Denali PowerPoint and Time Lines

Check out the latest from the Denali Pipeline. (LINK)

The time lines grabbed my attention - Is there any way to move those milestones to the left by a few years?



Seriously 2020?

Yukon Pacific LNG - Anderson Bay

Who would want to build an LNG plant near Valdez I wondered when the TransCanada/ExxonMobil open season documents came out describing an optional line to Valdez. I figured ConocoPhillips / Tokyo Electric - Tokyo Gas would surface as likely LNG plant builders, or maybe the Chinese or Koreans. Scratch that prediction - turns out Yukon Pacific (owned by CSX) has filed with FERC for an extension . (LINK to Petroleum News)

Yukon Pacific argues that the current open season efforts justify an extension. Quoting from the FERC filing:

There is now an additional reason for extending Yukon Pacific’s deadline. Since the Commission’s 2007 extension, industry efforts to commercialize North Slope gas have increased dramatically. The most visible and meaningful of these are the “pre-filing” steps taken by the two leading projects for delivering North Slope gas to Alaska and Lower-48 markets. The implementation of either project would greatly facilitate LNG exports by, among other things, creating pipeline infrastructure that can be leveraged. Given these developments, it is important that the LNG option represented by Yukon Pacific’s proposal remains viable as the “open-season” and other market-related activities for these projects play out. The ongoing effectiveness of the place of export approval granted in this docket is critical to that viability.

Of course every Alaska Gas silver lining has an associated cloud called Tom "Playa Hater" Irwin. A couple of years back he denied a Yukon right of way request. (LINK)

Maybe the stars can align for the LNG option -


View Larger Map

Shale Gas - Is the magic wearing off?

The Alaska Dispatch carried Larry Persily's recent speech on the future of the Alaska Gas Pipeline. (LINK). According to Persily:

I'm not here to tell you it will be built this decade. But I assure you it is not dead; shale gas has not driven a silver stake through the Alaska pipeline; the market has not forgotten us. It may not be paying as much attention as we would like, but that could change.

What about shale gas? Well ExxonMobil (XOM) joined the shale game through acquisition of XTO. Exxon has ideas about exploring for shale gas around the world. XTO cost Exxon $41 Billion (with a "B") in stock. My guess is that Exxon's investment in shale gas will pay off with the greatest successes in Europe.

Chesapeake Energy on the other hand shows signs that owning big shale gas plays + debt + $4/MMBTU may be a bad business plan. Yesterday they announced a $600 million cash infusion from Asian investors (LINK).

In a separate announcement Chesapeake says

Through a series of transactions over the next 24 months, including the preferred stock placement announced today, the company is planning to raise up to $5.0 billion in order to repay up to $3.5 billion of senior indebtedness and increase its investment in liquids-rich plays by up to $1.5 billion.

So judging from their actions it looks like $4/MMBTU shale gas can break you and leave you wanting some liquid hydrocarbons. So I tend to agree with Mr. Persily - Shale gas at $4/MMBTU is not going to drive a stake in the heart of the Alaska Pipeline, that's a job for the politicians.

Open Season - It's a Go!

Today marks a significant milestone in the process to build the Alaska Gas Pipeline. TransCanada and ExxonMobil (Alaska Pipeline Project - APP) have announced (LINK) the beginning of the open season.

Two options are on the APP menu - Pipeline to Alberta, or Pipeline to Valdez for a future LNG plant.

Later this year the Denali Pipeline (LINK) will get cracking with their open season for a competing pipeline to Canada.

The score so far for those playing the game at home:

TransCanadaExxonMobil (APP) Using other peoples money (AGIA) +1, First Open Season +1, Multiple Options including an All Alaska option +1 (Subtotal +3). Denali Pipeline: Still in the game +1, Second out of the chute -1, no all Alaska option -1 (Subtotal -1). Both projects get a -1 for failing to join up and push for one project.

Side note - An 18 month stretch of mega overtime (OT) is coming to an end for me, so I have more time to devote to fishing, and attending to this blog. I've been in the constant OT game for over a decade and I'm look forward to some 3 day weekends. On the other hand - I'd like to see a pipeline project slide into gear. With a bit of luck that might just happen. Your thoughts are always appreciated- Thanks.

A Job Posting!

You heard it here first! One of my goals for this sleeply little blog is to pass on any news of jobs on the Alaska Gas Pipeline.

Job Title: Senior Project Engineer
Agency: Office of the Federal Coordinator for Alaska Natural Gas Transportation Projects Job Announcement Number: OFC-010-0004
SALARY RANGE: 100,500.00 - 130,500.00 USD /year
OPEN PERIOD: Tuesday, April 13, 2010 to Friday, April 23, 2010
SERIES & GRADE: AD-130008010819-00/00
POSITION INFORMATION: Full-Time Permanent DUTY LOCATIONS: 1 vacancy - Anchorage, AK
WHO MAY BE CONSIDERED: Applications will be accepted from United States citizens and nationals

(LINK)

Good Luck! And provide some feedback (positive or negative) if you apply for the job.

Denali Open Season Announced

The Denali open season was announces this week. Here's a few links:

Denali Request for Approval of Plan for Conducting an Open Season (FERC File)

FERC Elibrary Page with additional Files

NOTICE OF REQUEST FOR APPROVAL OF PLAN FOR CONDUCTING AN OPEN SEASON

Great news all around - The cards are on the table

Compare to the Alaska Gas Pipeline

FERC Gives Go-Ahead for Open Season

I'm still reading and digesting this FERC Order (LINK).

Essentially FERC is satisfied with the TranCanada / Exxon open season plan.

It documents the fact that all parties are not in total agreement, but the process is moving forward.

The Bottom Line:

X Conclusion95. Conditioned on the modifications required herein pertaining to the opening of the data rooms and the revisions to the Compliance plan and standards of conduct, herein, the Commission finds that TC Alaska’s detailed plan for conductingan open season for the purpose of making binding commitments for the acquisition of initial capacity on the Alaska Pipeline Project is in conformance with theOpen Season regulations and it is therefore approved. We encourage TC Alaska and potential shippers to work together to resolve any issues arising during the implementation of the open season plan, during the open season, or the during negotiations after the close of the open season.