North Slope producers still say LNG project not best option
Kay Cashman, Petroleum News publisher & managing editor
Despite the efforts of the Alaska Gas Port Authority and the Alaska Gas Development Authority to make a liquefied natural gas project at Valdez a reality for the marketing of North Slope gas overseas and to the West Coast of the United States, the three companies whose leases hold most of the slope’s 35 trillion cubic feet of known gas reserves continue to maintain that a conventional gas pipeline through Canada to the Lower 48 states, not LNG, is the most commercially viable way to market the North Slope’s stranded gas. And those three producers — BP, ConocoPhillips and ExxonMobil — would have to agree to sell their gas to an LNG project for it to become a reality. Been there, studied that, says ExxonMobil “From ExxonMobil’s viewpoint, LNG has been one of the options (in addition to gas-to-liquids and a conventional pipeline) studied in the effort to commercialize North Slope gas. I believe it’s fair to say that at this point a conventional pipeline project is the best option for monetizing the resource. The other two approaches are really not under active consideration,” ExxonMobil spokesman Bob Davis said July 2.
Dave MacDowell, director of external affairs-gas for BP in Alaska, said “an LNG project in our view is not the most promising option for commercializing North Slope gas. We believe that transporting gas by pipeline to North American markets — and North America is the largest gas market in the world — has the most promise. That is why that option is our focus.” LNG effort a distraction from best option ConocoPhillips Alaska President Kevin Meyers said that an all-Alaska pipeline to produce LNG for shipment to Pacific Rim countries and the West Coast has become “a distraction” from his company’s effort to get the project with “the most value to the various stakeholders” off the ground — i.e. a conventional pipeline to the Lower 48.
What about building two pipelines, an all-Alaska line to Valdez and one through Canada?
Meyers said one argument against more than one line centers on “optimizing the oil leg and gas leg” at the giant Prudhoe Bay field, which holds some 26 tcf of gas.
Building two gas lines could require as much as 6.5 billion cubic feet per day, shorting the supply of gas for reinjection at Prudhoe Bay where Meyers said it is needed to maintain reservoir pressure in order to produce approximately 450,000 barrels per day of crude.
The loss of Prudhoe oil, he said, is “probably not worth it.”
Short a “breakthrough or some understanding that we have missed” in ConocoPhillips’ studies of commercializing North Slope gas, the LNG project “is not going to happen,” Meyers said.
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