Saturday, September 29, 2012

Almost There

After years of nattering nonsense we are starting to hear the right kind of stories about the Alaska Gasline project - stories about customers. All those cliches about "the customer is always right" are true.   LNG is not a commodity (yet) so Alaska must have a long term buyer lined up and participating in the LNG project.

The good news includes a piece in the Alaska Dispatch by Amada Coyne. Apparently a Japanese group called Resources Energy Inc is in Alaska with boots on the ground exploring a gas project.

The next bit of good news comes from the Asia Pacific Energy Research Centre LNG Producer - Consumer Conference recently held in Tokyo.  All of the presentation slides are worth reading, but its great to see Alaska Department of Resources Commissioner Dan Sullivan making the case for Alaska gas to a group of buyers (Dan's Slides).

A smart LNG buyer would negotiate to buy Alaskan gas at a tidewater and be a major equity partner in an LNG facility.  The good news is that there are some smart buyers out there and the stars may start aligning soon.

Thursday, September 27, 2012

A Good Week

Good news #1.  Alaska Governor Sean Parnell is making the rounds in Korea and Japan doing what an Alaskan Governor should have been doing since the price of natural gas tanked four years ago.  The Governor's web site features a picture of the Governor smiling, standing next to the US Ambassador to South Korea. That's worth one cowbell, but no more.  Next time the photo op needs to include a living breathing smiling LNG customer.  LNG buyers are making a push to de-link LNG prices from crude oil prices (LINK).  This could be the right time to offer the first delinked LNG supply.  Imagine a long term contract based on cost plus a fixed fee with cost escalators to track inflation rather than the roller coaster linkage to crude oil prices.  Reduced risk for the buyers, producers, and transporters should make a project more appealing.  It's time to get creative Governor.  Buyers want to commoditize LNG - run with that.

Good news #2  Great Bear wants to accelerate their drilling program. Actions speak louder than words.  Keep it up!

September is drawing to a close - still hoping for some more good news.

Sunday, September 16, 2012

Mid September Blues

I had some high hopes for the Valdez LNG Summit (LINK) held this past week, but a summit with no buyers and no sellers isn't much of a summit.  I also hoped that the summit would correspond with Governor Parnell's Third Quarter 2012 milestone:

Third Quarter 2012: Two State-funded groups working on parallel projects must complete discussions to examine consolidation prospects. The groups are the North Slope producers and TC-Alaska (MOU parties) and the Alaska Gasline Development Corporation (AGDC).

There's two weeks to go to make this milestone, so remain patient.

So where are the buyer and the sellers? In a word: Canada. Spectra Energy and BG Group are hatching a plan to build a 500 mile pipeline to Prince Rupert for LNG export (LINK).  The stated capacity is 4.4 BCFD at a cost of $8 Billion.  Compared to the $20 Billion Alaska Gas Pipeline to Alaskan Tidewater the Spectra/BG pipeline is less expensive and it moves more gas.  Possible construction start date : 2015.

British Columbia Premier Christy Clark thinks Apache will win the race to export BC LNG. She may be right.  It's a sure bet that BC LNG will beat new Alaskan LNG to Asian markets.  Premier Clark said “We are moving at lightning speed to try to enable this,” she said. “We need to be in the exports market sooner rather than later to lock up those contracts.”

Wow! Great quote, I wish Sean Parnell had said that.