ASAP Update

Supplemental environmental impact statement (SEIS) documents are available HERE.

Summary of design changes (page 15 of the presentation)

Monthly Pre-Filing Status Report No. 01

The first project progress report to FERC is out (LINK).

Stakeholder engagement, studies, field work, pre-design all "tracking".

It looks and feels like 2005/2006 all over again.  So many hurdles yet to go.

Metrics of success I'm looking for:

1) Announcement of customer commitment to buy product
2) Announcement of customer equity participation in project
3) Ordering pipe.

Project Data Filed with FERC

Lots of AK-LNG project filings:

(FERC FILINGS)

Project Legislative Briefing

Project Description (public version)

TransCanada Out?

Link

Perhaps this is a procedural step needed in order to make way for the new and improved project team.

Another BC LNG Project

The list of Alaska sized LNG projects in BC just keeps growing.  Latest contender: Quicksilver Resources, Campbell River, BC (Application LINK) 

BC LNG projects website (LINK)

Project website (LINK)

DOE LNG Export Application

Find it here (LINK)

Department of Energy Filing

From Governor Parnell's website:

July 21, 2014, Anchorage, Alaska – After ensuring that Alaska’s gas could go to Alaskans first, Governor Sean Parnell today lauded Alaska’s LNG Project for applying to export liquefied natural gas (LNG). The application was submitted to the U.S. Department of Energy.

“We are building Alaska’s future with a gasline to heat our homes and fuel Alaska’s businesses,” Governor Parnell said. “Alaska’s LNG Project is on the right track with hundreds of Alaskans out in the field this summer working to secure permits and hundreds more working to refine the engineering and design challenges of the project. I am committed to getting Alaska’s gas to Alaskans and then to markets beyond. I look forward to continued progress on this important project.”

The application requests authorization to export up to 20 million metric tons per year of LNG for a period of 30 years. The application seeks to export to countries that have existing free trade agreements with the U.S. and to non-free trade agreement countries.

Link to Platts (more detail)

Alaska-LNG website press release

$70 Billion Gas Line

No, it's not the Alaska Gas Line and LNG Project (thank goodness) - it's the Gazprom Russia to China "Power of Siberia" pipeline. (LINK). The Russian project estimate is now at $70B, surpassing the $65B price tag for the Alaska gas project.

In other news, the quarterly Exxon FERC Alaska Pipeline Project activity report doesn't indicate any activity. (LINK)

Plan B - Enbridge

News on the Plan B small gas pipeline (LINK)

Canadian LNG Report

In terms of markets, project cost, technology, and risk the proposed Alaskan Gas Pipeline and LNG project has a lot in common with the proposed western British Columbia LNG projects.

Here's a link to a report titled: "RISKY BUSINESS: THE ISSUE OF TIMING, ENTRY AND PERFORMANCE IN THE ASIA-PACIFIC LNG MARKET" M.C. Moore, D. Hackett, L. Noda, J. Winter, R. Karski and M. Pilcher The School of Public Policy

Canadian LNG Projects

Need a summary of the long list of Canadian LNG Projects?  Me too.  Find it here (LINK)

Projects sized to compete with Alaska LNG (10 MMTPA or greater):

LNG Canada (LINK)  24 MMTPA

Kitimat LNG (LINK)  10MMTPA

Kitsault Energy (LINK)  20 MMTPA

British Gas Group (BG Group) (LINK) 21 MMTPA

Pacific NorthWest LNG (LINK)  18 MMTPA

Aurora LNG (LINK)  24 MMTPA

Canada Stewart Energy Group Ltd (LINK) 30 MMTPA

Interesting mix of projects - about 7 times the volume of the proposed Alaska LNG Project.

Alaska Gasline Work Underway

That's what the press release says, but I have haven't heard of any contract awards etc,

To put this news in P3 schedule terms "We'll take and actual start on this activity"

LINK

Press Release:

July 2, 2014, Juneau, Alaska – Citing significant progress on an Alaska gasline that gets Alaska’s gas to Alaskans and markets beyond, Governor Sean Parnell welcomed news that a formal commercial agreement has been signed between the Alaska Gasline Development Corporation (AGDC), BP, ExxonMobil, ConocoPhillips, and TransCanada to advance the Alaska LNG Project.
“Environmental and pipeline engineering fieldwork has officially begun,” Governor Parnell said. “I am pleased all parties continue to make progress on building an Alaska gasline project that will create thousands of Alaska jobs and fuel Alaska homes and businesses. This milestone marks the historic progress we have made on a gasline. Our way forward will continue to be on Alaska’s terms and in Alaskans’ interests.”
The Alaska LNG Project has fully entered the Pre-Front End Engineering and Design (Pre-FEED) phase – a milestone no previous Alaska gasline project has achieved. During the Pre-FEED phase, the producer parties will spend hundreds of millions of dollars on design and engineering of the project. In the coming weeks, the project will begin to work to secure an export license with the Department of Energy and continue permitting work with the Federal Energy Regulatory Commission. Each producer party, in addition to the state, will begin to engage the LNG sales market during this phase.

Somewhere a village is missing an idiot

I'd like to remain professional and objective when confronted with opinions I disagree with....but then there's this guy:

Senator Ed Markey of Massachusetts

Markey thinks LNG exports are against the law (read the madness here)

As twits go I like these guys much better:

Maybe Markey will over play his hand and someday domestic oil can will be exported overseas.  Just imagine - free markets at work without government interference.

 Who's your favorite twit?

SB - 138 Signed

Alaska Governor Sean Parnell has signed SB-138, the legislation that may enable the Alaska gas pipeline and LNG plant.

Link to Press Release

SB 138 selected links and documents

Enalytica

Lisa Weissler Comments 20140219.pdf

Black&Veatch Presentation

The Big Proposal

SENATE BILL NO. 138 (LINK)

State equity participation: up to 25% (LINK)

Is Exxon Happy?  Maybe, the 2013 Q4 press release mentions the Alaska LNG project (LINK) 


SB 138: Commercial Production of North Slope Gas SECTIONAL ANALYSIS 


SB 138

The BIG Agreement

Memorandum of Understanding (MOU)

Heads of Agreement (HOA)

AGIA TERMINATION / SKIN IN THE GAME

 Ding Dong AGIA is dead. Any predictions on the degree of State participation?  I'm guessing an eighth or more.  An eighth would equal $7.5 billion which should be a manageable figure for the state.

Why this is Good:

1. AGIA may have worked in a shale gas free world,but it was absolutely doomed after shale gas gathered momentum in the lower 48.

2. State participation gives the project better financing  options and terms.

3.  Alignment - State interest are better served as partners.

4.  Revenue - as an investor the State stands to receive a return on the investment.

5. Agreements are forthcoming - I have to assume the Governor wouldn't make this announcement unless the grand deal was about to signed.

6.  A Flat Gross Tax on gas sounds like fiscal certainty at long last?

What would make this better:

1. LNG Buyer participation - nothing says that won't happen, but LNG customer participation could strengthen the project. 

What could go wrong:

1. Just about anything and everything can go wrong at this stage.  The problem with grand deals is that somebody or group will feel left out or abused by the deal, then the lawsuit phase of the project begins.  I hope the project survives that stage but hang on to your hat.

Good luck Governor, this is a big step in the right direction.


Press Release from Alaska Governor Sean Parnell (LINK), text:

January 10, 2014, Anchorage, Alaska – Governor Sean Parnell today announced that the State of Alaska will pursue becoming an equity partner in the Alaska LNG project. The governor also announced the state will terminate its involvement with TransCanada as its licensee under the Alaska Gasline Inducement Act (AGIA), and partner with the company in a more traditional commercial agreement.

“For the first time in our state’s history, the framework is in place to build an all-Alaska gasline on Alaska’s terms and in Alaskans’ interests,” Governor Parnell said. “We have all the necessary parties to make an Alaska gasline project go - three producers, a pre-eminent pipeline builder, an entity in AGDC that can carry Alaskans’ interests, and state agencies responsible for the royalties and taxes.”
The governor stated he soon expects a commercial agreement, known as a Heads of Agreement, for the Alaska LNG project. The agreement is anticipated to be signed by Exxon, BP, ConocoPhillips, TransCanada, the Alaska Gasline Development Corporation (AGDC), and by the commissioners of the Departments of Revenue and Natural Resources. The Heads of Agreement will be subject to public review by the Legislature.

“As a partner in the gasline project, Alaska will control its own destiny,” Governor Parnell said. “Ownership ensures we either pay ourselves for project services, or negotiate and ensure the lowest possible costs. As a partner, Alaskans stand to gain more.”

Governor Parnell also intends to introduce legislation addressing how the state will manage its gas resources by authorizing the Department of Natural Resources to modify certain leases, and enter into shipping agreements to move and sell the state’s natural gas. The legislation will propose moving from a variable net tax to a flat gross tax for North Slope gas, allow certain leases to pay production taxes with gas, and enable the Departments of Revenue and Natural Resources to manage the state’s gas revenues.

“While most Alaskans have seen past efforts to develop a large gas project falter for various reasons, this time is different,” Governor Parnell added. “AGDC is our ‘ace in the hole,’ meaning we can still opt for the smaller volume ASAP project.”
###

Video

Stand Off ? Game Over ?

Platts reports that the State of Alaska "will withhold an offer of special state fiscal terms for a large North Slope gas pipeline and liquefied natural gas project until companies working on the project reach agreement on terms among themselves to proceed with the project"

Interesting news - Obviously the AGIA project team of TransCanada and ExxonMobil will need to agree to abandon AGIA for new undisclosed agreement and project structure.

If TransCanada and the North Slope producers assemble a new project structure will the new project include an equity position for the state? And what about the Japanese (JBIC & REI) I'd like to think customers with money to invest would have a role on the project.

There are a lot of moving parts here and the state of Alaska and the producers have spent years and millions of dollars with very little to show for their efforts.  The clock is ticking down and I see Governor Sean Parnell losing the game in the last second.

The first big loss happened on Sarah Palin's watch - The gas line was almost a reality when North American shale gas burst upon the scene.  North Slope producer ExxonMobil bet big on shale gas ($40billion) and bought XTO.  Fractional term Governor Palin's introduction of AGIA burned valuable time off the clock and the win went to gas investments elsewhere.

The full impact of shale gas was not immediately apparent and it took some years for the overland Alaska gasline to morph into an all-Alaska gasline feeding an LNG export terminal.

Along the way fate dealt Japan a cruel hand in the form of a devastating earthquake which also destroyed nuclear plants at Fukushima.  The magnitude of the Fukushima disaster resulted in the closing of all nuclear plants in Japan and a dramatic uptick in Japan's need for imported energy including LNG.

Somehow the state skillfully avoided the obvious and failed to engage with Alaska's long term LNG customer to strike a deal.

Meanwhile cheap shale gas in Texas and Louisiana prompted many Gulf of Mexico LNG import terminals to invest in LNG export projects.  Soon, the first loads of GOM LNG will hit the market.  A portion of those sales will go to Japan.  Again other projects are getting built while Alaska make no progress.

The losses keep piling up. Maybe Governor Parnell knows what he's doing but the producers have hundreds of competing projects with known variables competing for their investment dollars.  In fairness to the Governor he did win the battle of Point Thomson so I have some level of faith in his abilities.

Other opportunities exist (state equity position, and low interest customer government backed financing).  Again Alaska is avoiding the win or ignoring the clock, either way investment dollars are poised to go elsewhere.

The clock is ticking, and oh by the way interest rates are heading up. Spoiler Alert Governor Parnell - interest rates will kill the gas line for decades unless the grand bargain is reached in 2014.

Adios AGIA

Perhaps Christmas is coming early in Alaska - the State is looking at ditching the Alaska Gasline Inducement Act(AGIA).

Looks like my prediction of AGIA's future was a few years premature, LINK.