Tuesday, December 6, 2011

NovaGold - LNG Imports

NovaGold has completed the updated feasibility study for the Donlin Creek project.  It's good reading and looks like a great project if it gets funded.  Alaska Gas angle - The project will build a 300 mile 12" diameter gas line to transport gas from the Anchorage area. The project will depend on gas from IMPORTED LNG. (LINK) and quote:

Natural gas will be delivered to site by a 500-kilometer-long, 12-inch-diameter pipeline. It will serve as the energy source for on-site power generation. This natural gas pipeline is a lower-cost alternative to the previously considered barging of diesel fuel. Operating costs include importing liquefied natural gas ("LNG") by ship to Anchorage and total delivery costs to site which includes ship based regasification of the LNG and delivery from Anchorage to the Donlin Gold project via the pipeline. There may be an opportunity in the future to source natural gas from within Alaska
I read this as LNG gas plus a small pipeline is the baseline cost that doesn't depend on other projects.  They can always switch to Alaskan gas when and if that becomes available.  If the project goes forward it would make a great anchor customer for some of the proposed Alaskan gas pipeline projects.

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