March 14, 2002 --- Vol. 8, No. 29March 2002

Revenue projects $175-$250 million startup costs for gas development authority

Commissioner of Revenue Wilson Condon told House Oil and Gas this morning that the Department of Revenue is estimating the state will have to provide money up front for a gas development authority somewhere in the range of $175 million to $250 million for the first two years. House Bill 410, comparable to Scott Heyworth's gas development authority initiative which will be on the ballot in the fall, is aimed at a project by 2007-2009.

To get a project going that quickly, Condon said, "you'll need to start to spend real money now."

Expenditures would include the cost of acquiring existing permits and engineering, negotiating gas purchase and LNG sales contracts and the cost of operating the gas development authority.

Yukon Pacific proposes smaller gas project

Yukon Pacific Corp. has downsized its proposed gas export project to 1.4 billion cubic feet a day and a project cost of $9.5 billion.

Paul Fuhs told the House Special Committee on Oil and Gas this morning that the company has developed a new formulation that the company has developed for a natural gas export project from Alaska.

"While other project have gotten larger and larger, we're actually looking at a smaller project," Fuhs said. Yukon Pacific holds the major permits for the project, he said, and has also been working on pipeline design and economic models.

Yukon Pacific's previous design was a 36-inch pipeline, he said, and the company is now proposing a 30-inch diameter pipeline. The plan is for 7 million tons of LNG plus ethane and propane as separate products for a total of 11 million tons. Fuhs said the project can be expanded to 16 million tons with additional compressor stations.

The small case Yukon Pacific is presenting is 1.4 billion cubic feet a day.

The project's 11 million tons a year would include: 2 million tons a year to North America; 5 million tons to Asia; 1.25 million tons of ethane; and 2.2 million tons of propane.

The methane price would be $2.50 an Mcf in Alaska. LNG would go for $2.75 an Mcf to the U.S. West Coast and $3.50 an Mcf to Asia.

The cost of this project is $9.5 billion, Fuhs said, based on the 30-inch diameter pipeline, seven LNG tankers, two tankers for liquid propane and the liquefaction facility.

The gas purchase price used in the modeling was 50 cents per million Btu, which roughly equates, Fuhs said, to a thousand cubic feet. He said Yukon Pacific has heard costs of 68 cents for the Alcan route, with an 18-cent conditioning cost, which would be 50 cents at the wellhead.

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