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.