Parnell, in a speech to an oil and gas industry group in Anchorage, said he wants the major North Slope players - Exxon Mobil Corp., BP and ConocoPhillips - to coalesce behind a project that would allow for liquefied natural gas to be shipped overseas. He wants them to do this under the framework of the Alaska Gasline Inducement Act. If they do, the state can be flexible, including talking tax and royalty terms, he said.
Also see Amanda Coyne's Alaska Dispatch article (LINK)
LNG to tidewater is not a new idea. It's an option included in the Alaska Gas Inducement Act (AGIA). What is news is the the Governor can't envision how Alaska Gas will ever compete with abundant lower 48 shale gas. Of course the public is not in the loop on the facts and figures but it's believable when you look at the capital cost, the taxes and the low price of lower 48 shale gas.
The big news in his statement is "the state can be flexible, including talking tax and royalty terms". Wow! This is the one area under the State's control. Getting back to the economics - Lower 48 LNG import facilities are considering conversion to exporting. An Alaskan LNG export facility will need to compete with those projects so the Governor is going to have to be extremely flexible. Politically this may be the only option with a chance. The All-Alaska aspect of the plan should resonate with the voters, especially when it supplies affordable fuel to so many along the route.Alaska's competition in the Lower 48 is busy lining up customers and cutting deals (LINK: Cheniere lands customer for LNG export).
Is this just an empty challenge? Let's hope not. I'd like to think that the option is thoroughly vetted and in the realm of the possible for the State and the producers. There's always one element missing from announcements on Alaska's LNG plans - a BUYER. I'll hold my applause for Governor Parnell until he makes a LNG announcement with a producer CEO and an Asian buyer CEO standing close by.
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