Using ballpark estimates of development costs on the North Slope, assuming for example a more than doubling of costs compared with a region such as the U.S. Gulf Coast, Van Wijk has estimated a $7.7 billion price tag for an initial two-train plant. Assuming a 20 percent return on investment over a 15-year period and a tax rate of 35 percent, gasoline could viably be sold at a price of $1.583 per gallon at a natural gas price of $2 per thousand cubic feet, Van Wijk said. The viable gasoline price rises with increasing natural gas prices, with the gasoline price reaching $3.458 at a natural gas price of $10 per thousand cubic feet, he said.Van Wijk estimates the initial two train unit will produce 63,000 bbls per day of low sulfur low benzene gasoline. The economics, as stated look good, although where are North Slope gas producers going to get $10/MMBTU for their gas? (LINK TO VAN WIJK SLIDES)
Sunday, August 28, 2011
Saturday, August 20, 2011
Friday, August 19, 2011
Tons of ideas out there, but still no buyers for Alaska gas. Here's links to pipeline related presentations submitted to the Senate Resources Committee this week :
Larry Persily, Federal Coordinator (LINK)
Bill "Valdez LNG" Walker (LINK)
Malcolm Roberts (LINK)
Harold Heinze ANGDA (LINK)
David Gottstein (LINK)
AGDC, answers to 54 Wielechowski questions (LINK)
DNR Dan Sullivan, Gasline Update (LINK)
Dan "ASAP" Fauske (LINK)
That's the word from TransCanada (LINK to slides) in a presentation to Alaska State Legislature Senate Resources Committee on August 16, 2011. Here's a chilling quote from the slides.
"APP has not been able to secure Precedent Agreements with Shippers at this time"No shippers, no buyers, no project. Tony Palmer, TransCanada VP was unable to show proof of project viability to lawmakers in testimony to the Alaska Senate Resources committee on Tuesday (LINK). Point Thomson is identified as the major sticking point. According to TransCanada:
"Resolution of Pt. Thomson and gas fiscals are essential to commercial success"A solution to that problem may be in the works (LINK to Alaska Dispatch). Alaska Dispatch ran the Point Thomson story on the 15th however other news outlets have been slow to grasp the significance of an agreement on Point Thomson. The Fairbanks New-Miner has a followup story with no new content (LINK).
We do know that ExxonMobil has drilled a couple of wells (PTU-15 and PTU-16) in recent times and has plans to produce condensate as early as 2014. (USACE EIS LINK). At a minimum Exxon has more data and is in a good position to negotiate with the the Department of Natural Resources. (LINK to a good description of Point Thomson).
Sometimes it seems like this project is all lawyers, politicians, and guys in nice suits. It's good to see at least one outfit (Exxon) is out there, boots on the ground, building, drilling, hiring and making tangible progress. With a little luck maybe their success will get the ball rolling.
Wednesday, August 10, 2011
One way to improve the economics of a remote gas pipeline is to use stronger steel.
Here's a press release from Exxon on X12o pipe welding. (LINK).
Because I'm an optimist I read "Alaska Gas Pipeline" into this portion ofthe press release:
X120 ultra high-strength linepipe was jointly developed by ExxonMobil’s Upstream Research Company and Nippon Steel. X120 linepipe is 50 percent stronger than the strongest linepipe steel (X80) commonly used in gas transmission pipelines and is a cost effective and safe method of transporting natural gas from remote regions to urban customers using high-pressure, large-diameter pipelines.
Natural gas demand is forecast to grow 60 percent globally in the next 20 years. Many new gas resources required to meet this demand are in remote areas and will require cost-effective transportation options before they can be commercialized. The use of X120 linepipe could substantially improve the economics of long-distance pipelines used in the development of remote gas resources.
Saturday, August 6, 2011
Summary of the Planned ProjectThe APP would involve construction and operation of a new pipeline system to transport up to 4.5 billion cubic feet of natural gas per day (Bcfd). Specifically, the planned project includes the following major components in Alaska:· About 58 miles of 32 inch diameter pipeline and associated aboveground facilities (the Point Thomson Pipeline) from the processing plant at the Point Thomson Field to a planned gas treatment plant (GTP) near Prudhoe Bay, Alaska;· A new GTP near Prudhoe Bay capable of producing up to 4.5 Bcfd of pipeline-quality gas;· About 745 miles of 48 inch diameter pipeline and associated abovegroundancillary and auxiliary facilities (the Alaska Mainline) from the GTP to the Alaska-Yukon border. The Alaska Mainline would have a maximum allowable operating pressure of 2,500 pounds per square inch;· Construction of at least five delivery points, eight compressor stations, two meter stations, various mainline block valves, and pig launching/receiving facilities; and· Associated infrastructure such as access roads, helipads, construction camps, pipe storage areas, contractor yards, borrow sites, and dock modifications and dredging at Prudhoe Bay.
The planned Alaska Mainline would start at the GTP and generally follow the existing Trans-Alaska Pipeline System crude oil pipeline (TAPS) and adjacent highways southeast to Delta Junction, Alaska. From Delta Junction, the mainline would diverge from TAPS and generally follow the Alaska Highway southeast to the Alaska-Yukon border. At the Alaska-Yukon border, the pipeline would interconnect to a new pipeline in Canada to deliver gas to North American markets through the Alberta Hub or other facilities with existing off-take capacity at or near the British Columbia/Alberta border.
The project proponent is also considering an alternative proposal to build a natural gas pipeline to Valdez, Alaska for delivery into a liquefied natural gas (LNG) plant for liquefaction and export to global LNG markets. Because the Commission has received very little information on the LNG plant and the associated pipeline, the Valdez proposal is not sufficiently developed for the FERC to include in the environmental review at this time