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Alaska Pipeline Project partners progressing on massive LNG export project; total cost between $45 to 65+ billion

5 October 2012

App
Concept of the Alaska Southcentral LNG Project. Click to enlarge.

The partners in the Alaska Pipeline Project (APP)—ExxonMobil, ConocoPhillips, BP, and TransCanada—submitted a letter to Alaska Governor Sean Parnell describing their companies’ progress in advancing an Alaska liquefied natural gas (LNG) export project. (Earlier post.)

Given the massive size of the Alaska North Slope conventional gas resource (35 trillion cubic feet of reserves and more than 200 trillion cubic feet of undiscovered, technically recoverable resources) and the scope of the project as described by the companies, an Alaska LNG project will be one of the largest in the world. Describing it as “a megaproject of unprecedented scale and challenge”, the partners envision the LNG project entailing up to 1.7 million tons of steel, a peak construction workforce of up to 15,000, a permanent workforce of more than 1,000 in Alaska, and an estimated total cost in today’s dollars of $45 to $65+ billion.

Earlier this year, the APP partners agreed on a work plan aimed at commercializing North Slope natural gas resources within an Alaska Gasline Inducement Act (AGIA) framework. Because of a rapidly evolving global market, large-scale liquefied natural gas (LNG) exports from south-central Alaska would be assessed as an alternative to a natural gas pipeline through Alberta, the partners said.

I’m encouraged that the companies have made significant progress in advancing a project and an associated schedule for commercializing North Slope gas. Clearly, they have fully shifted their efforts to an Alaska LNG project.

—Governor Parnell

The companies’ new letter addresses a critical benchmark that Governor Parnell laid out in his January State of the State address, calling on the companies to harden the numbers on an LNG project and identify a project timeline by the end of the third quarter.

Over the past six months, more than 200 employees from the four companies have been working on managerial, technical, and commercial aspects during this phase of the project schedule, according to the letter. The focus of the work includes:

  • Developing a design basis for the pipeline, including areas of continuous and discontinuous permafrost;

  • Investigating multiple ways to remove and dispose of CO2 and other contaminants;

  • Assessing use of existing and addition of new Prudhoe Bay field facilities;

  • Mapping multiple pipeline routing variations;

  • Assessing multiple pipeline sizes;

  • Providing for at least five in-state gas off-take points;

  • Completing preliminary geohazard and marine analysis of 22 LNG site locations;

  • Developing a design basis for the required LNG tanker fleet;

  • Evaluating multiple LNG process design alternatives; and

  • Confirming a range of gas blends from the Prudhoe Bay and Point Thomson fields can generate a marketable LNG product.

The letter also addresses an additional third-quarter benchmark that Governor Parnell laid out in his address, calling on the companies to complete their discussions with the Alaska Gasline Development Corporation (AGDC) on the potential to consolidate their work. In the letter, the companies said they have established a cooperative framework with AGDC to share information.

As the concept selection technical work reaches closure, additional commercial agreements as well as support from the State of Alaska will be required in order to progress this world- class opportunity. This opportunity is challenged by its cost, scale, long project lead times, and reliance upon interdependent oil and gas operations with declining production. The facilities currently used for producing oil need to be available over the long-term for producing the associated gas for an LNG project. For these reasons, a healthy, long-term oil business, underpinned by a competitive fiscal framework and LNG project fiscal terms that also address AGIA issues, is required to monetize North Slope natural gas resources. The producers look forward to working with the State to secure fiscal terms necessary to support the unprecedented commitments required for a project of this scope and magnitude and bring the benefits of North Slope gas development to Alaska.

—APP letter to Gov. Parnell

While the companies have been developing their LNG project design, the Parnell administration has undertaken significant outreach to Pacific Rim markets to highlight the comparative advantages of Alaska LNG exports, and to other key stakeholders, including U.S. government officials in charge of export licensing.

The most recent of these efforts was Governor Parnell’s trade mission in September to South Korea and Japan, where he discussed Alaska LNG exports with government and industry officials.

October 5, 2012 in Arctic, Infrastructure, LNG | Permalink | Comments (4) | TrackBack (0)

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In addition to the above resources, the commercial extraction of methane hydrates in the same area has moved from a distant dream to a technology which has been tested at small scale, and which is on the cusp of commercialisation:

'Recent assessments produced by the U.S. Geological Survey (USGS) estimated that 85 trillion cubic feet (tcf) of undiscovered, technically recoverable gas resources exist within gas hydrates in northern Alaska. Past USGS assessments indicated 40 tcf of the resource may exist within hydrate deposits below existing oil and gas production facilities. In 2001, BP Exploration Alaska Inc. proposed a state-of-the-art 3-D seismic survey over its Milne Point production unit to provide a starting point for a full evaluation of the feasibility of commercial production from Arctic hydrates.'

We are at Phase 3, with Phases 1 and 2 successfully completed:
'Phase 3 concentrates on activities necessary to achieve a long-term, depressurization-based, field test of methane production from an ANS hydrate reservoir. To date (Phase 3A), this has included the drilling, logging and coring of a stratigraphic hydrate test well in the Milne Point Unit as a mechanism to verify reservoir characterizations and to test techniques and technologies necessary to prepare for a long-term production test in Phase 3B.'

http://www.netl.doe.gov/technologies/oil-gas/futuresupply/methanehydrates/projects/doeprojects/alaska-41332.html

Should those resources prove to be exploitable, then the pipeline would be in use for decades more.

Incidentally any question of energy shortages would be overcome, although the consequences for global warming might be severe.

If you fancy investing long term, then the logging concessions on Baffin Island are going cheap!

we required LNG at india please state for cif rate

That's a lot of NG with probably 10+ times more on the Russian side? Most of the current dirty coal fired power generation facilities could be converted to lower cost, cleaner NG?

"Associated Press IMPACT: CO2 emissions in US drop to 20-year low. By KEVIN BEGOS | Associated Press – Fri, Aug 17, 2012
PITTSBURGH (AP) — In a surprising turnaround, the amount of carbon dioxide being released into the atmosphere in the U.S. has fallen dramatically to its lowest level in 20 years, and government officials say the biggest reason is that cheap and plentiful natural gas has led many power plant operators to switch from dirtier-burning coal."

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