Thursday, December 18, 2008

Exxon LNG Project - Moving Forward

Here's a link to a good news story, big Exxon LNG project moving forward - Only one problem - It's not in Alaska.

NEW YORK, Dec 17 (Reuters) - Exxon Mobil said on Wednesday it has received delivery of two of a new breed of massive liquefied natural gas (LNG) tanker this month, which will ship gas from projects in Qatar to importing markets around the globe.

Tuesday, December 16, 2008

Gas Line Wish List

According to Marty Rutherford, deputy commissioner of natural resources:

"We believe it's only a matter of time until all the parties come together to accomplish our mutual goal"
(Link to full story).

That's a happy thought, but why? Will wishing for it make it so? What does TransCanada have the the Denali Pipeline needs? Of course TransCanada needs money, actually more US taxpayer money to build the gas line and gas to fill it with. The North Slope producers have the financing and they have the gas.

And while we're penning a happy note to Santa asking for a pipeline merger go ahead and ask for $140/bbl oil and $2/gal diesel. Dream on Marty, and happy holidays!

Sunday, December 14, 2008

Throw out the AGIA

Build a short gas line to Valdez and sell liquefied natural gas (LNG) to the highest bidder. It's a capital idea sidetracked by the Alaska Gasline Inducement Act (AGIA). As the reality of AGIA sets in expect more calls like this one (LINK) from Alaska Gasline Port Authority board member Merrick Peirce (quote from Fairbanks News Miner):

"The Legislature should toss out AGIA as soon as it gets back in session, and it should get to work on the Alaska gas line. It is the only way Alaska can avoid economic devastation. If the Legislature refuses to change course, then legislators have the obligation to explain how they will replace declining state oil revenue. Do they prefer to end the dividend program first, then impose an income tax, or do they want to slash state spending and lay off state employees? What will that do to our economy?"
You know the old saying about all the eggs in one basket - Well the Canadian basket is getting pretty full - they got the $500Million inducement, they want billions in loan guarantees, the want a guaranteed high rate of return, and they can't promise regulatory approval anything built in Canada. It's going to get ugly before it gets better so hang on!

Wednesday, December 10, 2008

INTERVIEW-TransCanada looks for more Alaska guarantees

By Scott Haggett (Forbes)

CALGARY, Alberta (Reuters) - TransCanada Corp , which was sanctioned by Alaska last week to build a $26 billion pipeline to ship the state's natural gas, wants the U.S. government to boost the loan guarantees offered for the project, its chief executive said Tuesday.

Hal Kvisle, chief executive of Canada's biggest pipeline and power company, said inflation has cut the value of the $18 billion in loan guarantees authorized in 2004 by the U.S. Congress, which was then looking to speed construction of the massive project.

Pipe Dreams to Nowhere: Another Palin Lie

From Geoffrey Dunn of the Huffington Post (LINK to full story):

Palin has always been fast and loose with the truth (and her capacity for self-promotion would seem to know no bounds), but her duplicity about the pipeline extends far beyond whether it is currently being built or not --it is not--but whether or not it ever will be built. "That pipeline," she declared at the GOP convention, "when the last section is laid and its valves are opened, will lead America one step farther away from dependence on dangerous foreign powers that do not have our interests at heart."

Well the first section is at least six years away, and many contend that it will never be built at all. As one Alaskan state legislator grumbled at the license signing, "This AGIA license is not a commitment to do anything other than process a whole lot of paper."

Palin has repeatedly trumpeted the pipeline as an example of her energy know-how and pragmatic politics. She also has claimed, as she did at the convention, that she has single-handedly imposed "competition and basic fairness" to oil and gas production in the Last Frontier.

In fact, as is often the case with Palin, it's all hat and no saddle.

Zane Henning, a longtime critic of Palin and an oilfield worker on the North Slope, says "I can guarantee that the AGIA pipeline will not be built unless the State of Alaska passes a long-term tax policy that the oil companies agree with."

There's that comment again - long term fiscal certainty. You think that concept will ever soak into Palin's head? We may not be making real progress towards a pipeline, but all the bad ideas need to run their course before we get down to business.



The Alaskan Pipeline - A Wolf in Sheep's Clothing?

Apparently not all Canadians think the Alaska Gas Pipeline is a good thing. Here's a link to a Canadian opinion that Alaskan gas will lower prices and hamper gas development of Candian natural gas.

"While construction of the Alaskan pipeline will likely have a positive impact on Canada's economy in the shorter term, once it is up and running it will make Alaska into a direct and effective competitor for Alberta and BC's natural gas industry," said Ralph Glass, VP Operations of AJM Petroleum Consultants. "Looking ahead, we have to consider the fact that the Alaskan pipeline will increase natural gas volumes into the US market. This could keep natural gas prices low in future years - low natural gas prices will have a significant impact on future drilling here in Canada."






Sunday, December 7, 2008

Point Thomson Math - Palin Style

The Fairbanks News-Miner has this story (LINK) on relationship between the drilling halt at Point Thomson and putting gas in the Alaska Gas Pipeline. The story tells the weird math of the Alaska Palinista Army, i.e. you don't need gas for a gas pipeline.

State officials like to call Exxon "liars" like this quote from Marty Rutherford, deputy commissioner of the state Department of Natural Resources:

“Exxon is very nervous about losing that unit and those leases,” Rutherford said. “They are putting a lot of pressure on the state. But at the end of the day, we’ve gotten commitments from them previously that they haven’t honored."
Exxon is also providing (or attempting to provide) employment to lots of contractors and companies in Alaska. The actions of "Drill Baby Drill" Palin have sent hard working taxpayers to the house. Maybe she should be getting nervous about her political future.

The smug, self assured presidential wanna be Governor is standing between the development of natural gas and the pipeline itself. In the end Palin may indulge her narcissistic need to teach Exxon a lesson but she should remember that her actions are costing people their jobs. Those those people vote.

Saturday, December 6, 2008

Quote of the Week

I'm always keen to talk about the price of oil, the future of the Alaska Gas Pipeline, gas prices, Tar Sands and energy conservation. Since October the wheels have pretty much come off the truck. I feel like I've seen this movie before like maybe 1985-87 when life for a young engineer in Texas kinda sucked.

You read a lot of articles that curse the oil companies or the speculators. I dismiss those folks as clueless, they have no skin in the game, they haven't seen the industry from the inside. The story is that our economy is very complex, highly optimized and totally interrelated.

I found a good article that sums this up well - The Looming Energy Crisis Oil Prices: Why the Past is Not Prologue By Chris Nelder. It's the source of the quote of the week, Mr. Nelder says:

By focusing on the financial markets without seeing their connection to everything else, we have truly missed the point, which is that energy is the real economy, and money is merely an artificial representation of it. Consequently, twiddling with interest rates, and other measures that don't produce more energy or decrease demand for it, ultimately don't cure our problems at all.
To be honest I look forward to $150/bbl oil and $15/MMBTU natural gas. My reasons are selfish, I'll be the first one to admit that - but society needs to understand that energy resources are precious and should be conserved and used carefully and thoughtfully. Squandering energy on soccer mom SUV's and 5,000 square foot Mac-Mansions is not going to build a better society.

Nelder says that energy prices will turn around in 2010 - just in time for the Alaska Gas Pipeline open season. For the engineers and craftsmen that design and build the world let's hope he's right.

Alaska Gas Pipeline License Signed

Natural Resources Commissioner Tom Irwin and Revenue Commissioner Patrick Galvin signed the Alaska Gasline Inducement Act in Fairbanks yesterday (LINK).

The ceremony was attended by Hal Kvisle, president and chief executive officer of TransCanada - The same man who earlier this year said no body is happy until Exxon is happy. These days Exxon is not happy - not happy with Natural Resources Commissioner Tom Irwin who recently shut down Exxon's efforts to start drilling at Point Thomson.

You'll need your breakup boots to wade through the non-sense these politicians are dishing out. Gavin got one point right:

"Much work remains, and we will keep working with all project stakeholders to make the natural gas pipeline a reality"
Issuance of the AGIA license is a milestone in the sense that the saga can move on to the next stage, but the actual pipeline will not move forward until all the players are on the same team.

Related - APRN Libby Casey interviews Federal Pipeline Coordinator Drue Pearce - Audio Link (APRN).

Fairbanks News-Miner coverage of the AGIA license signing (LINK), and the op-ed piece (LINK) , and quote:
BP, Conoco Phillips and ExxonMobil — own the gas. They have consistently stated that they cannot work within the terms outlined in the Alaska Gasline Inducement Act and reflected in the agreement with TransCanada.

Alaska doesn’t have years in which to allow this to unfold. It is imperative that the administration and the producers reach an agreement. Since AGIA does not allow the administration to negotiate with the producers outside the process that has led to the TransCanada agreement, the state’s options are limited. We hope those limits do not doom the agreement to failure or years of delay.

Thursday, December 4, 2008

Mackenzie Pipeline - Closing the Gap?

Looks like the Canadians are pushing forward with the Mackenzie pipeline. (from upstreamonline.com):

"I'm actually very optimistic because a lot of the work that needed to be done has now been done," Environment Minister Jim Prentice told Reuters in an interview.

The pipeline's backers, led by Imperial Oil, have also been in talks with Ottawa over their request for financial breaks that would make the huge project economically viable.

"Pending receiving the environmental Joint Review Panel work, the fiscal framework continues to be an outstanding issue," said Prentice. He said he felt the Mackenzie project was now most likely five to six years' ahead of the proposed Alaska pipeline, compared with a gap of two years in 2005.

The Mackenzie pipeline would ship up to 1.9 billion cubic feet of gas a day 1200 kilometres along the Mackenzie River Valley in the Northwest Territories to Alberta, where it would link up with existing lines serving Canadian and US markets.
Now is the time to build - the first pipeline built will get better pricing on commodities and labor.



Sunday, November 30, 2008

Business Leader Supports Exxon Point Thomson Work

Jeanine St. John vice president of Lynden Logistics and president of the Alaska Support Industry Alliance wrote this op ed piece for the Anchorage Daily News: Exxon takes leap of faith with Point Thomson field.

St. John points out:

Point Thomson is a crucial building block for that pipeline. By giving Exxon Mobil a green light to proceed with field development, the state will give the company an even greater incentive to play an active role in making the gas pipeline a reality.
The editorial is in response to the State's ongoing effort to block Exxon's development plans at Point Thomson.

Saturday, November 29, 2008

Pipe Makers Ready

The JSW steel mill in Baytown Texas is geared up and looking forward to the Alaska Gas Pipeline (LINK):

Even in a region that prides itself on doing the heavy lifting to meet the nation’s energy needs, JSW’s plate and pipe mills are powerhouses. The plate mill can process up to 1.2 million tons of steel per year. The adjacent pipe mill can bend and weld 550,000 tons of pipe per year, enough to stretch the 4,500 miles from Houston to the Bering Strait."
At this time JSW USA claims they can produce X70 pipe up to 48" diameter and up to 1" thick (website).

TransCanada, one of the potential builders of the Alaska Gas Pipeline, claims they will use X-80 pipe (LINK).

Sunday, November 23, 2008

Drill Baby Drill?

Where's that "Drill Baby Drill" Governor when you need her? Two stories this week of disrupted drilling plans. Thanks for doing your part Sarah.

Court voids Shell's Beaufort Sea drill gig
The US 9th Circuit Court of Appeals blocked a major oil-drilling programme in the Beaufort Sea, ruling that federal officials failed to address environmental impacts when they granted permission to Shell Oil to drill wells over a three-year period.

State nixes Pt. Thomson ice road application, says no valid lease
ExxonMobil Production Co.’s application to permit an ice road to move a drilling rig to Point Thomson has been denied by the Alaska Department of Natural Resources, which terminated the unit earlier this year — a decision which the Point Thomson working interest owners, led by Point Thomson operator ExxonMobil, are appealing.
In the good news category -BP to boost Alaska spending:
Budget - BP PLC, Europe's second-largest oil company by market value, plans to increase spending on capital projects in Alaska to $1.2 billion us in 2009 from $900 million this year, said Doug Suttles, president of BP's Alaska unit, at an industry conference in Anchorage.

Thursday, November 20, 2008

Pipeline Politics Explained

Andrew Halcro has a good story on Pipeline Politics (LINK). One quote:

The only thing that one has to understand about the Alaska Natural Gas Pipeline is that not one piece of steel pipe can be ordered until Exxon, BP and ConocoPhillips, write the checks and assume all of the risk.
I agree - this simple fact seems to escape most folks.

Wednesday, November 19, 2008

Goodbye Uncle Ted

Goodbye and good luck Uncle Ted, Alaska will miss you. Good luck to Senator Elect Mark Begich, you've got some big shoes to fill.

Tuesday, November 18, 2008

TransCanada to raise funds with stock sale

Alaska Gas Inducement Act (AGIA) licensee elect TransCanada plans to raise funds by selling more stock (LINK). The C$1 Billion should help TransCanada as their business strategy is tested by lower prices and lower demand for the products they transport, and the $250 Million hit they took when Lehmans went out of business.

Concerning TransCanada's efforts on the Alaska Gas Pipeline the Wall Street Journal says: (LINK):

Gov. Palin focused on passing the $500 million incentive package and selecting Calgary-based TransCanada to develop the 1,700-mile pipeline. But TransCanada needs commitments from the three big producers controlling the gas on Alaska's North Slope before it can secure financing for the project. And those companies are balking. Exxon Mobil Corp. has so far refused to participate. BP and ConocoPhillips are backing their own pipeline and have expressed reservations about joining the state-backed pipeline.

Monday, November 17, 2008

Ice Road Blocked

To quote that lady who ran for VP "It's all about jobs"

From Reuters (Yereth Rosen):

ANCHORAGE, Alaska, Nov 17 (Reuters) - The Alaska Department of Natural Resources has denied ExxonMobil Corp. a permit to build a seasonal ice road to carry equipment to an oil and gas field the state says it has seized.

Exxon wants the nearly 50-mile road to transport a rig for drilling wells this winter at Point Thomson, a languishing eastern North Slope field of vast oil and natural gas reserves. (Link)
So let's see at today's oil price and with no gas line in place - who exactly is going to step up and drill Pt. Thomson, this winter other than Exxon?

Friday, November 14, 2008

Senator Begich?

Seems like this political season just won't end. (LINK).

JUNEAU, Alaska, Nov. 13 (UPI) -- Ballot counting in Alaska indicates U.S. Sen. Ted Stevens, R-Alaska, has fallen slightly behind Democratic challenger Anchorage Mayor Mark Begich.

Leading by more than 3,200 votes in an initial count after Election Day, Stevens fell behind Begich by 814 votes after about 57,000 additional ballots were counted Wednesday, The New York Times reported Thursday.
I'd hate to see Uncle Ted go, but that Senate seat should go to someone who can work with industry and business to get a gas line built.

Thursday, November 13, 2008

A future for Gas Hydrates?

From the USGS (LINK): "Secretary of the Interior Dirk Kempthorne and U.S. Geological Survey Director Mark Myers today released a USGS assessment estimating that there are 85.4 trillion cubic feet of undiscovered, technically recoverable gas from natural gas hydrates on the Alaskan North Slope. This would be enough natural gas to heat more than 100 million average homes for 10 years, according to current usage rates provided by the Energy Information Administration. However, further research, including long-term production tests, still is needed to demonstrate gas hydrates as an economically producible resource."

Good news, let's hope it leads to more gas for the pipeline.

More from USGS: Factsheet, and gas hydrate website.


Wednesday, November 12, 2008

Age of Easy Oil is Over

Good analysis by Economist.com (LINK)

According to Francisco Blanch of Merrill Lynch, the rising cost of capital is likely to outweigh all these benefits. Tar-sands schemes, like most oil projects, are very capital-intensive and so very sensitive to changes in financing costs. He believes that higher borrowing charges could push the cost of new tar-sands developments as high as $150 a barrel by 2010. So if demand for oil has started growing again by then, and if tar sands remain the source of marginal production, then the oil price will have to rise back to this summer’s levels to stimulate increased supply. “The age of easy oil”, warns the Emirati minister, “is gone forever.

Saturday, November 8, 2008

The Lastest from TransCanada

The Anchorage Daily News published the following TransCanada story (LINK). According to TransCanada CEO Hal Kvisle everything is full steam ahead as he stated the obvious:

"The most likely shippers that are going to underpin this pipeline are the three existing Prudhoe Bay producers (BP, Conoco Phillips and Exxon Mobil) and so while the open season is out there, in parallel with that we're also holding discussions with those people in advance of the open season and leading up to the conclusion of that.

"And that is probably the single most important step in moving that project forward, are fruitful discussions with the existing producers on the North Slope"
What Kvisle has not explained is why the producers should be compelled to do business with TransCanada. TransCanada expects the AGIA license by late November, but an AGIA license is not needed to build a gas pipeline. So really- what does TransCanada have that the producers actually need?

Friday, November 7, 2008

Obama's Energy Plan

From the Barack Obama energy plan fact sheet:

"Prioritize the Construction of the Alaska Natural Gas Pipeline. Barack Obama and Joe Biden will work with stakeholders to facilitate construction of the pipeline. While this pipeline was proposed in 1976, and Congress authorized up to $18 billion in loan guarantees for this project in 2004, there has been no progress in building this critical energy infrastructure under the Bush Administration.

The planned pipeline would have a daily capacity of 4 billion cubic feet of natural gas, or almost 7 percent of current U.S. consumption. Not only is this pipeline critical to our energy security, it will create thousands of new jobs."



Wednesday, November 5, 2008

Good News / Bad News

The good news - Sarah Palin won't be a heartbeat away from the presidency.

The bad news - She'll be back in Alaska working against the free market pushing her TransCanada vision for the Alaska Gas Pipeline.

Swell. Tough times ahead for Sarah, tough times ahead for the Alaska Gas Pipeline.

Also - It looks like Ted Stevens won re-election. On the surface this is good news, but given his age and his legal troubles the stage is set for Sarah Palin to appoint herself to his seat in the event he can't serve out his term in office.

Sunday, November 2, 2008

Reduced Demand for Alaska Gas

Canadian tar sand projects demand lots of energy - energy that could be supplied by Alaska gas (more info here).

The downturn in oil prices has the Canadians rethinking their expansion projects - Here's the latest regarding Shell (LINK):

Shifting sands (Times Online Robin Pagnamenta, Energy and Environment Editor 10/31/08)

— Canada's oil sands industry is under pressure as high costs, plunging oil prices and turmoil in global financial markets trigger a wave of project delays

— This month alone, projects worth more than C$40 billion (£20 billion) have been postponed

— Petro-Canada, one of the largest players, is deferring a C$10 billion investment decision on a new bitumen processing plant

— Suncor Energy, another big player, is postponing by one year the construction of a C$20 billion upgrader plant, which turns bitumen into a more easily refinable, synthetic crude.


Thursday, October 30, 2008

TransCanada Financials Part II

Looks like project funding problems at TransCanada have intensified. See Part I here.

Here's a link to the story on Andrew Halcro's blog:

TransCanada Corp. said it could delay parts of its multibillion-dollar Keystone oil pipeline expansion if its oilsands customers, dogged by the credit crisis, want to hold off on shipping additional crude oil to the Gulf Coast. (Canwest News Service; Financial Post
Published:Wednesday, October 29, 2008)

Did Palin get a pipeline for Alaska?

Kay Cashman, publisher and executive editor of Petroleum News says Palin came close (LINK):

I say she has come closer than any other governor to making a pipeline from Alaska's North Slope to market a reality. In her first two years in office, two major North Slope oil producers, BP and ConocoPhillips, decided to build their own gas pipeline without any up front guarantee of fiscal concessions from the state of Alaska.

Trans-Canada, a major North American pipeline company, was right behind them with $500 million in state matching funds that would either result in a completed pipeline or a valuable certificate of convenience and necessity from the Federal Energy Regulatory Commission that would belong to the state if Trans-Canada pulled out.

Tuesday, October 28, 2008

Ted Stevens - Guilty

It's a bad day for Ted Stevens, a bad day for Alaska and a bad day for the Alaska Gas Pipeline. We'll know in a week whether or not this cost him the election. (LINK).

After the election we can ponder the impacts on the Alaska Gas Pipeline project - there's too many variables in the equation right now.

Saturday, October 25, 2008

Palin’s Pipeline Claims Prompt Media Investigation of Alaska Gas Pipeline

And the results aren't pretty.

Most of the facts are old news to Alaska Gas Pipeline project news followers, but Justin Pritchard and Garance Burke of the Associated Press have put Palin's boasting in context (LINK).

In interviews and a review of records, the AP found:

_Instead of creating a process that would attract many potential builders, Palin slanted the terms away from an important group — the global energy giants that own the rights to the gas.

_Despite promises and legal guidance not to talk directly with potential bidders, Palin had meetings or phone calls with nearly every major candidate, including TransCanada.

_The leader of Palin's pipeline team had been a partner at a lobbying firm where she worked on behalf of a TransCanada subsidiary. Also, that woman's former business partner at the lobbying firm was TransCanada's lead private lobbyist on the pipeline deal, interacting with legislators in the weeks before the vote to grant TransCanada the contract. Plus, a former TransCanada executive served as an outside consultant to Palin's pipeline team.

_Under a different set of rules four years earlier, TransCanada had offered to build the pipeline without a state subsidy; under Palin, the company could receive a maximum $500 million.

ConocoPhillips Cautious in '09

As oil and gas prices plummet keep a sharp eye out for the first cracks in the plans of Alaska Gas Pipeline producers and potential builders. Last week we heard that financially strong ExxonMobil is holding steady with it's capital investment plans. This week we're see some signs of potential weakness in Denali Pipeline partner ConocoPhillips.

According to Brett Clanton of the Houston Chronicle:

ConocoPhillips "will not be as aggressive" with drilling in North America and will probably keep its capital spending budget flat in 2009 amid continued volatility in the commodity and credit markets, the company’s chief executive said Wednesday.

The temporary pullback in the lower 48 U.S. states and Canada would result only in delays, not cancellations, of projects and would be part of a broader effort by ConocoPhillips to watch costs and prioritize spending, Chairman and Chief Executive James Mulva said in a conference call after release of the company’s third-quarter earnings report.

"Until we see more certainty or probability, I think our concentration is to live within our means," he said. (MORE)
ConocoPhillips third quarter earnings call was silent on the progress of the Denali Pipeline or the overall outlook for Alaska Gas production and utilization (transcript link, presentation link).

What are your thoughts on the impact of recent financial events on the Alaska Gas Pipeline project? Check out the new poll, multiple answers are allowed.

Tuesday, October 21, 2008

Exxon chief says capital spending still on track

From Bloomberg News (LINK)

Exxon Mobil Chief Executive Officer Rex Tillerson said the company’s capital spending program hasn’t been scaled back by the drop in crude-oil prices. “Nothing that we had in our plans has been affected by this change in prices,” Tillerson told reporters today at an American Petroleum Institute meeting in Scottsdale, Arizona.
ConocoPhillips and Chevron will announce capital spending plans later this year.

This is good news for the Point Thomson project which will eventually produce gas for the Alaska Gas Pipeline. Point Thomson holds nearly one-fourth of the North Slope's 35 trillion cubic feet of known reserves (Link to Point Thomson Lawsuit story).

We look forward to some positive indication from ConocoPhillips and BP - builders of the Denali gas pipeline.

Wednesday, October 15, 2008

Gazprom?

Gazprom eyes role in Denali pipeline project in Alaska
By Steve Gelsi (LINK)

NEW YORK (MarketWatch) -- Officials from Russian energy giant Gazprom on Tuesday reiterated interest in taking part in a pipeline project to transport natural gas from Alaska to the U.S. market, according to published reports. In a recent visit to Alaska, the world's largest gas producer discussed gas production, transport and supply with counterparts in the U.S., including ConocoPhillips CEO Jim Mulva. ConocoPhillips and BPhave proposed the $30 billion Denali pipeline project to connect natural gas fields in the North Slope of Alaska to the lower 48 states
From Reuters (LINK)
"Gazprom has accumulated great experience in exploring hydrocarbon deposits, building and using gas pipelines in the Far North environment. Gazprom's experience will be relevant in realisation of similar projects in Alaska," it said in the statement, without specifying what projects were discussed.

Gazprom's Chief Executive Alexei Miller, who headed the delegation, said in June his firm wanted to join a gas pipeline project to pump the fuel from Alaska across Canada to the U.S. market and had made a proposal to oil majors BP (BP.L: Quote, Profile, Research, Stock Buzz) and ConocoPhillips.

Sunday, October 12, 2008

Alaska Gas Pipeline - News Roundup

Here's a round up of stories that may affect the Alaska Gas Pipeline:

Dermot Cole of the NewsMiner reflects on the impact of low oil prices on teh Alaskan economy:

As oil prices continue to tank, state officials should focus on budget challenge
By Dermot Cole

What is seen Outside as the “silver lining” from the stock market collapse is bad news for the Alaska economy, which lives on oil money, much of it filtered through state and local governments.

To some extent, the silver lining applies here, at least in terms of lowering the price of gasoline and heating fuel, though the downward movement has been slower than a quart of 30-weight motor oil poured at 40 below.
Fortunately, Alaska Governor and resident oil industry expert understands the oil business, or does she?
Palin wrongly suggests Congress bans oil exports
By H. JOSEF HEBERT

"No. It's not 75 percent of our oil being exported," Palin said, suggesting some of Alaska's oil, in fact, may be going abroad but not that much.
"In fact," she added, "Congress is pretty strict on, um, export bans of oil and gas especially."

No Alaska oil has been exported since 2004, and little if any since 2000, according to the Energy Information Administration and the Congressional Research Service.
The trial of Ted Steven's edged forward this week. A conviction could rob Alaska of it's best leader in Washington and pave the way for a former V.P. candidate to appoint herself Senator.
Associated Press Link

Justice Department Link

Saturday, October 11, 2008

Palin's Political Career Hits An Icy Patch

Last night the facts caught up with Sarah Palin. From Reuters - "Alaska ethics probe says Palin abused her power"

Blogger Andrew Halcro broke the story months ago and the investigation validated his story.

Here's a link to the investigation report.

Assuming her Vice Presidential bid is unsuccessful she will continue to play a big role in Alaska politics and the Alaska Gas Pipeline, either as Governor for the rest of her term, or as Senator via self appointment in case Ted Steven's career falters.

What's does her future hold? Vote in the new poll on the right.

Sunday, October 5, 2008

Companies spend millions mapping gas line route

By Amanda Bohman (Fairbanks NewsMiner) (LINK)

Published Saturday, October 4, 2008

FAIRBANKS — The two companies competing to build a natural gas pipeline from the North Slope to Alberta, Canada, are spending tens of millions of dollars as they continue efforts to map a route in time to start lining up customers in 2010.

Denali — The Alaska Gas Pipeline is backed by two major oil producers, BP and ConocoPhillips. TransCanada, a pipeline company based in Calgary, Alberta, is developing its gas line project in coordination with the state of Alaska. Which project prevails depends on federal regulators and market conditions years from now. Gas isn’t expected to flow before 2018.

TransCanada is doing similar work.

Tony Palmer, TransCanada’s vice president for Alaska Development, said his company has done aerial photography of the Alaska portions of the route and documented the Canadian section on special 360-degree video.

The company has hired an environmental planner for the Alaska section, Palmer said.

TransCanada also is in the midst of hiring companies to complete geotechnical and terrain mapping of the route as well as engineering and design for a gas treatment plant at Prudhoe Bay, Palmer said.

“The bulk of our field work will be completed in the spring or summer of 2009,” he said.

Palmer estimated TransCanada will have spent $84 million by 2010, when it will try to line up customers. TransCanada has agreed to conditions set by the state, which has promised to reimburse about half of that money.

Fackrell Offers More Details on Denali Pipeline Project

By Tim Bradner (LINK)
Alaska Journal of Commerce

Denali Pipeline President Bud Fackrell gave additional details on the company's gas pipeline planning effort at the Alaska Oil and Gas Symposium in Anchorage Sept. 23.

Fackrell said that most of the chilled pipeline would be buried, while other segments would be built above-ground through earthquake-prone areas and major river crossing. The gas pipeline will be placed on vertical support members similar to the procedure used for the trans-Alaska oil pipeline.

The company in 2009 will also begin studies of long-term in-state gas needs and will ramp up training initiatives, he said. The in-state needs assessment is required by the U.S. Federal Energy Regulatory Commission.

Alaska groups like the Alaska Natural Gas Development Authority and Enstar Natural Gas Co. are working on ways of getting North Slope gas to consumers in the state, he said.

Denali is focused on the big pipeline, but the company intends to work closely with these groups. Fackrell said Denali has established five take-off points for gas within Alaska and is setting up a special engineering team to work with groups like ANGDA and Enstar, which want to take gas from the pipeline.

Friday, October 3, 2008

TransCanada Alaska Project on Despite Natgas Price

By Frank Pingue (LINK)

TORONTO, Oct 2 (Reuters) - TransCanada Corp (TRP.TO: Quote, Profile, Research, Stock Buzz) said on Thursday the slide in natural gas prices does not dampen the outlook for its proposed Alaska gas pipeline, which would deliver natural gas to U.S. markets from Alaska's North Slope.
TransCanada Chief Executive Hal Kvisle told reporters after a Toronto speech that natural gas prices often hit their lowest level of the year around September and October before turning around during the winter months.

"The commodity price is always a big concern and a big risk on a project like (Alaska) but I still don't think we're in an environment of falling natural gas prices," said Kvisle. "The real comparison is what was the bottom in the gas market this year versus what it was a year ago, and we're actually up a bit over a year ago."

The price of natural gas fell as low as $7.43 on Thursday, which is off considerably from the $13.69 reached in July, but comfortably above the 2007 low of $5.19 touched in September.

In August, TransCanada won approval from Alaskan lawmakers to construct a 1,700-mile (2,700-km) line to an existing pipeline hub in Canada that would send about 4 billion cubic feet of Alaska natural gas a day to U.S. markets.

Saturday, September 27, 2008

Tar Sand Project Cost Increase

It's a preview of things to come - Mega Project, Mega Cost. This problem is exacerbated by the Wall Street meltdown.

Fort Hills Costs Leap to $24 billion (LINK)
Petro-Canada hikes price tag for oilsands project 50 per cent
Shaun Polczer, Calgary Herald
Published: Thursday, September 18, 2008

Petro-Canada on Wednesday set a new benchmark for capital cost overruns in the oilsands after it hiked estimates for the proposed Fort Hills mine by 50 per cent.

The project, originally pegged at $14.1 billion, will now cost about $24 billion.

"We've seen a dramatic rise in capital costs in the past year," said Ron Brenneman, Petro-Canada's president and CEO.

Analysts said UTS will face difficulties coming up with the extra money given the financial turmoil that has rocked Wall Street in recent days, with the collapse of big investment banks like Lehman Brothers and fire sales of Merrill Lynch and AIG.

"Financing was already a concern in the current credit market. With the mounting cost escalation and a sum of $3 billion of additional financing, UTS faces considerable headwinds moving forward," UBS analyst Andrew Potter noted.

TransCanada Plans Open Season

June 2010, According to Tony Palmer, TransCanada's vice president for Alaska gas development.

TransCanada to beat Denali in open season (LINK)

By Tim Bradner
Alaska Journal of Commerce

The great pipeline race is on. TransCanada Corp. will begin an open season for an Alaska natural gas pipeline in early 2010, beating a rival pipeline group led by North Slope producers by several months, a senior TransCanada manager told an oil and gas conference in Anchorage Sept. 23.

Meanwhile, TransCanada's rival, the Denali pipeline group, said it is ramping up its work fast and plans to have 300 to 400 people in the field next summer, up from 80 this year.

Tony Palmer, TransCanada's vice president for Alaska gas development, told the annual Alaska Oil and Gas Symposium, sponsored by the American Conference Institute, that his company will conclude its open season June 30, 2010, and will proceed with work toward certifications of the project by the U.S. Federal Energy Regulatory Commission and Canada's National Energy Board.

Sunday, September 21, 2008

TransCanada Financials

TransCanada’s high debt to equity ratio and exposure to Lehman’s meltdown prompted me to examine TransCanada in comparison with industry peer Enbridge, Denali Pipeline partners ConocoPhillips and BP, and North Slope producer ExxonMobil. (click to enlarge)


It looks like TransCanada is highly leveraged and not very profitable. What’s not clear to me is exactly how TransCanada would swing the funding for the $40B Alaska Gas Pipeline. Without a successful open season what would they borrow against? If interest rates go up (and they will) will TransCanada plan still turn a profit?

Saturday, September 20, 2008

TransCanada Exposure to Lehman

TransCanada (TRP) moves to keep Lehman deals from Barclays,
PAUL WALDIE (LINK)

TransCanada PipeLines Ltd. has more than $250-million (U.S.) in exposure to Lehman Brothers Holdings Inc. and it's concerned about what might happen to that debt if Lehman is taken over by Barclays PLC, court filings show.

TransCanada revealed the holding in a filing in the New York court that is overseeing Lehman's bankruptcy protection. Lehman filed for protection on Monday, listing $613-billion in debt. Two days later, London-based Barclays announced plans to buy the firm's U.S. operations for $1.7-billion.

In its court filing, TransCanada said it has "significant contractual agreements" with Lehman Brothers Commodity Service Inc. and its subsidiary, Eagle Energy Partners, a Houston-based energy marketing and services specialist. The contracts total "in excess of $250-million," the company added.
TransCanada was selected by the Alaska Gasline Inducement Act (AGIA) to compete with the North Slope producers gas pipeline, the Denali Pipeline.

The Total Debt to Equity ratio of TransCanada is 1.345, compared to Exxon's debt to equity ratio of  0.077. 

Denali Pipeline partners ConocoPhillips (COP) and BP have debt to equity ratios of 0.237 and 0.287 respectively.

Bottom line - This is something to keep an eye on as the banking crisis unfolds.  TransCanada is the most exposed (weakest) firm of the potential Alaska Gas Pipeline players.  ConocoPhillips and BP are in good shape and Exxon is more or less bullet proof.  TransCanada's weakness could tip the game in Denali's and Exxon's favor.

Friday, September 19, 2008

Canadian Tar Sands Utilization

One of the main drivers for the Alaska Gas Pipeline is the development of the Canadian Tar Sands.  This link details the outlook for pipelines and refineries downstream of tar sands (LINK).

By Lindsay Sword, Wood Mackenzie

Supply of Canadian oil sands products will increase by 2 million b/d between 2007 and 2015; half of this growth will be in Canadian heavy crude blends. A recent study shows that the export pipeline infrastructure and US refinery capacity will be able to handle forecast additional supplies of Canadian crude during 2007-15. Planned export pipeline infrastructure should keep pace with forecast additional supply of oil sands products to 2015; export pipeline capacity will increase by 2.1 million b/d. Current capacity tightness should be resolved once expected new pipelines start up in 2008 and 2009. By the end of 2015, spare capacity will reduce, suggesting the need for additional export capacity shortly after 2015. Refinery projects targeting Canadian heavy blends that we expect to proceed are aligned with our forecast of additional supply: Canadian heavy blends supply will increase by 1 million b/d by 2015, and projects that are planning on processing heavy blends will increase by 1.1 million b/d.

A quick math check - It takes 1,200 cubic feet of gas to produce a barrel of tar sand oil -   So to produce 2.1 million barrels of tar sand oil, you would need about 2.5 BCF/day.  That's more than twice the volume of the MacKenzie pipeline and a little more than half the capacity of the proposed Alaska Gas Pipeline.

Tuesday, September 16, 2008

Mackenzie Pipeline Leaders "Optimistic"

From Bloomberg:

Imperial Oil Ltd. Chief Executive Officer Bruce March, head of Canada's largest oil company, said he's the most optimistic he has been in the past five years about the chances of the Mackenzie gas pipeline proceeding.

``We're very committed to the project and we're probably more optimistic than we've been in the last five or six years,'' said March.

Building the proposed 1,220-kilometer (758-mile) pipeline has been marred by regulatory delays and surging costs. Calgary- based Imperial, head of the conduit's development group, in 2007 doubled its cost estimate for the project and pushed back the target completion date by three years to 2014. (LINK)
The cost are up, the schedule has move to the right, there are regulatory delays.  There are a lot of lessons here for the Alaska Gas Pipeline.

Sunday, September 14, 2008

Multiple Pipeline Applications Will Strain FERC's Resources

According to Joseph Kelliher, chairman of the Federal Energy Regulatory Commission:

reviewing multiple projects "would greatly challenge the commission staff, the other agencies on the federal interagency team, and state agencies. Clearly, everyone must work together with the shared goal of getting a project built." (LINK to ADN story)

The "multiple projects" he refers to are the Denali Pipeline, and the AGIA / TransCanada project.

Saturday, September 13, 2008

LNG Exports to Japan Challanged

Senator wants to stop Alaskan gas exports to Japan

By Tom Doggett (Reuters): A U.S. senator has asked the Energy Department to revoke a recent order authorizing energy companies to continue exporting liquefied natural gas from Alaska to Japan and other Pacific Rim markets. (LINK)
The Anti Free Market Senator is Ron Wyden of Oregon.   Read his press release HERE.

I guess according to Senator Wyden, Alaska LNG should be sold to the Peoples Republic of Oregon at a loss.

If Wyden and the people of Oregon want Alaska LNG - Step up and make a better offer. It's called the free market systems. 

Friday, September 12, 2008

Blog Stats

Little bit of validation from the fine folks at Google. Their ranking of "Alaska Gas Pipeline" sites goes like this #1. Denali the Alaska Gas Pipeline, #2 This Blog: Alaska-Gas-Pipeline.Blogspot.com. and third - the official State of Alaska Pipeline web site.

Ha! Thanks for visiting and thanks for my helpful friends who follow the blog and help me with my spelling. Thanks for all the site hits, it's like "Infinity" as Napoleon Dynamite would say.

One of these days the politicians will be out of the way and real people will do the real job of building thing.

Pipeline Progress - The Fact Come Out

From Keith Johnson :

Palin’s Pipeline: Pols’ Jabs at Big Oil Could Come Back to Hurt Them
Posted by Keith Johnson
But the state’s agreement with TransCanada doesn’t include any guarantees the pipeline will actually be built. And Alaska hasn’t locked up the gas needed to fill the pipeline. In that sense, Gov. Palin’s barekknuckle approach to the diversified international oil giants–steps like raising the royalty fees oil companies pay the state–may make it tougher for her to fulfill her domestic-energy promises. (LINK)

From the NY Times SERGE F. KOVALESKI and MIKE McINTIRE

Palin’s Pipeline Is Years From Being a Reality

The pipeline exists only on paper. The first section has yet to be laid, federal approvals are years away and the pipeline will not be completed for at least a decade. In fact, although it is the centerpiece of Ms. Palin’s relatively brief record as governor, the pipeline might never be built, and under a worst-case scenario, the state could lose up to $500 million it committed to defray regulatory and other costs. (LINK)


Wednesday, September 10, 2008

ConocoPhillips Gets Final Permit for New Coke Plant

From the Belleville News Democrat:

ConocoPhillips Gets Final Permit for New Coke Plant

ConocoPhillips Wood River Refinery has been issued an air permit -- originally challenged by the U.S. EPA -- allowing the refinery to move forward with plans for a new $2 billion coke plant.

The second coker at the Roxana refinery "will allow the facility to process Canadian crude oil and produce a wider variety of fuels," according to a news release today from U.S. Rep. Jerry Costello, D-Belleville. (Link)
Tar Sand Oil production and downstream projects like this coker in Illinois are the real driving force behind the Alaska Gas Pipeline. Lower 48 refiners need Canadian crude oil. The Canadian Tar Sand Oil producers need gas to process Tar Sand Oil into a synthetic crude product that can be piped to the lower 48.

Saturday, September 6, 2008

Pipeline News

From GARY JACOBSON / The Dallas Morning News: 

        Palin's Alaska pipeline dream Not a Reality Yet:

Alaska Gov. Sarah Palin boasted this week that she stood up to Big Oil in advancing a decades-old ambition to bring natural gas to the Lower 48. But experts say she'll eventually have to sit down with the oil giants if she wants her pipeline dream to become a reality. (LINK)
From Barry K Worthington, Financing The World Energy Industry Requires $22 Trillion
Meeting the world's energy needs over the next several decades represents incredibly complex challenges on many fronts. These include access to the resource base for fossil fuels; availability of an adequate workforce, specifically engineers and skilled tradesmen; siting every variety of energy facility; dealing with climate change challenges; stability and predictability of regulation; and attracting $22 trillion ($22,000,000,000,000) into the sector. Never before, on a global basis, has the energy industry been expected to site, finance and manage the construction of infrastructure on this scale. It is doubtful that any other industry has ever been compelled to deal with this level of capital investment. (LINK)

Monday, September 1, 2008

Scarborough reacts to Palin news

I like to keep this blog on point and discuss Alaska gas pipeline issues, but 15,000+ hits in two days suggest I should share this item:



For more info on the Alaska Governor I direct lower 48 first time blog visitors to: Andrew Halcro's blog & Mudflats is pretty good too.

Read'em and weep.

Sunday, August 31, 2008

FERC to the Rescue?

The Federal Energy Regulatory Commission on Friday volunteered to help merge two competing Alaska natural gas pipeline projects into one.

High energy prices have created a free market conditions favorable to building a gas line from Alaska to supply much needed gas to develop the Albert Tar Sands.

The Alaska Gasline Inducement Act (AGIA), is slated to pay State of Alaska funds to TransCanada to work towards building a gas pipeline.

Somewhere down the road one or both of the pipelines will not be built. 

FERC, not the State of Alaska, regulates pipeline development. Maybe this is a positive step to smooth the way.  Maybe not. 

The current playing field is populated by oil and gas producers (ConocoPhillips and BP - Denali Pipeline) playing by the rules, working with FERC, working within the bounds of free market economics - on the other side Governor Sarah Palin has passed new taxes on oil companies, slowed development, and passed a Pipeline law (AGIA) that shovels money to pipeline company TransCanada with no guarantees that they will build a pipeline.

Saturday, August 30, 2008

Pipeline Work Heats Up

Here's a news roundup on the Alaska Gas Pipeline:

Word of thanks to Senator John McCain for the 10,000+ hits my blog got yesterday, now back to the pipeline:

PIPELINE THE POWER POKER CHIP
Carrie Tait, Financial Post

Engineering firms chase opportunity in Alaska

HIGH OIL PRICES: Fluor, other heavyweights expand in state. By WESLEY LOY

Probably the BEST new of the week:

ExxonMobil Commences Site Work at Point Thomson to Support Drilling Program


If you're looking for information on Sarah Palin, Alaska's Glam Tax & Spend Republican Governor, I suggest Andrew Halcro's site.

Friday, August 29, 2008

Palin Picked - Gas Pipeline Blog Swarmed

Thanks for visiting my blog today - It's a sleepy little blog that gets about a 100 hits on a big news day - I guess John McCain's announcement of running mate has something to do with today's volume.

If you are interested in Sarah Palin scroll through or search her name within the Blog. I'm Pro-Alaska and Pro-Gas Pipeline. That does not mean I agree with Palin's policies, or approach. The Alaska Gas Pipeline is a monumentally huge project and I tend to think of it as more important than hand full of personalities that get the headlines.
How will Palin's VP bid affect the Pipeline? If she wins it will take her out of the game in Alaska - that may be a good thing since her policies are Pro-Government and Anti-Free Market. Whether VP Palin could help or hurt the pipeline is something to consider.

Remember it was VP Spiro Agnew that cast the deciding vote in the U.S. Senate for the Alaska Oil Pipeline.
Pipeline issues aside - I'm flabbergasted at McCain's choice -A Republican in Name Only -'nuf said.

Saturday, August 23, 2008

Buffet and Gates Visit the Oilsands

Billionaires Bill Gates and Warren Buffet visited the Canadian Tar Sands this week. Apparently they wanted a "First Hand Look".

Curious indeed. Earlier this year Buffet's Mid American Energy failed to submit a complying AGIA proposal to the State of Alaska. Mid American's CEO David Sokol said in a letter to Governor Sarah Palin "you and we alone cannot develop the pipeline project through AGIA's expected process".

So what's changed? What's Buffet's play? And why bring in Gates?

A stake in the Tar Sands at the Warren Buffet / Bill Gates level of play only makes sense if they have a long term source of energy in mind for Tar Sand Processing. Is it Alaska Gas? Nuclear? or Tar Sand Gasification?

Maybe Denali or TransCanada has a new partner.

Take the poll, multiple answers allowed -->

Tuesday, August 19, 2008

Mackenzie Pipeline Enjoys `Head Start'

Canadian Industry Minister Jim Prentice says the Imperial Oil Ltd.'s Mackenzie pipeline project has cleared most regulatory hurdles and has a ``head start'' over a competing project in Alaska.

The Mackenzie pipeline capacity is about 25% of the capacity of the planned Alaska Gas Pipeline.

Calgary-based Imperial, is 70 percent-owned by Exxon Mobil Corp. Other partners in the Canadian project include Exxon Mobil, Shell Canada Ltd., ConocoPhillips and the Aboriginal Pipeline Group, which represents some northern native bands.

This project will compete with the both planned Alaska pipelines (TransCanada AGIA, and ConocoPhillips BP Denali) for customers, steel, engineers and craft labor. Unlike the plannned Alaska pipelines, the Mackenzie passes the "Is Exxon Happy" test.

Monday, August 18, 2008

"A Terrible Blunder"

That's what former Governor Wally Hickel says about passage of the Alaska Gas Inducement Act.

"Gov. Sarah Palin and the Alaska Legislature have decided to allocate to the TransCanada Corporation up to $500 million and the power to negotiate a deal with the North Slope producers to build an Alaska gas pipeline through Canada."

Wally suggest that Alaska build a line to the coast and ship LNG to the world - Not a bad idea, but nobody is biting.

Wally also points out "The oil producers want to use our gas to heat up the Alberta tar sands to produce crude oil, an environmental disaster in the making."

See the Alaska Gas - Tar Sand story here.

The point is that the Canada Only pipeline ties down Alaska gas for decades to come - It's easy economics, if Alaska had multiple markets it could get the best price.

Wally gets it. Too bad he's not in office now.


Saturday, August 16, 2008

Enbridge: The other Canadian Pipeline Company



From CNNMONEY/Dow Jones:

Enbridge Inc. (ENB) is still in talks with ConocoPhillips (COP) and BP PLC (BP) about taking part in their natural gas pipeline from Alaska, the company said Thursday, even as the state government throws its support behind a competing project.

Canada's second-biggest pipeline firm added that it wouldn't rule out participation in a broader consortium involving Alaska's major gas producers and Calgary-based rival TransCanada Corp. (TRP), which recently won the approval of Alaska's senate.

"We're still continuing discussions" with ConocoPhillips and BP, Enbridge spokeswoman Jennifer Varey said. "We've always seen ourselves participating in a larger consortium...We certainly see a role for us."

-By Hyun Young Lee, Dow Jones Newswires

ENBRIDGE 2007 ANNUAL REPORT HERE

Friday, August 15, 2008

What About the Tar Sands?

Candidate Obama's website claims he supports "Create Millions of New Green Jobs" The last bullet point is "Prioritize the Construction of the Alaska Natural Gas Pipeline."

It's interesting to note that Alaska natural Gas is needed to develop Canadian Tar Sands .

Obama's support of the Alaska Gas Pipeline is appreciated, but does Obama also support development of Canadian Tar Sands as part of a "Green" agenda?

Also - the phrase "Prioritize the Construction of the Alaska Natural Gas Pipeline" could mean placing the Alaska Gas Pipeline at the bottom of the list. What's wrong with saying "Build the Alaska Natural Gas Pipeline"?

Obama should clarify these points before he is truly listed among supporters of the Alaska Natural Gas Pipeline.

Saturday, August 9, 2008

Conoco and TransCanada Want Exxon To Join Gas Pipeline Effort

From CNN Money:

Conoco favors "taking ExxonMobil into the Denali project," said Brian Wenzel, Conoco's vice president of Alaska Gas Development. He added that the company would consider partnering with any other company that "provides value" to the project.

TransCanada has said Exxon's participation could be vital to its project.

ExxonMobil hasn't committed to either pipeline, although it has said it wants to participate in a project that would ship gas from the Point Thomson natural gas field on Alaska's North Slope, to the lower 48 states. The company said Thursday it wants to work with BP, Conoco, TransCanada and the Alaskan government to build a natural gas pipeline.

Exxon says they are ready "(Dow Jones)- Exxon Mobil Corp. (XOM) said Thursday it's ready to work with the Alaskan government and three companies competing to build a natural gas pipeline in the state, even as a dispute over leases revoked in 2006 looms in the background.

From the Denali Project

It's full steam ahead for the Denali team according to Bud Fackrell, President of Denali - The Alaska Gas Pipeline LLC

"The granting of the AGIA license will not affect the Denali work program, and as long as the State ensures a level playing field, should not affect Denali's steady march toward its first major milestone, an open season by the end of 2010."

Monday, August 4, 2008

Exxon & The Alaska Gas Pipeline

Here's a good story by the Canadian media on the role of Exxon in the Mackenzie Valley Pipeline and the Alaska Gas Pipeline.

In their opinion Exxon is still a key player in the development of Arctic gas resources.

They quote TransCanada chief executive officer Hal Kvisle as saying:

"Things aren't always as they seem," Mr. Kvisle said. "Exxon is not the front-and-centre party in the press but I know for a fact that they've got very hard work going."

Friday, August 1, 2008

Alaksa Senate Votes 14-5 for TransCanada Eh?

Today the Alaska Senate voted 14-5 to award a license to build a natural gas pipeline to TransCanada.

The license includes a $500 Million (US) payment from the State of Alaska to TransCanada to help the pipeline company move forward with the multi-billion dollar project.

It's not yet a ride on the gravy train with biscuit wheels for the Canadians. They will have to contend with the Denali Pipeline.

The Denali Pipeline doesn't have $500 Million of State handout money, but they do have gas to fill their pipeline. Committed gas is needed to secure funding to build the gas pipeline.

Competing ideas for a All Alaska / All American pipeline for LNG export are off the table for the time being.

It's a big gamble. The $500 Million is actually the smallest sum at risk. The TransCanada plan could derail or delay the ultimate pipeline by years if the process lands all parties in court.

Ironically a total solar eclipse started in the Arctic today over Canada...

A sign from above perhaps?

More AGIA Perspective from Frank Murkowski

The Fairbanks News-Miner has this Op-Ed piece by Frank Murkowski

It's worth reading in these final hours before the Senate vote on AGIA

Sunday, July 27, 2008

Pipeline Hurdles

The Alaska Gasline Inducement Act (AGIA) passed the Alaska House this week. The bill still requires passage by the Senate and funding before the next wave of hurdles.

Here's a link to a letter posted by RA Dillion concerning the effective date of the TransCanada proposal.

The letter is from Donald Bullock and Tamara Brandt Cook of The State of Alaska Legislative Affairs Agency Division of Legal and Research Service to Representative John Coghill, Jr concerning the effective data of the AGIA license.

Reading the letter it seems like an AGIA license is probably just the beginning of the next phase of Alaska energy lawsuits. Time will tell, but it still looks like construction of a TransCanada Alaska Gas Pipeline is years away - if ever.

Friday, July 25, 2008

AKPIRG weighs in on AGIA

From APRN:

AKPIRG weighs in on AGIA

Thur, July 24, 2008
Posted in Alaska News

The Alaska Public Interest Research Group, AKPRIG, has released a report on the Alaska Gas line Inducement Act or AGIA. The report by independent industry analyst Richard Fineberg does not take sides on pipe line projects, but says AGIA provides no assurance for the state of a fair return on its natural gas. Fineberg says, as lease holders of the gas, North Slope producers will be in a position of control even if Trans Canada’s project wins state support.

Dan Bross, KUAC - Fairbanks

On the Interweb:

AKPRIG Webpage LINK

Here's a link to the AKPRIG summary on AGIA

And a link to the full report

Thursday, July 24, 2008

New Poll - Please Vote

How do you feel about the AGIA bill passing the House?

Ultimately the free market will decide - What do you think?

Wednesday, July 23, 2008

Alaska Gasline Inducement Act Approved by Alaska House

Next stop - the Senate

From Reuters Yereth Rosen:

The chamber voted 24-16 in the state capital of Juneau for a bill backed by Governor Sarah Palin that would grant TransCanada a state license for a 1,700-mile (2,700 km) pipeline to bring the gas to North American markets.

Government interjecting itself into a market place has seen colossal failure after colossal failure after colossal failure," said House Majority Leader Ralph Samuels, an Anchorage Republican. "Government is ill-equipped to start picking winners in the marketplace."

From Wes Loy at Anchorage Daily News

Rep. Mike Hawker, R-Anchorage, delivered a long speech citing a litany of worries with the TransCanada deal.

"AGIA -- I'm a little bit afraid it stands for Alaska Goofs It Again," he said.



This link shows how the House voted.

Monday, July 21, 2008

The Canadian View

From DAVID PARKINSON

TRANSCANADA AWAITS THE GOVERNOR'S CALL

A new natural-gas pipeline from Alaska throws together a state hungry for revenues, a Canadian carrier hungry for volumes and producers who don't want to get left out, David Parkinson reports.

Saturday, July 19, 2008

The Little Susitna view of the AGIA

Dominic S.F. Lee is the president and CEO of Little Susitna Construction Co., based in Anchorage. Lee has led Little Susitna Construction, an engineering and construction company, for the past 28 years. Little Susitna was one of the rejected AGIA (Alaska Gasline Inducement Act) bidders.

Here's a link to his opinion of the AGIA. He points out how the AGIA will put Canadians in the driver's seat for development of Alaska's Natural Gas.

Sunday, July 6, 2008

This Weeks Pipeline Stories

While some may credit the AGIA and Alaska's Governor with moving the Alaska Gas Pipeline forward I suggest that you take a look at the chart and link to the left - It shows the price of natural gas more than doubled in the past year. Following the motto of "Lead, Follow or Get out of the Way" it looks like commodity pricing is leading, the producers (Denali Project) are following, perhaps the Governor should stay out of the way.

Links and news of interest:

Andrew Halcro has good summary of the rough and tumble world of lawmakers and the gas pipeline.

In case anyone thinks an Arctic gas pipeline project is easy take a look at this story by Ed Struzik of the Edmonton Journal. The article describes the trials and tribulations of the failing Mackenzie Delta gas line project.

This week Petroleum News carried a couple of stories worth passing on:

"Galvin on Mediation" -McGuire wants mediation; Revenue chief says Alaska first has to have position - Kristen Nelson, Petroleum News

"Definition, not mediation, please" Kristen Nelson, Petroleum News.

Friday, July 4, 2008

Cold War Brewing?

Jim Whitaker, Mayor of the Fairbanks North Star Borough sent this letter to the State Attorney General Talis Colberg. (Thanks to Andrew Halcro for posting the letter).

Sadly this is the shape of things to come - The high cost of energy will not go away in our lifetimes. The anti business political climate prevents folks from coming together to solve problems.

Instead people are divided by unreal expectations of free heat in the Arctic. You can't heat your home with lawsuits.

Perhaps the Mayor should draft a note to the various producers and ask for real world solutions with real world cost estimates so the citizens of the Fairbanks North Star Borough can have some sort of idea of what their cost of living will be 5, 10, 20 years down the road.

The U.S. average cost of residential natural gas is $14.30 per MSCF (per Energy Information Administration). When the Alaska Gas Pipeline gets built and starts flowing the cost will be much more than that. It's an ugly problem that will take some leadership and know how to solve in the near term and long term.

Good luck with the lawsuit approach.

Wednesday, July 2, 2008

Denali Dialogue?

Is it possible that a dialogue may open between lawmakers and the Denali Pipeline?

Senator Bill Wielechowski and Hollis French have some questions for Bud Fackrell.

Here's a link to the letter sent by Wielechowski French to Fackrell
.

It's nice to know that they want to hear from the Denali team rather than just make assumptions.

Link to Stefan Milkowski's story in the News-Miner.

Thursday, June 26, 2008

FERC approves Review of Denali Pipeline

The Federal Energy Regulatory Commission (FERC) has agreed to allow pre-filing activities to begin on the Denali gas pipeline.

This is good news from the standpoint of one of the competitors actually getting work done and moving forward.

Sunday, June 22, 2008

Alaska Gas Pipeline - News and Views

It looks like free market economics might just produce an Alaska Gas Pipeline after all, maybe more. Here's a hand full of links from the mighty interweb:

The Voice of the Times is comparing Alaska's glam governor with Hugo Chavez. It's a good comparison, and it's been made before. Time will tell how well the anti-business, anti free market approach works.

The Denali Pipeline folks are getting down to work. Good!

Andrew Halcro is speaking beyond his blog.

Point Thomson is still in legal limbo but ExxonMobil plans to start drilling. Point Thomson is considered key to the development of the Alaska Gas Pipeline.

More information is coming forward on the TransCanada gas line proposal. Apparent $5/MMBTU is considered a good price by Governor Palin's team. That's a tough pill to swallow even for TransCanada supporters.

Wally Hickel supports the idea of exporting Alaska Gas as LNG to Asia via an All-Alaska Gas Line. That option avoids the risk of letting Canada control the project. He may not be the prettiest governor Alaska ever had, but what he says makes a lot of sense.

Friday, June 20, 2008

New Life for the All-Alaska Option?


I didn't see this coming - wow! Great News. This will allow competition between LNG buyers and Tar Sand producers in Canada.

Competition equals better prices for the gas and a sense of urgency to get the pipeline built.

It never hurts to have multiple outlets for your product.

The LNG option also secures markets without the potential for delays caused by foreign governments.

The project includes a spur line to Anchorage.

Read the Fairbanks News-Miner story here.

Sunday, June 15, 2008

Big Week For ExxonMobil

The Supreme Court could issue a decision in the Exxon Valdez case this Monday. After 19 years the case may finally be settled.

Link to Supreme Court Decisions

One thing the case proves is that Exxon will spend years litigating. A good point to keep in mind as ExxonMobil and the State of Alaska head back to court to haggle over Point Thomson.

Link to Alaska Journal Point Thomson Story

Link to the Fairbanks News Miner Point Thomson Story.


Update - The Supreme Court did not rule this week - stay tuned!

Friday, June 13, 2008

Palin Pushes AGIA Agenda

Alaska Governor Sarah Palin continues to push the A.G.I.A. (Alaska Gas Inducement Act) with this opinion piece in the Anchorage Daily News.

Palin is bound and determined to promote the proposal from pipeline builder TransCanada (Re-named "TC Alaska" by Palin to deemphasis the Canadianess of TransCanada).

In the past Republicans favored and promoted free market solutions and reduced government involvement and taxes.

Palin contends that the State of Alaska should give TransCanada a $500 million inducement to push the pipeline process along.

The AGIA process has morphed into an anticompetitive, anti-free market program. Palin has proved that she is a Republican In Name Only (R.I.N.O.).

ConocoPhillips and BP are actively pursuing the Denali pipeline. They are motivated by free market forces. This pipeline will follow roughly the same route to support oil sand production in Alberta.

Neither project will initially include the All Alaska LNG route to Valdez.

Both projects are subject to permitting delays by Canadians similar to the delays suffered by the Mackenzie Pipeline.

Ultimately one of these pipelines may get built and provide jobs to Alaskans, Canadians and Okies, and tar sand oil for the lower 48. In all likelihood TransCanada and Denali may form a partnership similar to the Keystone Pipeline (a TransCanada & ConocoPhillips partnership). Again free market forces drive firms to spread risk and exploit synergies.

Some Alaskans question Palin's approach and conclusions: Jay Ramras, Ralph Samuels, and Lyda Green to name a few. U.S. Senators Murkowski and Ted Stevens have had next to nothing to say about the A.G.I.A. process, the free market Denali project, or the TransCanada project proposal.

With Oil at $130+/bbl and Gas @ $12+/MMBTU it's time to give the free market a chance or get out of the way.