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Plans emerge for new LNG proposal for Alaska
ALASKA
PLANS to develop a new LNG facility in south- east Alaska, close to the border with Canada, have emerged over the past two weeks. Alask- CAN International LNG is proposing to build a $12bn floating LNG (FLNG) export terminal in Alaskan waters, near the northern British Columbian town of Prince Rupert on the other side of the Canadian border.
Under the proposal, the terminal would be located between BC’s Wales Island and Sitklan Island in Alaska, within the Tongass Passage, local media reported last week. It would produce and export up to 12mn tonnes per year (tpy) of LNG. If the project progresses as planned, the facility could be online by 2027 or 2028.
The project – like the LNG Canada facility that is currently under construction in Kitimat, BC, just 70 miles (112km) away – would use shale gas from northern BC as feedstock.
“With the shale gas revolutions, directional drilling and all those technological advances of the past 15 years, we’re awash with gas, so that gas is looking for a market,” AlaskaCAN LNG’s president, Byng Giraud, said recently.
However, others have voiced concerns over the need for more LNG projects in the region. The Prince Rupert Northern View quoted a University of Alaska Anchorage professor, Larry Persily, as saying the market was adequately sup- plied with the construction of LNG Canada nearby. He added that it would be almost as easy to ship the gas from the LNG Canada terminal instead of from Alaska.
Persily estimated that the added cost of pipe- line construction connecting the proposed ter- minal to shale plays in BC would bring the cost of the project up to around $20bn. On this basis, he questioned the economics of the scheme and said it would make more sense for LNG Canada
to be expanded than to build a whole new facility at a different site.
“We like the Alaska side, partially because it makes the pipeline shorter – saves about 60km. And Alaska has a fairly robust permitting pro- cess,” Giraud said.
Persily did not agree, however, that the per- mitting process would be easier in Alaska. “I’m not sure regulation is easier, but it’s that regu- lators have more experience. It’s not regulation issues that affect projects from proceeding; it’s environmental, economics and First Nations rights,” Persily was quoted by the Northern View as saying. “At some point fishermen are going to be concerned and not want tankers in their waters.”
Meanwhile, state-owned Alaska Gasline Development Corp. (AGDC) continues to pro- gress its proposed Alaska LNG megaproject, which could cost $40bn or more, and would pro- duce up to 20mn tpy of LNG. The project would involve an 800-mile (1,287-km) pipeline con- necting fields on the North Slope to an export terminal in south-central Alaska.
The Alaska LNG project has had a turbulent history. In 2016, the other three partners in the project – North Slope producers BP, Cono- coPhillips and ExxonMobil – pulled out of the project on concerns over its economics at a time when oil and gas companies were reining in spending. However, BP and ExxonMobil signed a collaboration agreement with AGDC in 2019, under which they will still help to advance the project, including by helping to fund it.
The companies have contracted with Fluor to update a 2015 cost estimate for the project, which is due in March. The original cost estimate came in at $43bn, but the companies are working to bring this figure down.™
Meanwhile, state-owned Alaska Gasline Development Corp. continues to progress its proposed Alaska LNG megaproject.
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w w w. N E W S B A S E . c o m Week 04
29•January•2020