LNG

Proponent of LNG exports from Alaska expect to finish the key engineering and cost assessment for an 800-mile gas pipeline stretching from the North Slope to the Gulf of Alaska by the end of this year, according to US Interior Dough Burgum. The pipeline is critical for securing feedgas for Alaska’s $44 billion LNG export terminal.

Taiwan's state-owned energy company CPC Corp is considering investing into the Alaska LNG export project, having signed an initial offtake agreement with AGDC to buy LNG from the venture. The deal was signed on a tour of Alaska’s Governor Mike Dunleavy across Asia, seeking additional investors for the $44 billion Alaska LNG project.

Cost overruns and limited firm offtake had for long delayed the Alaska LNG venture – but now the project became a priority of the US Trump administration. Gov. Dunleavy and senior officials from Alaska Gasline Development Corporation (AGDC), a state entity developing the liquefaction project, are currently touring Asia with the aim of securing firm offtake agreements and private investment.

Apart from Taiwan, utility buyers in Japan and South Korea have also been approached to step up their LNG imports as the United States seeks to balance its trade deficit with these countries.

The letter of intent (LoI), signed by CPC Corp, is not binding but could sway further Asian LNG buyers to sign on for firm offtake of Alaska LNG. As part of the LoI deal, CPC wants to invest in the export project though the exact amount is still subject to discussions.

Firm offtake its vital for project developers to reach financial close on the $44 billion Alaska LNG project, one of the most expensive liquefaction projects in the world. The venture has been government funded after ExxonMobil, ConocoPhillips, and BP backed out in 2016 citing cost concerns and headwinds from environmentalists.

Phase 1 of Alaska LNG focuses on construction of the pipeline to deliver North Slope gas to interior and southcentral Alaska and resolve energy shortages on Cook Inlet. Infrastructure to liquefy the gas and export it will be developed in Alaska LNG Phase 2.

Feedgas for Alaska LNG is meant to be sourced from Prudhoe Bay and Point Thomson fields. These fields will produce some 3.5 billion cubic feet of gas per day. The proposed liquefaction terminal in Nikiski, southwest of Anchorage is designed to process, store and transport up to 20 million tons per year (mtpa) of LNG.

Realisation of the gas pipeline, for starters, has gained traction after Glenfarne in January teamed up with AGDC agreeing to jointly Alaska Export Facility, Pipeline, and a Carbon Capture facility. Moreover, Glenfarne and ENSTAR Natural Gas Company also have agreed to advance an LNG import project utilizing the Alaska LNG export site.

Should the massive Alaska LNG venture go ahead, it would be Taiwan’s geographically closest source of US LNG given that cargoes from Alaska do not need to transit the Panama Canal to reach Asia.

Alaska Governor Mike Dunleavy has just concluded a trade mission to Japan where he met executives of leading energy companies and utilities as well as government ministries about the Japanese companies procuring long-term Alaskan LNG supplies.

Oct 8 (LNGJ) - Alaska Gasline Development Corp. (AGDC), the state-run body and owner of the Alaska LNG project which has been dormant because of the high development costs, has released a consultancy report detailing the environmental benefits achieved by building the export plant utilizing North Slope natural gas to replace high-emissions coal in Asia. “Alaska has some of the world’s strictest environmental laws, and Alaska natural gas should be a key component of any realistic energy roadmap,” said Alaska Governor Mike Dunleavy.

   AGDC has all its regulatory permits covering three liquefaction Trains with 20 million tonnes per annum of capacity, two 240,000 cubic metres capacity storage tanks as well as a 807-mile natural gas pipeline from Prudhoe Bay to Nikiski on the Kenai Peninsula. AGDC President Frank Richards said the justification for Alaska LNG was a “compelling” one. “This timely report uses respected and transparent methodologies to quantify the value of replacing high-emissions energy sources in foreign markets with the low-emissions at Alaska LNG,” added Richards.

UK major BP confirmed its commitment to completing the sale of its Alaska business to Hilcorp Energy of the US for the original price of $5.6 billion despite the industry downturn, including the North Slope feed gas resources for the Alaska LNG export project and Prudhoe Bay oil.

Alaska Gasline Development Corp., the lead developers of the Alaska liquefied natural gas export project, said regulators had published the final environmental impact statement for the venture to monetize North Slope gas and ship it to Asia as LNG.

The US agency that helps the Federal Energy Regulatory Commission with the permit processing for export plants and pipelines has determined that the Alaska LNG liquefaction facility proposed for the eastern shore of Cook Inlet complies with siting requirements.

Alaska Governor Michael J. Dunleavy has begun a visit to Japan where he will promote future liquefied natural gas exports and visit the Negishi LNG import terminal where the first cargo from Alaska was unloaded 50 years ago and meet Tokyo Gas executives as well as proponents of a new Alaskan liquefaction project.

The Alaska Gasline Development Corporation (AGDC), owner of the proposed Alaska LNG project, has started replying to regulatory questions on environmental mitigation measures as its main partner in the venture, ExxonMobil Corp., has sent a supporting letter.

ExxonMobil Corp and BP of the UK plan to invest more administrative funds with Alaska Gasline Development Corp. into the Alaska LNG project to keep it moving forward in terms of resource availability and the regulatory process.

The two energy majors will spend a further $20 million to help advance the state’s $43 billion Alaska liquefaction and export plant using their natural gas resources from the state’s North Slope reserves.

The two companies, along with ConocoPhillips, had backed out of the project as investors in 2016 amid concerns about its global competitiveness after they had already spent $500M on studies, field preparations and regulatory presentations.

Since then, the state of Alaska has tried to advance the project on its own with potential support from Chinese energy and banking companies.

Damian Bilbao, vice president of commercial ventures for BP in Alaska, said at an oil and gas conference in Anchorage that the company was optimistic that the project’s cost could be reduced to below $40Bln.

Alaska’s deputy governor Kevin Meyer said at the conference that ExxonMobil and BP had each committed an additional $10M as the project continues to refine details while it seeks authorization from the Federal Energy Regulatory Commission.

The state will cover the remaining $10 million of the expected costs before FERC makes that decision in 2020.

The Alaska project is designed to liquefy 3.5 billion cubic feet per day of gas for sale to customers in the Asia-Pacific region from a liquefaction facility to be built in Nikiski on the Kenai Peninsula, south of Anchorage.

The venture includes a pipeline of 807 miles in length linking the gas fields to the liquefaction facilities with several interconnections for domestic supplies.

The FERC recently delayed the date it expects to finally decide on the LNG project to June 2020 from February 2020.

“When the governor took office, he made it clear that we needed participants with the credentials and the resources necessary in order to make a project of this scope work,” said Meyer, the deputy of Alaska Governor Michael Dunleavy.

“The involvement of BP and Exxon provides confidence that all future decisions regarding Alaska LNG will be rooted in world-class LNG experience,” added Meyer.

Damian Bilbao, Vice President of Commercial Ventures for BP in Alaska, said the company has at least one big reason to put money into the project.

“Alaska gas remains BP’s single largest global undeveloped resource,” he said.

Bilbao said it was significant that industry and the state were collaborating on the project again.

“The state has made good progress over the last several years. And, working together with Exxon and AGDC we think we can unlock some additional opportunities,” he said.

“But we’ll just have to see in a few months after some work gets done where the project is relative to other opportunities around the world,” stated Bilbao.

ConocoPhillips has also said at the conference that it was willing to sell its natural gas to the project and was engaged with the state in negotiating a gas-sales agreement.

BP and ExxonMobil have provided technical expertise to Alaska LNG as it moves through the federal regulatory process. Last year, they signed precedent agreements spelling out the price and other terms of gas sales to the project.

AGDC has been negotiating with several parties interested in the project, though these efforts have been weighed down by the political and trade disputes between the US and China.

Alaska LNG had been expecting to sign a joint development agreement with the Chinese energy major China Petroleum & Chemical Corp., also known as Sinopec, and possible finance deals with China’s sovereign wealth fund, China Investment Corp. Capital and the state-owned Bank of China.

A formal agreement was been delayed several times because of the US-China trade dispute and has now been side-lined until trade relations improve.