JUNEAU, Alaska (AP) — Alaska has price advantages that could make it a competitor in the Asian natural gas market, a federal official said, though it remains unclear when or if a gas line project capable of exports will be built.
On Monday, Exxon Mobil, BP, ConocoPhillips and TransCanada Corp. announced the Kenai Peninsula town of Nikiski is the leading contender for the terminal site where gas would be liquefied and shipped to Asia. The decision, applauded by state leaders as a sign of continued progress, signaled that a decades-old dream could become a reality even though major hurdles remain.
Larry Persily, federal coordinator for Alaska natural gas pipeline projects, said the state is closer to Asia in terms of tanker voyages than, say, the U.S. Gulf Coast, Middle East, Africa and even some proposed projects in Canada's British Columbia. He said liquefaction plant compressors run more efficiently when it's cold — a plus for Alaska's colder climate — and its well-known that Alaska has the gas; it comes up with oil.
The pipeline would span 800 miles from the prodigious North Slope to south-central Alaska, and the mega-project could cost $45 billion to more than $65 billion. The companies have not yet committed to build and have made repeated calls for "competitive, predictable and durable" terms on oil and gas taxes and royalties.
Persily said the companies must feel comfortable that Alaska can compete in Asia or they wouldn't be spending time and money on pursuing the project.
Senior project manager Steve Butt said three or four other sites are still being considered, but Nikiski has the land needed for the plant, and the companies know they can route a pipeline there. Land acquisition work is underway. He declined to identify those other sites.
Another advantage for Nikiski, a town of about 4,600 people located 10 miles north of the city of Kenai, is that routing a pipeline there would allow the state's major population centers, including Fairbanks and Anchorage, to access gas from the line, he said.
A liquefied natural gas plant operated in Nikiski for decades and provided exports to Japan. But ConocoPhillips and its then-partner, Marathon Oil Corp., announced plans to close the plant in 2011, citing market changes. Sporadic shipments continued until ConocoPhillips announced earlier this year that it had decided not to renew its export license. The state has asked ConocoPhillips to reopen the site and apply for a new license to provide an incentive for petroleum companies to explore and invest in Cook Inlet.
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