AGDC: Not ready to identify legislation
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Alaska Gasline Development Corp. to have economic viability report to Legislature by March; studies under way on GTL, LNG, NGL
Kristen Nelson Petroleum News
The Alaska Gasline Development Corp. reported on progress on a plan for an in-state natural gas pipeline Dec. 15.
Dan Fauske, CEO of the Alaska Housing Finance Corp. and chair of the Joint In-State Gasline Development Team created earlier this year by House Bill 369, reviewed work under three categories itemized in the bill.
On the obligation to “seek letters of intent from buyers and sellers of natural gas to ship gas using the facilities of the project and, from information obtained, define the project parameters that would allow the project to be commercially viable,” Fauske said there are “three critical elements” required to engage buyers and sellers in a commercially viable in-state gas line.
• Proving the economic viability of the project investment, and commercial requirements including an industrial anchor to keep the line operating at 100 percent of capacity through the first 20 years;
• A project schedule ensuring delivery of gas needed to meet Cook Inlet supply forecasts; and
• Finding a builder, owner and operator to participate in project development and fund the project following a successful open season.
Industrial anchor needed Fauske said the project needs an industrial anchor so that the volume on the line would be great enough to reduce the cost of service to existing consumers and power utilities. The search for an industrial anchor requires analyses to identify the economic feasibility of gas to liquids, liquefied natural gas and natural gas liquids projects.
Three firms are doing the economic feasibility and market studies: Hatch Inc. on GTL, with results expected in February; Science Applications International Corp. on LNG export potential, with results expected in March; and R.W. Beck on NGL, with results expected in March.
Fauske said the economic feasibility of the potential GTL, LNG and NGL projects will determine the commercial viability of an in-state line and will be included in a report to the Legislature by March.
“AGDC anticipates using the results from this work to help formulate recommendations for 2011 legislation,” he said.
AGDC has a request for proposal out for a financing plan, with responses due in January, and is participating with the Alaska Department of Natural Resources in a study “expanding understanding of the depletion of Cook Inlet gas supply,” which will help determine optimal project construction.
Independent Project Associates was contracted to review the current phase of the project, access current activities and help develop a schedule to meet Southcentral gas needs and maximize likelihood of successful project execution.
Letters of interest Fauske said on the obligation to “seek letters of interest from private pipeline construction and operating companies to develop the project,” that AGDC has met with more than 10 potential candidates for the project, including: Anadarko Petroleum Corp., OneOK Partners, The Williams Cos., ConocoPhillips, BP Exploration Alaska, ExxonMobil Production Co., ATCO Pipelines, Enbridge Inc., El Paso Pipeline Group, MidAmerican Pipeline Group and Kinder Morgan Energy Partners Ltd.
He said Anadarko and OneOK are not participating in the project update phase, but that AGDC expects each company participating at this stage to provide a letter of interest or disinterest before July 1.
On the third obligation, to prepare any initial legislation necessary for the project by Dec. 15, Fauske said work in progress is expected to provide information on the direction of the project, so draft legislation was premature at this time, but said AGDC will report to the Legislature during the 2011 and recommend any legislation it believes necessary for the project.
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