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NEWS BULLETIN

February 22, 2002 --- Vol. 8, No. 22February 2002

Nikiski GTL plant on target for April start

A pilot plant in Nikiski for testing BP’s gas-to-liquids technology is on track to start converting natural gas to liquid fuels by April.

About 100 to 120 workers are on site, down from a peak of 220, according to Steve Fortune, the project’s engineering manager. Fortune provided an update on the project at the Pac Com conference in Anchorage Feb. 20.

The $86 million plant will be used to test new technology BP has developed, including a compact reformer that’s about a fortieth the size of a conventional unit. About $40 million of the total was spent in Alaska.

Testing at Nikiski could go on as long as five years, according to Fortune.

The plant is designed so BP can plug in new designs in various stages of the process to test what its labs produce.

“We have a site devoted to research. That’s a very powerful thing to have,” he said. “If we can prove the technology at this scale, we can go up to 100-300 times the scale.”

With that, BP could build a plant on the North Slope that would produce 30,000 barrels daily, Fortune said, a hundred times what the Nikiski facility will turn out. Additional “trains” could mean even higher production from a single facility but little additional cost savings, he said.

BP has already done quite a bit of the design work for a commercial-scale plant, Fortune said.

The liquid that’s produced by a GTL plant is low in sulfur and other pollutants, and is expected to command a premium in the market.

Oil exploration incentive bill passes House

House Bill 307, sponsored by Rep. Hugh Fate, R-Fairbanks, passed the House of Representatives unanimously Feb. 20.

The bill extends the state's exploration incentive credit program for three years, until 2007.

“Alaska’s economic health is closely tied to the production of oil and gas, so it is in the best interests of the people for the state to encourage private industry to continue searching for new petroleum deposits,” Fate said in a statement.

Under the exploration incentive program the Division of Oil and Gas may grant credit against state royalties or taxes to oil and gas companies who agree to share seismic information or drilling core samples with the state.

“The Nenana Basin in the Interior is the kind of prospective gas field where incentives could play a decisive role in spurring development,” Fate said. “There’s an extremely high potential for finding deep natural gas in this area. Of course, you can only find gas in commercial quantities by actually drilling, but that’s just the kind of outcome this bill seeks to support.”

HB 307 moves next to the Senate for consideration.

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