Vladivostok LNG or Alaska LNG - You're doing it Wrong

Vladivostok Gas Line

Alaskans have again proven they are less nimble in the marketplace and less capable than than other stranded natural gas owners.  Gazprom has announced their plans to build a 2000 mile long gas pipeline (over twice the length of the proposed North Slope to Valdez gas line) to feed a planned LNG plant in Vladivostok.  The LNG plant capacity will be between 10 and 20 mmtpa compared to 25 mmtpa for the Alaska LNG project.  The "all in" cost for field development, pipeline and LNG plant is $44 Billion.

The field development cost is $13.9 Billion and the pipeline cost is $24.8 Billion leaving $5.3 Billion to build the LNG Plant plant.   Assuming a capacity range of 12.5 to 15.0 mmtpa the Gazprom investment equals $2.93 to $3.52 Billion per mmtpa of LNG capacity compared to $2.00 to $2.56 Billion per mmtpa of LNG capacity for Alaskan LNG.

The Gazprom LNG plant cost may be understated, but there is no good reason for Gazprom to bring LNG to market for less cost than the Alaskan project.

The clear message: Alaska LNG - You're doing it Wrong.  Alaskan gas is developed, the distances are less. The customers are the same.  The steel, the talent, the jobs are headed out for projects in all locations outside of Alaska.

Good Luck Gazprom - your investment is safe as long as Alaskans keep kicking the can down the road on the Alaska LNG project.

Alaskans need to learn from this, pick apart the numbers and figure out how to get in the game before the game is over.

Here's the winning formula: Fiscal Certainty + Customer Equity Participation - Taxation Gluttony - Sound Bite Populism = Alaska LNG success.

ConocoPhillips - LNG Makes Sense for Stranded Gas

ConocoPhillips is busy around the world with new LNG projects.  According to this article (LINK) Australia is first in ConocoPhillips mind but they are looking at potential projects in the US and Canada.  Quotes:

ConocoPhillips is studying North America's potential to export natural gas, but it isn't high on its priority list and any rush to build terminals on the U.S. coast could face opposition from Washington, Al Hirshberg, the company's Senior Vice President, Planning and Strategy, said Thursday.

"I just don't see it," Hirshberg said. "Five years from now Queensland will be a major spot on the map, as well as Western Australia in terms of LNG export, and the U.S. Gulf coast won't be, that's my prediction." 

"Canada's a little different," he told Dow Jones Newswires in an interview. "The gas in Canada is stranded, it really doesn't have access to a market so spending the money to liquefy it and get it ready for export is going to make long-term sense."

Similar logic may apply to stranded Alaskan Gas.  Probably not, but exportation of other gas plays helps build price stability which in turn helps the prospects of the Alaska Gas Pipeline.