Way cleared for major Alaska North Slope natural gas pipeline project
31 March 2012
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| Proposed route for the Alaska Pipeline project. Click to enlarge. |
Alaska Governor Sean Parnell announced that two major milestones have been met in the state’s effort to bring Alaska’s North Slope natural gas to Alaskans and markets beyond. The North Slope holds more than 35 trillion cubic feet of discovered natural gas.
First, the State of Alaska resolved its long-running litigation with ExxonMobil and other leaseholders regarding the Point Thomson field, which holds almost a quarter of the North Slope’s known natural gas. Second, the three major producers—ExxonMobil, ConocoPhillips and BP—delivered a letter to the governor announcing that they are now aligned with the Alaska Pipeline Project (APP) parties, and working on a gasline project focusing on bringing North Slope gas to tidewater in Alaska.
Point Thomson. Point Thomson, located 60 miles east of Prudhoe Bay, is Alaska’s largest undeveloped oil and gas field, holding an estimated 8 trillion cubic feet of natural gas and hundreds of millions of barrels of oil and gas liquids. ExxonMobil is the unit operator at Point Thomson, with BP, ConocoPhillips and Chevron holding the majority of the leases. The state’s legal dispute with the companies resulted from the lack of development at Point Thomson for the past 30 years.
Today’s settlement lays out strong near-term production commitments and a clear path for full development of Point Thomson’s significant oil and gas resources, and it establishes clear consequences if the companies do not follow through. The companies have agreed to firm timetables for production at Point Thomson. This will result in significant new investment, increased work for Alaskans and increased revenue for state and local government.
The animating principle of this settlement is that the companies must earn their acreage. The more work, more commitment, more investment and more production that occur, the more acreage the companies will retain.
—Alaska Natural Resources Commissioner Dan Sullivan
Major components of the settlement include:
Increasing liquids production into the Trans Alaska Pipeline System (TAPS).
Opening the Eastern North Slope to new development opportunities by adding infrastructure and a 70,000 barrels per day common carrier pipeline connecting to TAPS.
Incentivizing and laying out a clear path and alternatives for full-field development, each of which will require billions of dollars in investment if pursued.
Positioning North Slope gas for a large-scale gas pipeline project.
Providing potential for significant gas volumes for in-state use no later than 2019.
Requiring a commitment to develop a separate oil reservoir within Point Thomson.
Alaska Pipeline Project. The Alaska Pipeline Project proposes to design, permit and construct a new natural gas pipeline system beginning near Alaska’s Prudhoe Bay field and extending over one of two alternative routes.
The Alberta option would extend from Prudhoe Bay to points near Fairbanks, and Delta Junction, and then to the Alaska-Canada border, where the pipeline would connect with a new pipeline in Canada. The pipeline in Canada would extend from the Alaska-Canada border to link up with pipeline systems near Boundary Lake, Alberta, Canada, providing the capability of transporting natural gas into the United States.
The Valdez LNG option would extend from Prudhoe Bay through points near Fairbanks and Delta Junction, and then to LNG facilities (to be built by third parties) near Valdez, Alaska.
In both options, a minimum of five in-state connections to the main pipeline in Alaska (off-takes) would provide local natural gas suppliers the opportunity to obtain natural gas to meet community needs. For the Alberta option, local off-takes will also be available along the pipeline route in Canada.
The Alaska Pipeline Project proposes to design, permit and construct a new gas treatment plant (GTP) as an integral component of the project’s facilities. It would be located near existing Prudhoe Bay facilities and operate in conjunction with either the Alberta or the Valdez options.
A natural gas transmission pipeline connecting the Point Thomson field to the GTP is also a proposed component of both options.
ExxonMobil, ConocoPhillips, BP and TransCanada, through its participation in the Alaska Pipeline Project, announced in a joint letter to Governor Parnell that they have 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 will be assessed as an alternative to a natural gas pipeline through Alberta.
In addition to broadening market access, a south-central Alaska LNG approach could more closely align with in-state energy demand and needs. We are now working together on the gas commercialization project concept selection, which would include an associated timeline and an assessment of major project components including in-state pipeline routes and capacities, global LNG trends, and LNG tidewater site locations, among others.
—Producers letter to Gov. Parnell
In their joint letter, the CEOs of ExxonMobil, ConocoPhillips and BP also said that the “unprecedented commitments of capital for gas development will require competitive and stable fiscal terms with the State of Alaska first be established”.
With Point Thomson legal issues now settled, the producers are moving forward with the initial development phase of the Point Thomson project.
Obama isn't going to like this, since he'd rather be Brazil's best customer of oil.
http://www.youtube.com/watch?v=M2V4EM_jaFg
Posted by: ejj | 31 March 2012 at 07:13 AM
ejj:
I don't understand that comment.
Brazil is a major consumer of oil, and won't have any for export as it will use it itself however successful offshore is.
Posted by: Davemart | 31 March 2012 at 07:26 AM
Thank you, Napoleon.
Posted by: Larzen | 31 March 2012 at 07:33 AM
Not Napoleon - by bad - Russia.
Posted by: Larzen | 31 March 2012 at 07:35 AM
This could become part of a friendly trade issue with Canada. The XL pipeline (Alberta to Texas) versus this one. Time will tell how fair play is USA.
Posted by: HarveyD | 31 March 2012 at 09:42 AM
It is election time.
Votes top ideology.
Those who don’t want to believe so will also make weird excuses for the Keystone decision.
Posted by: ToppaTom | 31 March 2012 at 10:27 AM
That may be one of the few good aspects about regular elections. It forces parties to think and come out with promises, decisions and solutions that the majority want or is willing to accept.
Posted by: HarveyD | 31 March 2012 at 10:42 AM
True; though optimistic. - saying what the people want to hear may be at least a wee bit closer than normal (maybe) to the decisions and solutions that the majority wants.
Posted by: ToppaTom | 31 March 2012 at 12:25 PM
ejj's youtube is typical of his other offers, namely heavily edited. His youtube was cut down to just 13 seconds - 13 seconds out of a speech that lasted over 17 minutes;
http://www.youtube.com/watch?v=b8mweo9gnds
Please note how much time Obama spends talking about the growth in American jobs through exports TO Brazil.
And of course ejj is also implying that Obama, in wanting more Brazilian oil, is somehow against American oil/gas/energy. The best answer to that idea is "bullpucky!"
http://www.msnbc.msn.com/id/26315908/ns/msnbc_tv-rachel_maddow_show/#46490996
Posted by: ai_vin | 31 March 2012 at 02:01 PM
Interesting timing. Parnell (AK gov; ex-Conoco Phillips lobbyist) is pushing for lower state oil taxes. Big oil agrees to gas line, if they get lower oil taxes. Legislature is currently considering Parnell's oil-tax-giveaway bill during last days of session.
What a surprise!
Posted by: Nick Lyons | 31 March 2012 at 03:16 PM
@Nick
Watch this;
http://www.msnbc.msn.com/id/26315908/ns/msnbc_tv-rachel_maddow_show/#46900059
Posted by: ai_vin | 31 March 2012 at 09:01 PM
Interesting...
This is on the heals of Westport getting deals on production line LPG engines, as well as the Clean Energy 150 filling stations at "Pilot" Truck Stops. A Gaseous Revolution has begun and the usual suspects the nattering nabobs of negativism can't stop it. I find it also interesting the NPRM on Coal Plants and their CO2 hurdles. Gee, could Crony Capitalist who make Gas Turbine Units benefit? Nah, move along, nothing to see here...
Posted by: EGeek | 01 April 2012 at 01:09 AM
The trio (ExxonMobil, ConocoPhillips and BP) argue logically that at high gas volumes, the Alaska state oil tax schedule makes Alaskan NG production non-competitive - probably a legacy of the previous AK Govrnr.
ExxonMobil, ConocoPhillips and BP are now aligned with the APP parties; due in no small part to the present Govrnr’s expertise in community organizing.
Posted by: ToppaTom | 01 April 2012 at 08:40 AM
ai_vin,
Give it up. Even Bob Lutz, a devoted conservative, is complaining about the right wing disinformation machine.
As of yet there is no known way to send back the hordes to their parallel universe where reality obeys their commands.
Posted by: Arne | 01 April 2012 at 11:55 AM
Barak is a genius.
Just ask his paid PR publicists. It is a State Secret what his resume is, becaue he doesn't want to brag and so he won't intimidate the rest of us with his brilliance. Yeah, Sure. That has ot be the reason.
The only true question is whether he had passing grades and whether misuse of Affirmative Action, got him promoted. The true question is whether he is merely very average, dull, or a genuine moron.
I think his IQ is not as low as an imbecile, since he apparently can read what the teleprompters tell him to say, but not otherwise. Belief in a falsified econiomic system after 95 consecutive failures in 95 countries over the past 168 years, certainly indicates he isn't much of a subscriber to the scientific principles.
He is The only guy in America, who got his job without having to produce a Resume or a Curriculum Vitae, thanks to what passes for Journalism today.
His imbecilic troops can produce a Birth Certificate on a form with the name of a hospital that wouldn't exist until 20 odd years after he was born, and they, nor what passes as Journalists, see nothing curious or suspicious in that, either.
Not that it matters. He was elected and is serving in that capacity.
Posted by: Stan Peterson | 01 April 2012 at 12:18 PM
And as if on cue, Stan proves Anne is correct.
Posted by: ai_vin | 01 April 2012 at 05:44 PM
Info...crude oil went up 15% and gas price (in USA) went up an average of only 12% in the last 6 months.
When taxes are tied to price (instead of volume) they both go up and down at the same rate.
USA is one of the industrial country with the lowest gas price due to very low liquid fuel taxes and low cost discounted (-15%) crude from Canada.
Posted by: HarveyD | 02 April 2012 at 08:24 AM
I'd like to mention that we consume about 19 million barrels of oil a day. So if this major untapped oil field contains 100s of millions of barrels of oil, that is somewhere between 5 and maybe 25 days supply for the US. However, the oil companies make a nice little sum of about 1-5 billion dollar profit (assuming 10% profit). You see, the money is huge for even a relatively small amount of oil. I think many people fail to understand just how little these oil sources mean in the big picture of US oil dependence, but also, just how much motivation there is for the businesses to continue our consumption.
Posted by: Brotherkenny4 | 03 April 2012 at 01:19 PM
Stan...do you post all that garbage for free?
Posted by: HarveyD | 03 April 2012 at 05:52 PM
Natural gas is about 25 cents per therm, or less than half its nominal price over decades and they want to build a multiple billion dollar pipeline for more than 1000 miles. What is wrong with this picture?
Posted by: SJC | 04 April 2012 at 10:23 AM
NOT bringing oil to market cannot reduce gas prices -
Bringing it to market does.
Even the administration that has been trying to shut all oil production down obviously knows this (as elections approach)
When you have said; "this field will provide only a few months or years of US consumption" hundreds of times over you start to believe it when it obviously has become self contradictory.
Posted by: ToppaTom | 05 April 2012 at 08:58 PM
Even the administration that has been trying to shut all oil production down obviously knows this
You obviously don't mean the Obama administration because US oil production has been on the increase since he took office.
Posted by: ai_vin | 07 April 2012 at 09:38 AM
“Even the administration that has been trying to shut all oil production down obviously knows this” TT
“You obviously don't mean the Obama administration because US oil production has been on the increase since he took office.” ai_vin
You obviously know little about the subject or are being disingenuous.
I assume the latter is most likely true.
Production increase can be blamed on the last administration, momentum, industry determination and/or the administrations incompetence. I am not sure - but not on Obama's intentions.
After “illegally” blocking drilling permits in the GOM
http://www.kslaw.com/imageserver/KSPublic/library/publication/2011articles/4-11Law360RhynePerry.pdf
And blocking the Keystone pipeline, and other instances to numerous to mention, it is clear that Obama and Steven Chu wish to stop or reduce US oil production/refining.
And his promise to put the Oklahoma pipeline on a fast track (since he cannot disapprove that one) resonates only with the sheltered or insincere.
Do you think he has also “succeeded” in having the GITMO detainees tried by the military?
You should be ashamed of trying to give the administration credit for something you knew they opposed.
Posted by: ToppaTom | 08 April 2012 at 11:10 PM
The oil is base of economical development of nation.It is major milestones for improvement of nation,it will multiple the strength of the nation.
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Posted by: Mr Red Rose120 | 27 September 2012 at 01:15 AM