Natural Gas - Growth, Growth, Growth

November 16, 2011  ExxonMobil Presentation Alaska Resource Development Council (LINK)

Quote from page 8:

Alaska North Slope Gas is competing in a growing & increasingly global  marketplace
• Resource development underpins economic growth for State
• Complexity of Alaska gas development dictates need for on-going stakeholder alignment
• Alignment with the State of Alaska
• Establish predictable and durable fiscal terms so an investment of this magnitude can be made
• Build on foundation of the Alaska Pipeline Project and AGIA framework
• Alignment among Producers
• Support from ExxonMobil, ConocoPhillips and BP essential
• ExxonMobil is poised to work with all key stakeholders to shape the next generation of North Slope development

LINK to Video of the presentation.

All true, but no Kumbaya moment yet.

Listening to the presentation I heard a hint of buy in for Alaskan LNG, or at least a pitch that ExxonMobil has what it takes to succeed at an Alaskan LNG project.

Gulf Of Mexico LNG - Pre-Sold

Cheniere is gearing up to convert its Sabine Pass LNG plant into an export terminal, converting cheap lower 48 gas into LNG.  Here's news (LINK) of Cheniere pre-selling 3.5MTPA of LNG to Gas Natural Aprovisionamientos, a subsidiary of Gas Natural Fenosa.  


The contract runs for 20 years with an option of an additional 10 years.This agreement follows a simlar agreement with BG (LINK) inked in October.


I mention the Cheniere because it has all the ingredients that the  various Alaskan gas projects are missing. 1) Cheap gas at tidewater, 2) some pre-built facilities, and now 3) Customers.


What's next? - I assume the Cheniere business model is a good one and similar import terminals with the right ingredients will follow suit.  See page 38 of the Cheniere presentation (LINK) for plant volumes.  Lake Charles and Golden Pass have high volumes and plenty to gain by adding export capabilities.

As Gulf of Mexico LNG exporters come on line the price of gas will climb - maybe into that $6.00/MMBTU sweet spot that will promote development of Alaska's stranded gas resources.

Best use of Shale Gas - Export it

Cheniere project moving forward to export lower 48 shale gas (LINK).

The cost: $5 Billion for two trains producing a total of 9 million tons per year.(LINK2)

You can use the unit rate to estimate the cost of an Alaskan LNG export plant.  The Cheniere volume is roughly 25% of the proposed Alaska gas line volume. Add "Alaska" factors and you find that $25 billion is need to build the plant that could export the full 4.5 BCFD of Alaska gas.  That's on top of the pipeline cost.

New Gas & New Jobs

The Alaska Dispatch has this article by Amanda Coyne on the release of the Point Thomson EIS (LINK)(Point Thomson EIS Link).

There's no point in developing Point Thomson unless you believe in a future Alaska gas pipeline.

Follow the money - a producer (ExxonMobil) is spending real money with an expectation of a real return on investment.

Real jobs are being created too.  Check out "Careers" at Fluor.  Recent job postings mention Point Thomson by name.