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Energy firms propose Alaskan gas pipeline

Oct. 5, 2012 at 12:31 PM   |   Comments

ANCHORAGE, Ala., Oct. 5 (UPI) -- A group of energy giants have submitted a plan for a project to transport Alaskan natural gas for export to Asia.

The project, estimated to cost $45 billion-$65 billion, involves an 800-mile pipeline that would move North Slope gas to a port in southcentral Alaska where it would be liquefied for tanker transport for export to markets in Asia.

In a letter to Alaska Gov. Sean Parnell, the group, comprised of BP PLC, Exxon Mobil Corp., ConocoPhillips Co. and TransCanada Corp. said: "Individually, each of these components would represent a world-class project. Combined, they result in a megaproject of unprecedented scale and challenge.

The project would take at least eight years to build.

The companies hope to pump more than 3 billion cubic feet of gas per day.

Previously, TransCanada and ExxonMobil had planned to build a $40 billion pipeline to connect North Slope gas to the Canadian pipeline system and the Lower 48 states, Platts news service reports.

But the pipeline sponsors and the three production companies agreed earlier this year to shift their focus to an LNG export project.

"We have narrowed the broad range of alternative development concepts and assessed major project components, including the gas pipeline, gas treatment to remove CO2 and other impurities, natural gas liquefaction, LNG storage and marine terminal facilities," states the letter.

"This opportunity is challenged by its costs, scale, long project lead times and reliance upon interdependent oil and gas operations with declining production," the letter stated.

Parnell released the letter Wednesday with a statement saying he is "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."

Citing the North Slope conventional gas reserves of 35 trillion cubic feet with more than 200 trillion cubic feet of undiscovered resources and the scope of the proposed project, Parnell said an Alaska LNG project would be "one of the largest in the world."

The executives in their letter said that as the "concept selection technical work" wraps up in the months ahead, "additional commercial agreements as well as support from the state of Alaska will be required in order to progress this world-class opportunity."

During an economic trade mission to Japan and South Korea in late September, Parnell promoted purchases of natural gas from Alaska.

But Amy Jaffe, executive director of energy and sustainability at the University of California Davis told The Wall Street Journal that Alaskan natural gas will face stiff competition for customers in Asian markets, as a number of significant Australian LNG projects are coming online to meet Asian energy demand.

"My sense is that Alaska LNG has a lot of competition to Asia and they do not have a first mover advantage," Jaffe said.

Topics: Sean Parnell
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