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.

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).

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.

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.

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.

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.

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?

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.

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.

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.

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?

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."

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.

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.