Project Data Filed with FERC

Lots of AK-LNG project filings:

(FERC FILINGS)

Project Legislative Briefing

Project Description (public version)

H.R. 6, the Domestic Prosperity and Global Freedom Act

Get'r Done Bill for LNG Exports

Link

Link to Bill

Northern Alliance

I didn’t see this coming. Looks like a crafty deal. Possible new source of capital for the Alaska gas line?  Coordinated development of the Arctic. Free market at work - gotta love it




Exxon-Mobil Rosneft Arctic Deal LINK

2013 Alaska Gas Heroes and Zeros

Heroes

(1)    Great Bear Petroleum.  These guys took a fresh look at Alaska’s petroleum resources, invested in their ideas and completed their objectives.  New gas and new oil from Alaskan shale deposits will fill the oil and gas pipelines in the future.  Great job – best wishes for continued success.

(2)    Everyone working at Point Thomson.  Oil and gas from Point Thomson will fill the pipeline(s).  All the hard work at Point Thomson will pay off in the future.

(3)    ExxonMobil & The State of Alaska – Nice job on the Point Thomson settlement.

(4)    Governor Parnell – Ramped up his game in 2012, meeting with North Slope Producers CEOs - Bob Dudley of BP, Jim Mulva of ConocoPhillips and Rex Tillerson of Exxon Mobil.  The Point Thomson settlement cleared the deck and in March 2012 the producers announced that they had aligned. He also hit the road and started talking to LNG customers.

(5)    Pedro van Meurs – Keep on sticking to the math and providing reality checks.

(6)    LNG Buyers – The Alaska Gas project is a nonstarter without LNG Buyers and this year we started seeing Japanese and Korean LNG Buyers enter the picture.  With a bit of luck the buyers will become equity partners and help move the project forward.

(7)    Cheniere Energy & Sasol.  Cheniere is moving forward with a lower 48 LNG export project and Sasol is moving forward with a lower 48 gas-to-liquids (GTL) project.  These types of projects will sponge up lower 48 shale gas, and boost gas prices.  Projects like these lead the way and Alaskans should take note and understand the parameters of real world natural gas success stories (here’s a hint – fiscal certainty).
8)  Combined Cycle Power Plants.  One by one high efficiency combined cycle power plants are coming on line.  These plants will replace aging coal plants over the next decade and consume lots of lower 48 natural gas, which will help build natural gas prices back up to a reasonable level.  Anything the builds lower 48 gas price support helps the Alaska gasline project.  Congrats to TVA for bring the John Sevier Combined Cycle plant online ahead of schedule and below cost.

Zeros

(1)    Matt Damon.  Shale gas hater Damon received funding for his anti-shale gas movie from the United ArabEmirates.  The public discourse about lower 48 shale gas ultimately impacts the price of gas, jobs and the future of gas exports from Alaska.  Bad shale gas law could choke Alaskan shale gas development. The American electorate is about as uninformed, uneducated and mathematically impaired as is possible.  It’s sad to see the simpletons led astray by one of our own funded by those who will profit from our poverty. (Ask me how I really feel!).

(2)    The 2012 presidential campaign.  There was no real discussion of the economic benefits of domestic energy development – a real missed opportunity.  Good policies now could help Alaska in the future. In 2008 I looked forward to 2012, now I’m almost certain that we are in the first years of the idiocracy.

(3)    I could name some other maladroit zeros closer to home, mainly for inaction, but for the time being I’m hopeful that project alignment, real customers and forward momentum will pull them along.

 Good luck in the new year, and work safely.

Gas to Gasoline?

Petroleum News carried additional details (LINK) on Janus Methanol chairman Deo van Wijk's ideas for un-stranding Alaska's natural gas. The idea is called "MTG" or Methanol to Gasoline. Given the dismal prospects of the umpteen dozen proposed gas lines maybe this idea is worth a second and even a third look.

In a nutshell van Wijk's concept is to convert Alaska's natural gas into valuable liquids and batch the liquids to market via the existing TAPS oil pipeline to Valdez and then on to markets where the material will trade as gasoline.

How it works - Cleaned up natural gas is converted to Syngas (carbon monoxide and hydrogen), Syngas is converted to Methanol (MeOH) and Methanol is converted to liquids, i.e. gasoline via a process owned by Exxon.

Quote from the Petroleum News article:

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)

The price of North Slope gas is really an imaginary number without other viable outlets. I figure that gas input to the facility should be at cost with gas producers compensated and tax assessed on the product stream ex-Valdez.

Van Wijk didn't indicate if the cost of a train includes gas pretreatment so let's tack on some capital cost for other items, say $1.3B for offsite utilities (gas treatment) , tankage at Valdez and assorted items along the pipeline. At $9B per two trains the project should still work.

What's good about this idea:

1) It converts Alaska's gas into revenue.

2) It's incremental, initial cost are more easily financed.

3) It fills the pipeline, extending the life of the pipeline.

4) It puts Exxon in the game as the technology licensing participant.

5) Fewer permits required, fewer jurisdictions.

6) It's an "All Alaska" option.

7) The incremental approach depressurizes the North Slope more gradually than a full size gas pipeline, i.e. it extends some oil field production.

8) There are actual buyers for the product.

Here's what people will hate about this idea:

1) No gas for Alaskans - Better start thinking propane

2) $500 Million for AGIA down the drain, maybe $1.5 Billion if damages are paid to TransCanada. Maybe the viability of MTG will force the discussion of AGIA feasibility.

Conclusion - I say why not - Van Wijk's team should press on and develop a full cost estimate. Clean up the concept and minimize capital installed on the North Slope. Get a proof of concept unit going on the Gulf Coast and iron out the arctic constructability issues.

No Precedent Agreements

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.