Mythbuster - Larry Persily

He may not get his own reality TV show busting Alaska Gas Pipeline Myths, but here's a link to Larry Persily's ideas about myth's surrounding the Alaska Gas Pipeline. Larry Persily is the Federal Coordinator for the federal coordinator's office for the Alaska natural gas pipeline. Here's a summary of the myths he debunks:

Myth: Shale gas has destroyed the market for Alaska gas.

Myth: The Lower 48 doesn’t need Alaska’s gas.

Myth: It would be better to export Alaska’s gas because gas prices are higher in Asia.

Myth: Well, then we should export our LNG to the U.S. West Coast.

Myth: We don’t want to let Alaska’s gas go through Canada, or let it be siphoned off to meet Canadian needs.

Myth: The EPA is our enemy.

I can't say that I agree 100% with Persily, but he is on the right track. Shale gas can not defeat Alaska Gas. Earlier this month he made this presentation called "What will it take to get a gas pipeline?" His reasoning makes good sense and I applaud his efforts to build consensus and momentum.

Annual Energy Outlook

The U.S. Department of Energy’s Energy Information Administration (EIA) has release the Annual Energy Outlook 2011 (LINK). The Globe and Mail (LINK) calls the report an "Energy Fantasy Land" The Alaska Gas Pipeline is no longer a feature in the AEO base case:

The Alaska natural gas pipeline, expected to be completed in 2023 in the AEO2010 Reference case, is not constructed in the AEO2011 Reference case. This change is a result of increased capital cost assumptions and lower natural gas wellhead prices, which make it uneconomical to proceed with the project over the projection period.

What's behind the demise of the Alaska Gas Line? Shale Gas of course, abundant, cheap shale gas:

The annual average natural gas wellhead price remains under $5 per thousand cubic feet through 2022, but it increases thereafter because significantly more shale wells must be drilled to meet growth in natural gas demand and offset declines in natural gas production from other sources. As the shale gas resource base is developed, production gradually shifts to resources that are somewhat less productive and more expensive to produce. Natural gas wellhead prices (in 2009 dollars) reach $6.53 per thousand cubic feet in 2035, compared with $8.19 in AEO2010

EAI projections show Alaska gas dwindling to oblivion by 2035:I think Jeff Rubin of the Globe and Mail has it right - this is a Fantasy Land forecast, but it's a happy fantasy with cheap oil and cheap gas for decades. I'll offer this forecast: 2011 will see the return to $100/bbl oil and natural gas prices will climb out of the ditch and skyrocket to $5.00/MMBTU.

Shale Gas Watch

I always look forward to Chesapeake's investor presentations (Dec 2010 Link), there's always some good insight to the world of shale gas. These presentations are chocked full of data and I found the table on page 14 instructive:It shows that you really have to keep a lot of rigs working to stay in the shale gas business, i.e. one in five gas rigs in the U.S. is a Chesapeake rig. Next, the data on page 15 shows the Chesapeake has tripled it's rigs drilling for liquids because $4/MMBTU gas at Henry Hub won't pay the bills.

Page 21 presents a graphic declaring "de-emphasizing natural gas"

I relate this info to make the point that the shale gas business is not risk free or cost free and I don't think shale gas can be produced at a cost that threatens the Alaska Gas Pipeline. I'm still a firm believer that the biggest threat to the Gas Line is long term tax rate uncertainty.

One Step Closer to an Arctic Gas Line

Canadian Federal Regulators have approved the Mackenzie Pipeline:

Vancouver Sun Link
Vancouver Sun Project timeline
CBCNews Link
Financial Post: Mackenzie Pipeline: A nation-builder
Bloomberg : Link
Canada’s National Energy Board report LINK

LNG for Japan

While Alaska ponders the world moves on. Yomiuri Shimbun reports that Russia and Japan are closing a deal for a 5 mmtpa LNG plant in Vladivostok on the Japan Sea.

The plant would begin operation in 2017, and produce more than 5 million tons of liquefied natural gas (LNG) a year, informed sources said Friday. The Vladivostok project will allow Japan to procure a significant amount of LNG from Russia's eastern Siberia region, thereby helping stabilize Japan's energy supply, the sources said.

Indications are that the Japanese side, which includes the Economy, Trade and Industry Ministry and major trading house Itochu Corp., would sign a construction feasibility survey contract with Russia's state-run gas company Gazprom by the end of the month, according to the sources, who spoke on condition of anonymity.

Russia has been interested in Japan's cutting-edge gas plant technology to enhance its Far East oil and gas development infrastructure. Japan, for its part, wants to diversify its LNG suppliers, many of which are currently in Southeast Asia, they said.

The Vladivostok plant capacity is roughly equal to the proposed Kitimat LNG plant. Both plants are about 15% of the size of a possible, though not probable Alaska LNG Valdez facility. The proposed Russian plant will be fed by the Khabarovsk-Vladivostok pipeline:

Kitimat LNG

Is liquefied northern gas shipped to overseas markets a viable project? These guys think so.

From the Calgary Herald:

CALGARY - Apache Corporation has applied to become Canada's first exporter of liquefied natural gas, setting in regulatory motion a new outlet for an over-stocked, under-priced resource.

The largest independent oil and gas producer in the United States filed for a 20-year licence to export super-cooled gas from a proposed terminal in Bish Cove, British Columbia, according to subsidiary Apache Canada Friday.

The Kitimat project is worth following for unit cost comparison to the Valdez Alaska Gas Pipeline alternative.

Running Late

The AP and the News-Miner reports that TransCanada's gas line negotiations are running late:

TransCanada Corp. says it may not meet its target of securing binding agreements by year's end for a major natural gas pipeline in Alaska, but the company remains optimistic about the prospects for its project.

TransCanada spokesman James Millar told The Associated Press on Tuesday that officials are pleased with negotiations with gas producers so far, but the process is complicated and takes time. In spite of an official's earlier stated target of having precedent agreements by year's end, he said TransCanada's concern is less on an arbitrary clock and more on ensuring that negotiations are undertaken prudently.

He said it's too early to say whether there will be a need for another open season, during which gas producers are courted and shipping commitments are sought.This does not sound promising.

It's like watching paint dry.

Three Mega Projects

In addition to the Alaska Gas Pipeline two other projects have caught my eye recently; the Susitna Dam and the Donlin Creek Mine.

The dam is important in that it can displace power generated by gas or coal, the mine is interesting in that it may become a large user of gas. Of course none may be built in the next decade. What do you think? See the poll on the right>>>

I have some questions, if you have the answer please post a comment (1) How far upstream of the dam with the reservoir reach, i.e. is there a summary of impacted creeks - I've know some great fishing spots in that drainage and I'd like to know what creeks are impacted.

(2) How much gas could the mine demand - I'd like to understand the demand in terms of take off from the bullet line or Cook Inlet production. Thanks in advance.


Photo: Me fishing in the Susitna drainage, undisclosed location, arctic grayling in hand and some bug life. Photographer: my buddy Bill.

Denali Timeline

The latest FERC filing by Denali includes this time line for the current and near term open season activities: This fragnet ends with filing confidential precedent agreements with FERC on 23 March 2011.

There's a few wiggle words about "highly conditioned bids" and resolving "conditions within its control" but overall progress continues.

Glimmer of Hope

The Black and Veatch report titled "Growing Shale Resources: Understanding Implications for North American Natural Gas Prices" is now available for your review. It should help lawmakers craft some workable fiscal framework for the Alaska gas pipeline.

From the Petroleum News:

And the Black & Veatch analysts have found that, although there are major uncertainties around future North American gas markets, it is likely that gas prices in Alberta, Canada, will climb to somewhere between $5 and $7 per thousand cubic feet by 2020, with prices continuing to climb thereafter. And with a possible fee of $3.50 per thousand cubic feet for treating North Slope gas and carrying it by pipeline to Alberta, those gas prices could make a North Slope gas line viable, Antony Scott, a commercial analyst with Alaska’s Division of Oil and Gas, told Petroleum News Nov. 22.

The report projects Henry Hub gas prices of $6.00/MMBTU to $8.00/MMBTU and Canadian AECO prices in the range of $5.00/MMBTU to $6.20/MMBTU.

I keep and eye trained on the shale gas producers behavior. It's known that they shut in some wells at $4.00/MMBTU and that they are divesting at a rapid pace. There's more than few stories of outrageous lease cost paid and 25% royalty agreements. Given what I've seen I would not invest in a shale gas play for a penny less than $6.00/MMBTU on the revenue side.

Shale gas can't kill the Alaska gas pipeline but the politicians and the taxman can. I'm hoping the recent changes in Parnell's administration will pan out.

In Other Energy News....

Sustina Hydro endorsed by Governor Parnell

From the State of Alaska Website:

Governor Parnell Backs Susitna Dam Project

November 24, 2010, Juneau, Alaska – Governor Sean Parnell today announced his support for the Low Watana site on the Susitna River as the primary hydroelectric opportunity for Alaska’s Railbelt. The governor’s support follows the Alaska Energy Authority (AEA) recommendation for the large hydroelectric project.

“In order to provide low-cost electricity for the Interior and the Railbelt and to meet the state’s goal of having half of Alaska’s electricity generated by renewable resources by 2025, we must invest in a large-scale hydro project,” Governor Parnell said.

Earlier this year, the Alaska Legislature appropriated funds to study the feasibility of major Alaska hydroelectric projects including Susitna, Chakachamna and Glacier Fork.

The AEA report concluded that the Susitna Project would produce two to three times more energy and at a lower per unit cost than the others; that Susitna is less likely to result in adverse environmental effects; that the project has fewer licensing and permitting complexities; that it can start sooner and involves simpler construction; and that it has a lower long-term operational risk factor.

Governor Parnell also announced he will propose legislation that will allow AEA to pursue funding for and ownership of the project.

AEA will hold a series of public workshops on the hydro project in February. A copy of AEA’s large hydro study is available at: www.akenergyauthority.org.

Link to Railbelt Large Hydro Evaluation Preliminary Decision Document

Trend Spotting

It's always dangerous to imagine you've detected a trend in natural gas, but here are four data points that might line up to help the prospects for the Alaska Gas Pipeline:

1) Shale gas producers are shutting in wells and backing away from dry shale gas prospects (LINK1) (LINK2)

2) There's a current trend to export refined products from the US (Downstream Today "US Could Become Net Fuel Exporter")

3) There's a project underway to convert the Cheniere LNG import terminal into an export terminal. (Cheniere Working On Deal To Send Liquefied Natural Gas To China).

4) LNG prices are firming up in Asia, (LNG's Asia Premium to U.S. Gas Advances to 20-Month High: Energy Markets)

Global gas prices are diverging as U.S. customers switch to cheaper, domestically produced gas from shale deposits, while Asian importers continue to pay prices linked to oil. Shale gas will account for 34 percent of U.S. production by 2035, compared with 18 percent in 2008, Energy Department estimates show.

Maybe it's a trend, maybe it will bear out over time. On a BTU basis LNG is less expensive than oil. The resurgence of Asian demand and devaluation of the dollar may drive the economics for an LNG export terminal in Valdez - It's time to lock in some long term contracts. Something to look forward to when the open season agreements are made public. As always my glass is half full and my fingers are crossed.

Speaking of trends it looks like Lisa, or Leza Murkowski or Mercawski will retain her Senate seat. This is good news for the Alaska Gas Pipeline, Alaska may have dodged a bullet. (Comic)

State Gas Team in Flux

From the News Miner :

Parnell has released Revenue Commissioner Pat Galvin, Health
and Social Services Commissioner Bill Hogan, Natural Resources
Commissioner Tom Irwin, Transportation Commissioner Leo von Scheben,
Administration Commissioner Annette Kreitzer and Education Commissioner Larry
LeDoux, spokeswoman Sharon Leighow said this morning.

Galvin has expressed a desire to remain with the administration,

Galvin and Irwin had front-row — and often hot — seats for ongoing debates over oil and gas development policies in Juneau. The debates produced, among other things, the 2007 Alaska’s Clear and Equitable Share oil tax increase and the Alaska Gasline Inducement Act. Parnell has also said OK to the resignation of a top Irwin deputy, Marty Rutherford.

Shale Gas For Sale

Shale gas will kill the Alaska Gas Pipeline - If I had a nickel for every time I heard that...
The new mantra of the shale gas business is "NGL" or natural gas liquids, i.e. propane and light paraffins. I've posted a lot of news releases from Chesapeake outlining their plans to edge away from dry shale gas plays and move into liquid rich plays. Apparently all shale gas plays are not created equal.

That trend is firming up with news that Range Resources is selling it positions in the Barnett Shale (LINK).

Range Resources said Wednesday that it will sell all its holdings in the Barnett Shale and use the cash to invest in more profitable ventures elsewhere.

From the Range website: "The general consensus was that pricing is currently too low to be sustainable."

Long term outlook - Shale gas will continue to play a part in the fossil fuel mix, but it's not the only game in town. Even the Shale Gas guys think it's too cheap.

ExxonMobil Announces Successful Drilling of Point Thomson Wells

(LINK) Exxon continues to invest in exploration for gas that will someday fill the Alaska Gas Pipeline - You've got to appreciate an outfit that's committed to Alaskan natural gas. The sums invested indicate that somebody at Exxon believes Alaska natural gas and the pipeline have a future. Nice job to everyone who worked hard to make the project a success.

ANCHORAGE, Alaska--(BUSINESS WIRE)--ExxonMobil announced today that it has successfully drilled and tested the PTU-15 and PTU-16 development wells for the Point Thomson project on Alaska’s North Slope, ahead of the year-end 2010 target.
“The successful drilling and testing of these wells represents a significant accomplishment and demonstrates we are delivering on our commitments,” said Alaska Production Manager Dale Pittman.

“Many Alaskans contributed to this milestone, completing work ahead of schedule in a safe and environmentally responsible manner.

Point Thomson is a remote natural gas and condensate field located on Alaska’s North Slope, approximately 60 miles east of Prudhoe Bay. It is estimated to hold about 25 percent of the North Slope’s discovered gas resources. Concurrent with the drilling of these two development wells, activities are also focused on engineering and environmental permitting which are critical for project development. To date about $1.5 billion, including more than $730 million in the last two years, has been invested in Point Thomson.

The Point Thomson project includes gas cycling facilities designed to recover hydrocarbon liquids and re-inject natural gas back into the reservoir, making Point Thomson the highest-pressure gas cycling operation in the world.

“The project is providing jobs and investment in Alaska,” said Pittman. “We are continuing to work with the State of Alaska to resolve outstanding issues in order to maintain the pace and momentum of Point Thomson development. Point Thomson gas is critical to the success of an Alaska gas
pipeline project.”

2010 Updated Assessment of Undiscovered Oil and Gas Resources of the National Petroleum Reserve in Alaska (NPRA)

2010 Updated Assessment of Undiscovered Oil and Gas Resources of the National Petroleum Reserve in Alaska (NPRA) (LINK)

Boom-A-Boon

Shale-gas boom a boon to Mackenzie pipeline hopes, minister says By Dave Cooper, Edmonton Journal (LINK)

"I think it will improve our chances for the pipeline because (the new gas supply) will stabilize the marketplace," Northwest Territories industry minister Bob McLeod said in an interview.

Stable prices + Stable Tax = Pipelines?

It's all about tax policy

From Platts (LINK):

An ExxonMobil executive said Tuesday the producer is optimistic that an Arctic natural gas pipeline will get built despite competition from shale, but said a major sticking point remains Alaska's tax and royalty policy.

"We take a long-term view on Alaska," said Steve Kirchhoff, ExxonMobil Gas and Power Marketing's vice president for the Americas. "The shale definitely does enter into that equation but a real fundamental issue at this point is we need to be able to sit down with the state and work through appropriate fiscal regimes that are going to make this work against a range of price forecasts."

ExxonMobil partnered with TransCanada on one of two proposals for a massive 48-inch-diameter pipeline from Prudhoe Bay to Alberta.

We're more or less back where we started 3 or 4 years ago. It's always been about tax rates vs. market rates.

Denali Open Season Ends 4-OCT-2010

Tomorrow marks the end of Denali's open season. Hundreds of millions have been spent on the Denali and the TransCanada open seasons, hopefully not in vain.

Three years down the road from passing the Alaska Gasline Inducement Act the world has changed a lot, mostly in ways that should make any sane person run like hell from this project - The international economy tanked, the price of oil and natural gas plummeted, and $6/MMBTU shale gas looks like it's here to stay. The pipeline contenders have experienced a wide range of fortunes over the past three years:

TransCanada - Continues to execute successful pipeline projects in North America like the Keystone pipeline - moving heavy Canadian petroleum products to the lower 48.

ExxonMobil - Earnings hit by declining commodity prices but now they are a big player in shale gas via acquisition of XTO. ExxonMobil is also adding Alaska Gas reserves by the bit up at Pt. Thomson. LNG, Shale Gas, Alaska Gas - it's all earning for ExxonMobil - they play to win.

ConocoPhillips - CEO James Mulva "re-evaluating the Alaska project in light of a glutted natural gas market" according to one report, followed by "Oh no - really we stand by the project" statements - I think the first story is closer to the truth, the re-eval will start next week.

BP - The Macondo blowout has cost BP at least $20billion and there's talk of a pull out from Alaska. It's unclear if a crippled BP brings anything positive to the table.

There's also some good news out there:

The shut-in price of Shale Gas seems to be holding at $6/MMBTU - I view that as solid base that will contain the Shale Gas glut.

The commodity price pendulum cuts both ways - Oil and Gas are cheap right now but STEEL is cheap right now. Engineers are cheap too and there are few major projects mopping up the excess - but watch out for the "recovery" when commodity prices recover.

Interest rates are out of this world cheap - Now is the best time in 30 years to fund a mega project.

I expect the pipeline project to continue sideways for at least the next year. Expect talk of project consolidation in the near term.

Mixed Signals?

Are you in or are you out?

Will ConocoPhilips flinch first? (LINK). BP's short on cash, ConocoPhillips is saying the wrong things - maybe by Christmas the projects will merge?

TAPS likely to reach minimum flow levels by 2015

Tapped out. From the taxing ourselves into oblivion department: TAPS will reach minimum flows (500,000 bpd) by 2015-2019. (LINK)

Run Lisa Run!

I don't like to get too political on this blog, but every once in a while you just can't separate the best interest of the Alaska Gas Pipeline project from the political scene. Senator Lisa Murkowski serves as a ranking member on the Energy and Natural Resources committee. She's well positioned to help the gas pipeline. The tea bagging guy? A nobody in Washington - zero stroke zero pull.


Good Luck Lisa!

$6 per MCF

I like to follow the plans of Shale Gas leader Chesapeake - they like the idea of $6/mcf gas and want to shift gears and target liquid rich plays.

Good! $6 / mcf is the kind of basement price that can help the rate of return of the Alaska Gas Pipeline.

Alaska Gas Pipeline for Sale!

Act fast! (LINK)

Add this Blog to your Reading List

Thoughts on Alaska Oil & Gas

Lots and lots of math - no comment now, I'm still soaking up the numbers, but I will say I enjoy reviewing the numbers more than following the lastest political feud(s).

The BIG cost of the little line

Cost Estimates for the Alaska Stand Alone Pipeline Project are in. ~$11 Billion, give or take a billion. (LINK) . That buys you 737 miles of 24" line moving 500 million cubic feet per day. The capital unit cost per unit of gas transported is 2.7 times greater than the Big Line.

Uncle Ted Remembered

The early reports were confirmed this afternoon, Ted Stevens lost his life in a plane crash on his way to go fishing with friends. (LINK)

I felt pretty deflated when Senator Ted Stevens was drummed out of office a couple of years back. Today I feel plumb awful. His work on behalf of the people of Alaska and the entire United States has been greatly missed. His passing marks the end of an era.

The photo above shows Senator Stevens, Senator Inouye and Major General John Holly on a visit to military construction site I worked on a few years ago. Senator Inouye is wearing a lei fashioned from whirly gig fishing lures. General Holly is explaining what we built with the tax dollars the Senators allocated to our project. I don't normally rub shoulders with the higher ups but I was very impressed to listen to questions the senators asked and the answers they received. In a world full of second rate soft headed middle managers I was glad to learn that the guys in charge were first rate thinkers and top notch leaders.

On another occasion Uncle Ted brought Thanksgiving dinner to the post with assistance of the Alaska National Guard. Outside of Alaska I don't think the ordinary guy is ever on the receiving end of a nice visit and a hot meal from a senior elected official who rides into town in a C-130. Sure all politicians press the flesh, kiss babies and want votes, but I think Ted Stevens enjoyed seeing the people of Alaska and filling the role of the favorite uncle.


A chair was set up for Uncle Ted to play the part of Santa and entertain the kids after the meal. I stood in the chow line with Uncle Ted and ask him about my favorite subject - the Alaska Gas Pipeline. I asked him if Santa Claus would bring Alaska a gas pipeline. Ted Stevens laughed and told me I was like the guy who asked Santa for sports car and awoke to find matchbox toy car in his stocking. He told me that I might find a soda straw in my stocking instead of a full sized pipeline. That was years ago and I'm still asking Santa for a pipeline and waking up to find something much less.

We'll miss you Uncle Ted.

Concerned about Shale Gas?

Check out shale gas heavy weight Chesapeake Energy's August 2010 Investor Presentation.

They want to sloooooow down drilling until gas prices reach $6/MMBTU and they are looking for more liquids.

(See page 6 of the presentation)

That puts the shale gas threat in perspective. $6/MMBTU gas sounds like a market for AK gas really does exist.

BIDS!

According to multiple news outlets the TransCanada / ExxonMobil / AGIA Alaska Gas Pipeline Project has received bids.
(LINK1)
(LINK2)
(ALASKA DISPATCH)

More details later. Let's hope this develops into some good news.

What's Next?

I ask myself that question a lot. What's the next milestone, what's the next stretch of trail going to look like? Is this project ever going to get some traction?

According to Federal Coordinator Larry Persily, Office of the Federal Coordinator, Precedent agreements are next (LINK to PetroeumNews).

When a shipper and a project sponsor reach agreement they sign a precedent agreement which is then filed with FERC: Precedent agreements become public after 10 days.

The Alaska Pipeline Project’s schedule says it is seeking to have precedent agreements signed by the end of the year; Denali’s schedule says Feb. 1, 2011.

Persily said what that means is that by the “end of this year, early next year, we’ll know if we’re closer to a deal on a gas line; we’ll know if there are any signed precedent agreements out of the open season.”

The article goes on to record his wishful babblings about a magical day when coal fired power plants are demolished and replaced by natural gas power plants - What's the time line on completion of a couple of hundred $500 Million to $1 Billion power plant projects - This is your message of hope for the Alaskan Gas Pipeline Larry?

And then there's this scripted quote directly from the White House talking points of the day memo:

But Alaskans need to realize that chances for an Alaska gas pipeline would be helped by passage of “comprehensive energy legislation that helps move the nation to natural gas as a preferred fuel for electrical generation,”

No mention of building a meaningful tax structure for the pipeline builders and shippers. He goes on to fantasize about a world were shale gas trims off the high end of gas market prices. From his perspective shale gas helps the Alaska Gas Pipeline because stable gas prices cause utilities to build more gas fired power plants.

Here's an alternative universe:

(1) Yes - Gas power plants are good, and a few are getting built - but there's also some rather large coal plants in construction as well. I'd say the two fuel sources will continue to compete for at least one more decade.

(2) Shale gas aint free, and it's not universally loved. For every coal hating global warming advocate I'll and find you a shale gas hating environmentalist. We also know from following Chesapeake(CHK) that shale gas producers will shut in shale gas wells when prices drift below $4.50/MMBTU.

(3) Shale gas isn't doing TransCanada any favors. According to the Calary Herald (LINK) shale gas is beginning to impact TransCanada's mainline volumes in a big way.
The answer to TransCanada's problem is to fill their mainline with Alaskan or Mackenzie Delta gas. Price that gas to compete with Northeastern shale gas and establish a new gas price equilibrium in the $5.50 to $6.00 range. Shale gas producers like Chesapeake carry a lot of debt and don't have the wiggle room to compete with large volumes of arctic gas. XTO, another shale gas leader is now owned by XOM, a North Slope producer - they are in the best position to weather the coming competitive storm and even profit from it.

(4) Arctic gas is also needed for the ongoing energy needs of the tar sand / oil sand industry. The bitumen plants in Alberta will become long term, steady baseline customers for arctic gas. That demand is more attractive than gas turbines designed to pick up load when the wind fails to blow in the wind power regions.

No Larry - I don't buy your logic, I still believe in the competitive forces of the market place and I'm cheering for TransCanada to re-fill their mainline with arctic gas, hopefully Alaskan Arctic gas.

BP-Apache Deal: Prudhoe Bay Was Too Complex

From the Wall Street Journal Blog: (LINK).

The BP- Apache deal is a no-go. Alaska Gas Pipeline effect: Assuming the TransCanada / ExxonMobil project and the Denali project merge BP will still be a player. A cash strapped, weakend player but in the game all the same.

The upside: BP's current unfortunate situation may help all the producers over the conceptual hump to merge the projects sooner rather than later.

Irony

From the Irony Department: Folks in Nebraska oppose the Keystone XL pipeline. This pipeline will carry Canadian bitumen products to U.S. refineries where the evil oil companies with refine the bitumen into gasoline, diesel, jet fuel - you know the stuff that powers our modern society.

I support everyone's right to free speech, but anti oil company, anti pipeline BUMPER STICKERS just points out how perfect our Idiocracy has become.


Maybe the oil company haters in Nebraska will succeed and kill another energy project. Nebraska say hello to Mule power!

Denali Open Season Starts Tuesday 6 July 2010

See the detailed FERC filing (LINK)

The link contains one letter and three volumes of open season information. The In-State Demand Study is in Volume II- Good reading if your #1 issue is In-State industrial development and the $8 Billion Bullet Line.

Volume III has technical stuff, and the cost estimate ($35.5 Billion)

Some quick ratios to think about: $35.5 Billion moves 4.5 BCFD ($7.9 per cfd capacity) vs. $8 Billion for up to 0.5 BCFD for a bullet line ($16 per cfd capacity). The economies of scale work for the big line and against the Bullet Line.

Good Luck Denali ! Let's start building this damn thing!

Note: the competing TransCanada / ExxonMobil Alaska Pipeline Project open season is in progress and end 30 July 2010. Good luck to you guys too - I looking forward to the Kumbaya moment when all the producers join together.

Eventually the Projects Must Join

From the Houston Chronicle: Rivals may join to develop gas pipeline from Alaska

A BP-ConocoPhillips venture planning to build a huge natural gas pipeline from Alaska to the Lower 48 is in early talks to join a competing project headed by Trans- Canada and Exxon Mobil Corp., according to a source familiar with the projects.

The BP-ConocoPhillips project, known as Denali, would likely be tabled as the two companies team with the TransCanada project, said the source, who is not authorized to discuss the status of the projects and requested anonymity. With a price tag up to $40 billion, it's long been thought that only one of the projects would be built.

BP and ConocoPhilipsDave MacDowell, a spokesman for Denali, said he wasn't aware of such discussions but noted that BP and Conoco- Phillips have said they are open to "considering involvement of any entity that adds value and takes on risk."

Hey Anonymous - Leave me a comment

MIT: The Future Is A (Natural) Gas

From the Forbes blog (LINK): MIT has published an interim report titled "The Future of Natural Gas". The theme is carbon foot print theme in which shale gas comes to the rescue. The Alaska Gas Pipeline get mentioned as a future resource:

Around 15% of the U.S. resource is in Alaska; full development of this resource will require major pipeline construction to bring the gas to market in the lower 48 states (L48). Given the current abundance of L48 supplies, development of the pipeline is likely to be deferred yet again, but this gas represents an important resource for the future.

Alaska's methane hydate gas resource is mentioned:

Methane hydrates are unlikely to reach commercial viability for global markets for at least 15 to 20 years.

The report concludes

The share of natural gas in the energy mix is likely to be even larger in the near to intermediate term in response to CO2 emissions constraints.

I guess it's a given that our future energy policy will be crafted around the idea of climate change. Coal will become illegal, maybe nuclear will produce power for electric cars someday, but you can put nasty ole petroleum in your SUV or buy a combined cycle gas turbine power plant today for a lot less capital investment.

BP to cut capex, sell assets for $20bn payout

Tip of the iceberg. The Chicago shakedown is going to leave BP much less able to fund a share of the Alaska Gas Pipeline.

From UpStream Online: BP will slash its capital spending budget, sell $10 billion in assets and drop its dividend to pay for a $20 billion spill response fund.

File this one under "Crazy random occurrences 5000 miles away the screw your project into oblivion"

Denali Open Season Starts 6 July 2010

Normally this would be good news (LINK to FERC) as it is a tangible sign of progress by Denali in their efforts to authorize and build an Alaska Gas Pipeline. (Graphic links to Denali Source Page)


This fragment of good news is tainted by the overwhelming tragic news from BP, one of the Denali venture partners. I've watched the Deepwater Horizon tragedy unfold from the perspective of an old engineer who has seen bad decisions and errors lead to death and injury in the workplace. The loss of life and ruination evoke deep feelings of sadness and anger. I won't add my voice to the shrill din of those calling for the heads of BP's leaders. The marketplace will punish BP, and nobody knows how far our political leadership will go in their ham-handed approach to an industry they no little about.

In the end BP may be dissolved and gobbled up by Royal Dutch Shell or CNOOC (China National Offshore Oil Corporation). It's also possible that a severely weakened BP will emerge from this tragedy. I can't see how either outcome helps push and fund the Alaska Gas Pipeline proposed by Denali.

"Energy Abyss" Prediction

John Hofmeister, the former president of Shell Oil's U.S. operations, says we're headed for an energy abyss.

"We hate the oil companies because government officials teach us to," he said, citing politicians who love to hold hearings criticizing Big Oil while ignoring what he called Washington's own shortsighted failure to think beyond the next election when considering energy issues.

The "structural dysfunction" regarding energy policy is likely to result in an insufficient number of new power plants being built and restrictions on drilling that will result in inadequate supplies of electricity and motor fuel "by the end of this decade," Hofmeister said at the Gas Shales Summit.

The "energy abyss" could include "blackouts and brownouts that make us look like a Third World country" and lines for gas selling at perhaps $6 to $7 a gallon, Hofmeister said. Gas is now selling at roughly $2.50 to $2.75 a gallon, compared with record U.S. prices in summer 2008 topping $4 a gallon.

"Wind and solar and biofuels aren't going to make it for us," he said.

Article by Jack Z. Smith Fort Worth Star-Telegram, Texas

Yukon Pacific LNG Site - Denied

A swift FERC denial of the Yukon Pacific request to extend the commencment of the Anderson Bay LNG plant. Nice going Feds - Another window slammed shut.



See the full document at (LINK) Search Docket "CP88-105"

Denali PowerPoint and Time Lines

Check out the latest from the Denali Pipeline. (LINK)

The time lines grabbed my attention - Is there any way to move those milestones to the left by a few years?



Seriously 2020?

Yukon Pacific LNG - Anderson Bay

Who would want to build an LNG plant near Valdez I wondered when the TransCanada/ExxonMobil open season documents came out describing an optional line to Valdez. I figured ConocoPhillips / Tokyo Electric - Tokyo Gas would surface as likely LNG plant builders, or maybe the Chinese or Koreans. Scratch that prediction - turns out Yukon Pacific (owned by CSX) has filed with FERC for an extension . (LINK to Petroleum News)

Yukon Pacific argues that the current open season efforts justify an extension. Quoting from the FERC filing:

There is now an additional reason for extending Yukon Pacific’s deadline. Since the Commission’s 2007 extension, industry efforts to commercialize North Slope gas have increased dramatically. The most visible and meaningful of these are the “pre-filing” steps taken by the two leading projects for delivering North Slope gas to Alaska and Lower-48 markets. The implementation of either project would greatly facilitate LNG exports by, among other things, creating pipeline infrastructure that can be leveraged. Given these developments, it is important that the LNG option represented by Yukon Pacific’s proposal remains viable as the “open-season” and other market-related activities for these projects play out. The ongoing effectiveness of the place of export approval granted in this docket is critical to that viability.

Of course every Alaska Gas silver lining has an associated cloud called Tom "Playa Hater" Irwin. A couple of years back he denied a Yukon right of way request. (LINK)

Maybe the stars can align for the LNG option -


View Larger Map

Shale Gas - Is the magic wearing off?

The Alaska Dispatch carried Larry Persily's recent speech on the future of the Alaska Gas Pipeline. (LINK). According to Persily:

I'm not here to tell you it will be built this decade. But I assure you it is not dead; shale gas has not driven a silver stake through the Alaska pipeline; the market has not forgotten us. It may not be paying as much attention as we would like, but that could change.

What about shale gas? Well ExxonMobil (XOM) joined the shale game through acquisition of XTO. Exxon has ideas about exploring for shale gas around the world. XTO cost Exxon $41 Billion (with a "B") in stock. My guess is that Exxon's investment in shale gas will pay off with the greatest successes in Europe.

Chesapeake Energy on the other hand shows signs that owning big shale gas plays + debt + $4/MMBTU may be a bad business plan. Yesterday they announced a $600 million cash infusion from Asian investors (LINK).

In a separate announcement Chesapeake says

Through a series of transactions over the next 24 months, including the preferred stock placement announced today, the company is planning to raise up to $5.0 billion in order to repay up to $3.5 billion of senior indebtedness and increase its investment in liquids-rich plays by up to $1.5 billion.

So judging from their actions it looks like $4/MMBTU shale gas can break you and leave you wanting some liquid hydrocarbons. So I tend to agree with Mr. Persily - Shale gas at $4/MMBTU is not going to drive a stake in the heart of the Alaska Pipeline, that's a job for the politicians.

Open Season - It's a Go!

Today marks a significant milestone in the process to build the Alaska Gas Pipeline. TransCanada and ExxonMobil (Alaska Pipeline Project - APP) have announced (LINK) the beginning of the open season.

Two options are on the APP menu - Pipeline to Alberta, or Pipeline to Valdez for a future LNG plant.

Later this year the Denali Pipeline (LINK) will get cracking with their open season for a competing pipeline to Canada.

The score so far for those playing the game at home:

TransCanadaExxonMobil (APP) Using other peoples money (AGIA) +1, First Open Season +1, Multiple Options including an All Alaska option +1 (Subtotal +3). Denali Pipeline: Still in the game +1, Second out of the chute -1, no all Alaska option -1 (Subtotal -1). Both projects get a -1 for failing to join up and push for one project.

Side note - An 18 month stretch of mega overtime (OT) is coming to an end for me, so I have more time to devote to fishing, and attending to this blog. I've been in the constant OT game for over a decade and I'm look forward to some 3 day weekends. On the other hand - I'd like to see a pipeline project slide into gear. With a bit of luck that might just happen. Your thoughts are always appreciated- Thanks.

A Job Posting!

You heard it here first! One of my goals for this sleeply little blog is to pass on any news of jobs on the Alaska Gas Pipeline.

Job Title: Senior Project Engineer
Agency: Office of the Federal Coordinator for Alaska Natural Gas Transportation Projects Job Announcement Number: OFC-010-0004
SALARY RANGE: 100,500.00 - 130,500.00 USD /year
OPEN PERIOD: Tuesday, April 13, 2010 to Friday, April 23, 2010
SERIES & GRADE: AD-130008010819-00/00
POSITION INFORMATION: Full-Time Permanent DUTY LOCATIONS: 1 vacancy - Anchorage, AK
WHO MAY BE CONSIDERED: Applications will be accepted from United States citizens and nationals

(LINK)

Good Luck! And provide some feedback (positive or negative) if you apply for the job.

Denali Open Season Announced

The Denali open season was announces this week. Here's a few links:

Denali Request for Approval of Plan for Conducting an Open Season (FERC File)

FERC Elibrary Page with additional Files

NOTICE OF REQUEST FOR APPROVAL OF PLAN FOR CONDUCTING AN OPEN SEASON

Great news all around - The cards are on the table

Compare to the Alaska Gas Pipeline

FERC Gives Go-Ahead for Open Season

I'm still reading and digesting this FERC Order (LINK).

Essentially FERC is satisfied with the TranCanada / Exxon open season plan.

It documents the fact that all parties are not in total agreement, but the process is moving forward.

The Bottom Line:

X Conclusion95. Conditioned on the modifications required herein pertaining to the opening of the data rooms and the revisions to the Compliance plan and standards of conduct, herein, the Commission finds that TC Alaska’s detailed plan for conductingan open season for the purpose of making binding commitments for the acquisition of initial capacity on the Alaska Pipeline Project is in conformance with theOpen Season regulations and it is therefore approved. We encourage TC Alaska and potential shippers to work together to resolve any issues arising during the implementation of the open season plan, during the open season, or the during negotiations after the close of the open season.

Catch up News Links

Here's some dibs and dabs of Alaska gas pipeline related links:

Cook Inlet needs $2.8B Transition into an IMPORTER of LNG - OUCH



The Concerned misses AGIA (HA!)

And this from Dermot Cole (LINK)

Big honking LNG deal somewhere other than Alaska (LINK) China spends $60B on LNG - Beats buying worthless US Bonds.

Rena Delbridge's take on Alaska losing the LNG game (LINK)

Every time I see an In-State gasline story I hear the faint sound of a bong bubbling (LINK). If an in state line solves in state gas needs that's nice - but the big money is in winning the game as a global competitor. To quote Kenny Powers "I do SPORTS. Not try to be the best at exercising"

Alaska: Confronting the Prospect of 6 Billion Barrels of Stranded Gas by Steve LeVine. Denali make the case against LNG.

Geopolitics of oil. You guessed it - China

Exxon-XTO, One step closer to tying the knot. There's gas in them there shales.

Delays for the Mac-D pipeline.

BP goes for the North Slope Heavy oil (The best use for stranded gas?)

Some hope for a gas powered future - Nuke Plant Delayed.

Alaskan Advocate - Bookmark this guy.

AGIA a FLOP?

Say it ain't so! AGIA a FLOP? Ted Stevens thinks the big pipeline to Canada is a no-go. (LINK). He favors the line to Valdez and LNG for the global market. Sometimes it's tough to see how big oil get get a decent rate of return on the big line to Alberta.

“I have now changed that position and now support the bullet line, but I think it should go to Kenai and I support the construction of the line to Valdez. I asked for the privilege of speaking to you to try to explain to Alaskans why I have so drastically changed my position. I think that these lines are needed not only for the needs of Alaska but I think we need to concentrate on processing as much of our gas as possible into LNG.”

I've made the point before that big oil needs gas for Canada to fuel tar sand projects, but marketing LNG to the Asian market is not a bad "Plan B".

In terms of scale and level of project difficulty think Trans Alaska Pipeline + Exxon's Papua New Guinea LNG Project.

In terms of global finance wouldn't be nice to reverse the flood of dollars headed to China? Instead of Canadians with a hand out for taxpayer AGIA cash why not do business with end users with funds to invest?

Now that Uncle Ted has said it - will anybody listen?

Proposed Regulations for Alaska Gas

Alaska Department of Natural Resources Division of Oil and Gas have published regulations aimed at setting values on Alaska gas for royalty purposes. See below:

The Proposed Regulation LINKS:

(11 AAC Royalty Election Under Alaska Gasline Inducement Act.)

(Gas 15 AAC Gas Production Tax Exemption under Alaska Gasline Inducement Act)

Quote:

This chapter applies only to a person that qualifies for royalty inducements provided in AS 43.90.300, AS 43.90.310, AS 43.90.330 and this chapter, by acquiring firm transportation capacity in the first binding open season of the project described in 11 AAC 25.020, or that holds a voucher issued by the commissioners under AS 43.90.330 and this chapter. For these persons, it: (1) establishes a method that the person, if qualified, may elect to use in calculating the monthly value of the state’s royalty share of gas shipped in firm transportation capacity acquired through a commitment made as provided in 11 AAC 25.020(b); and (2) establishes terms that a person, if qualified, may elect to govern the state’s exercise of its right to switch between taking its royalty-in-value or in-kind for gas to be shipped in firm transportation capacity acquired through a commitment made as provided in 11 AAC 25.020(b).

More information available at the DNR DOG website (LINK)

Flurry of FERC Filings

This week a number of firms filed motions or comments with the Federal Energy Regulatory Commission (FERC). Active engagement from the producers and affected parties is a good sign. Remember FERC matters - FERC issues permits for pipelines. That other four letter acronym AGIA - (Alaska Gas Inducement Act) does not.

ConocoPhillips Alaska, Inc. Comment on Filing Motion/Notice of Intervention

The State of Alaska Motion/Notice of Intervention

Notice of request for approval of plan for conducting an open season re TransCanada Alaska Company LLC

BP Exploration (Alaska) Inc. Comment on Filing

ExxonMobil Gas & Power Marketing Company, a division of ExxonMobil Corporation (as Agent) Comment on Filing

Motion to Intervene and Comments of BG Alaska E&P, Inc. (LNG?)

FYI - The FERC elibrary site is not one of the best. It only works about 50% of the time on the weekend. Update - Sunday morning - FERC website and these links are O-tay.

Another bite at the apple

From Petroleum News:

Point Thomson case on ice: Judge grants state’s call for timeout as it appeals ruling to Alaska Supreme Court, Wesley Loy

A judge has ordered a temporary halt to the Point Thomson case pending the state’s appeal of a recent unfavorable ruling to the Alaska Supreme Court.

The one-page order from state Superior Court Judge Sharon Gleason of Anchorage, issued Feb. 11, came over the objections of ExxonMobil and other oil companies with a stake in the rich Point Thomson oil and gas field on Alaska’s eastern North Slope.

Fresh off a significant victory in Gleason’s court, the companies had opposed the State of Alaska’s request for a timeout in a case that’s not yet run its course.

Gleason granted the state’s motion to stay the Superior Court proceedings until the Supreme Court either rejects the state’s petition, or accepts and acts upon it.

(Court Case Info Link)

Enough already - Stick a fork in it - It's done!

BP Exploration (Alaska) Inc. files Motion/Notice of Intervention

BP Exploration (Alaska) Inc. filed a Motion/Notice of Intervention with FERC concerning the TransCanada/ExxonMobil open season (LINK)

LINKS of the Week

ConocoPhillips Alaska boss killed in avalanche

Chinese Seen As Potential Alaska Gas Customer (Investing in AK gas/LNG makes more sense then buying 0.01% US Govt. Bonds)

ACES has put many Alaskans out of work

South Korea to begin gas hydrate and continental shelf development in 2010 (Huh?)

Gas market goes global - Shale's impact felt around the world

Denali's January 2010 FERC report

The Development of a Global LNG Market Is it Likely? If so, When?

Point Thomson Success

ExxonMobil Reaches Target Depth at First Point Thomson Well.

Plan the work, work the plan - What's not to love about this news? Politicians be damned. This team has a plan to develop the gas that will fill the pipeline.

From the Press Release: ExxonMobil drilled the well to a measured depth of over 16,000 feet. The shore-based rig directionally drilled under the Beaufort Sea to the targeted gas reservoir more than 1.5 miles offshore.

“This is another successful milestone for the Point Thomson project,” said Dale Pittman, ExxonMobil Alaska production manager.

ExxonMobil Senior Project Manager Lee Bruce added, “PTU-15 pushed the limits of drilling technology and demonstrated that the Point Thomson drilling plan is sound.”

The rig will be moved to the second development well at Point Thomson (PTU-16) and continue drilling. Work continues on front-end engineering and design for the initial production system.

APP Open Season Details

I've had some time to scan through the "APP" (Alaska Pipeline Project) open season documents and here are a few first impressions:

• In Service Date: 2020 - Hey I'll be SIXTY! OMG I'll be SIXTY!
• Cost to move gas to Alberta: $2.43-$3.13/MMBTU
• Cost to move gas to Valdez: $2.22-$2.89/MMBTU
• Point Thomson is a vital part of the overall project

Overall I'm encouraged by the numbers - it actually looks achievable. At a minimum the cards are on the table and other parties can start ciphering on the cost of an LNG plant, the value of Alaska Gas for tar sand production, and a reasonable tax structure.

Anybody want to take a stab at the cost of the LNG plant? My quick calculation say the LNG plant would have a capacity of 18 million tons per year LNG and cost $31 Billion. Somebody check my math. We really need a good cost estimate of the LNG plant to compare the options.

Here's some images from the document showing the pipeline options and capacities:





Assorted headlines:

EDMONTON JOURNAL:Alaska gas could bypass Alberta Option would send fuel to Valdez

UPI TransCanada details Alaskan pipeline plan

GLOBE AND MAIL: TransCanada seeks Alaska project commitments

OIL & GAS JOURNAL: Alaska Pipeline Project files open season plan

REUTERS: Exxon, TransCanada raise Alaska pipeline estimates

Getting Down to Details

This week TransCanada filed Open Season documents with the Federal Energy Regulatory Commission (FERC). Here's a link to the FERC ELibrary (FERC LINK).

This will make good reading, plenty of numbers to crunch. Enjoy!

A Turning Point?

Will Point Thomson become the turning point for State of Alaska & North Slope producers?

Perhaps - According to Govoner Sean Parnell:

"I think we are at a place where we need to resolve the Point Thomson litigation. I am working at that already. If I can resolve that litigation in Alaska's interest, I will do so." (LINK)

Rich Kruger, President of ExxonMobil Production Company had this to say:

ExxonMobil wants to see Point Thomson developed. We believe it underpins the success of the Alaska Pipeline Project. The owners’ commitment to achieving progress at Point Thomson is demonstrated by investments which have now topped $1 billion. (LINK).

I wouldn't call this a Kumbaya moment, but it's a step in the right direction. Maybe Parnell is starting to feel the heat from calls to oust ExxonMobil playa hater Tom Irwin (LINK to Halcro).

Parnell's to-do list should also include tackling the fiscal certainty. It's in Alaska's interest to explore for, produce and market oil and gas. Go for it Governor, get'er done!

Weekly Blurbs

West Alpine on Hold. It's not a gas pipeline story, but it's a bad sign when permits hold up work, especially when the permitting agency won't give an explanation.

TransCanada monthly report to FERC...Yawn, seriously here's a preview of next months report "Engaged stakeholders, worked on the gas treatment plant cost estimate, attended a meeting...."

Denali's monthly report to FERC...Hmm ever so slightly more interesting, comments on polar bears.

Tweeking oil taxes - Maybe Parnell gets it? Maybe not. High oil taxes and no firm gas tax plan are killing projects. Let's hope he didn't O.D. on Palin's koolaid.

Ramras get's it.

One man's assessment of the Republican candidates for governor.

Goofy Blurb of the Week/Year/Decade : New pipeline supplies gas to BioFuel plant. Think about it. Let's grind up food crops, cook it with a petroleum product, fill up the land barge SUV with biofuel and good kharma then commute alone to a desk job.

Norman Wells needs gas. (MAP LINK) Preview of Fairbanks future without gas?

How about a GTL Plant? Love the technology, but who's lining up to fund and GTL plant? It takes MONEY, Lots and lots of MONEY. In Alaska maybe natural gas is the wrong feedstock - Syngas from insitu coal gasification sounds like a better Alaska GTL feedstock to me.

Open Season: Denali Shippers May Hesitate

From the good folks at Denali:

“I am pleased to announce that Denali will file its open season plan in April,” said Bud Fackrell, Denali president. “The results of the open season will provide an understanding of shipper requirements, which will be important as we consider our next steps. While our objective is a successful open season, we are concerned that shippers may hesitate to make the financial commitments needed to support the project due to issues outside of Denali’s control. These issues include increased gas supply in the Lower 48 market, the legal status of Pt. Thomson leases, and the lack of a long term fiscal regime for North Slope gas production. Our potential shippers have publicly indicated that resolution of these issues will be important in their decision to make the multi-billion dollar commitments necessary to move the project forward. “

Denali has invested $130 million moving the project forward over the past 20 months, primarily in the areas of field work, engineering, and stakeholder engagement. These work products underpin a robust project plan and cost estimate, which are essential components of Denali’s commercial offering.

“Denali’s open season will provide potential shippers the best opportunity to evaluate the economics of North Slope natural gas sales to the Lower 48 market,” said Fackrell. “I expect that the quality and timing of our open season offering will be viewed positively in the marketplace.”

Sounds like progress, kind of. Long term fiscal certainty needed.

Judge rules for Point Thomson

Department of Natural Resource Commissioner "Playa Hater" Tom Irwin was handed a defeat in court Monday for failing to give due process to the Point Thomson Unit (AKA ExxonMobil and others).

More later, but here's the links:

KTUU (With links to the court decision)

Halcro

Fine Print: FTC 16 CFR 255 Disclosures

Apparently some bloggers get cash, swag, freebies and treats from companies in return for writing favorable blogs about the companies and/or their products. Our tax dollars paid some folks in Washington D.C. to overthink this situation. (FTC LINK) That’s not how this blog rolls. I work for a living and nothing posted in this blog sends anything of value my way. If Rex Tillerson sends me a bale of unmarked bills, I'll disclose that. If Sarah Palin sends me a free copy of her book - I'll send it back assuming I don't burst in to flames upon touching it.

Observations

Odds and ends, items related to natural gas markets, and ultimately related to building the Alaska Gas Pipeline.

ExxonMobil to build an arctic drilling ship. (LINK) I wonder where's going to drill and what they will do with gas if/when they find it. File this under - Somebody's thinking long term.

EPA issues draft permits for offshore Alaska drilling (LINK)(LINK). This work is planned for the Chukchi Sea. Again - where's the gas going when/if they hit it? (Shell Alaska Links)

Mackenzie Pipeline, path forward - more hearings (LINK). NEB hearings in April, decisions in Fall.

PetroChina stiffs Aussie Woodside LNG project (LINK)(LINK). The LNG market seems to be realigning - there will be winners and losers.

Speaking of LNG there was this story on Kitmat (LINK). The project website indicates construction will start this year.

Bottom line - Natural Gas is a competitive world market, Alaska's politicians need to get cracking on building a competitive tax system. It's a dog eat dog world and you shouldn't wear milk bone underpants. To quote the colonel in Full Metal Jacket "Why don't you jump on the team and come in for the big win?"

Alaska Gas Pipeline on CNBC

Weekend Update

The Canadians issued the "Report of the Joint Review Panel for the Mackenzie Gas Project" The report is supportive of the project. (LINK to press story). I take the view stated once by Dermot Cole - It's not a project until somebody starts ordering pipe (that goes for any Arctic Pipeline).

Shale OIL tidbit. It's not Shale GAS, but here's and interesting story on Exxon's research into production of shale oil in Colorado (LINK). They used a technique called “Electrofrac”. Basically they drill horizontal wells in the shale formation, fracture it, inject a conductive material then pour on the amps to resistively heat the formation until the hydrocarbons flow. What's the Alaska gas angle? Electrical power - lots of gas will be needed to produce the power needed to fry the foundations of Colorado and Utah. Note: the oil production objective is 162,000 bbls / acre. The overall resource is estimated in the Trillions of barrels of oil. Yeah they're gonna need some gas.

Speaking of Shale...Here's a story on shale gas in New York state (LINK). Apparently everyone does not have unconditional love for shale gas exploration and development. (LINK to Marcellus Shale info)

Finally - According to Halcro's website, something's cooking with DNR Commissioner Tom Irwin. With some luck maybe this player hater can move on.