I had greater expectations for the Alaska Gas Pipeline in 2011. To recap -
- The open season process was expected to yield announcements of precedent agreements for long term commitments to ship gas. The agreements may or may not have been reached, but no public announcement was forthcoming. Chances are any agreements reached are so heavily conditioned that they represent no commitment to do anything in the here and now.
- In 2011 I expected a viable shipper for a 7 MMTPA Valdez LNG plant to step forward. What actually happened was that Governor Parnell voiced support for a tidewater LNG project. The Governor's comments had the unintended consequences of delaying submission of resource reports by the Alaska Pipeline Project (TransCanada and ExxonMobil).
- 2011 Started with two Alaska Gas Pipeline projects - The APP (TransCanada & Exxon Mobil) working to the scope as defined by the Alaska Gas Inducement Act (AGIA) and The Denali Project (ConocoPhillips & BP). I had an expectation that the projects would merge in 2011. Instead Denali folded in May citing "open season efforts have not resulted in the customer commitments necessary to continue work on its Alaska North Slope gas pipeline project".
In 2012 the North American gas markets will have little appetite for Alaskan Gas. Billions will be spent to build Gulf of Mexico LNG export capacity and preliminary studies will be launched to look into the viability of at least one lower 48 Gas to Liquids (GTL) plant. Anti-fracking stories will continue with little effect on the continued development of lower 48 shale gas resources. The annual average price of 2012 gas may fall within the $3.50 - $5.00/MMBTU range. No new nuclear power will come on line in 2012, but a few gas fired plants will come on line to replace aging coal plants.
Throughout 2012 Alaskans will come to grips with the increasing unattractiveness of Alaskan Gas. The best comment this year came from Steve Kirchhoff, Vice President – Americas, ExxonMobil Gas and Power Marketing Company in a presentation to the Resource Development Council of Alaska in this video. In this presentation Kirchoff states that "You can't dabble at LNG"