line to Alberta, to feed into North American markets.
Alaska Natural Resources Commissioner Dan Sullivan said the state is in discussions with TransCanada about extending the state-imposed October 2012 deadline the pipeline company faces for filing with the Federal Energy Regulatory Commission for a certificate to build and operate a North Slope pipeline.
Investigating the option of an LNG project could mean setting aside further work on the pipeline to Alberta at this time.
Parnell also announced the state had settled its legal dispute with the oil companies involving their leases at the Point Thomson field, a large, undeveloped gas, oil and gas condensate field. Point Thomson is the North Slope’s second largest gas reservoir, with an estimated 8 Tcf, and its gas will be needed for any major gas pipeline project. With Point Thomson, the North Slope has an estimated 35 Tcf of natural gas reserves.
The Point Thomson settlement calls for the leaseholders to build a liquids pipeline to the trans-Alaska oil pipeline at Prudhoe Bay and to start producing 10,000 b/d of gas condensate by the winter of 2015-2016. A decision to fully develop the natural gas reserves would be made later, Parnell said.
The Alaska-to-Alberta pipeline that TransCanada and ExxonMobil have been working on would carry 4.5 Bcf/d of natural gas. In 2010 they also proposed a 2.7 Bcf/d pipeline from Prudhoe Bay to Valdez for LNG export, but they did not proceed further with environmental work on that option. It’s unclear how much gas the companies might want to export under their new alignment.
“My understanding is that the companies intend to complete their concept selection work this fall,” the governor said of the new interest in an LNG project. “The Point Thomson settlement clearly played a significant role in the companies’ overall alignment on North Slope gas. … Ending litigation and reaching alignment are important first steps, but the state of Alaska and the companies still have much work to do.”
In their letter, the oil company executives said, “Unprecedented commitments of capital for gas development will require competitive and stable fiscal terms with the State of Alaska first be established. Appropriately structured, stable fiscal arrangements have opened new opportunities around the world, and will play a pivotal role in making Alaska competitive in the global market and unlocking the economic potential of North Slope resources.”
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