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Vol. 19, No. 38 Week of September 21, 2014
Providing coverage of Alaska and northern Canada's oil and gas industry

Fairbanks prepares for small LNG project

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Only one of larger projects — ASAP, Alaska LNG Project — will advance; Interior gas expected by 2016, as bridge to pipeline

Kristen Nelson

Petroleum News

Three projects are under way to deliver North Slope natural gas to Alaskans - and on three different scales and timelines.

The 10th annual Alaska Oil & Gas Congress got an update on all three in Anchorage Sept. 16.

The smallest, and furthest along, would truck liquefied natural gas from the North Slope to Fairbanks, adding to the small amount of Cook Inlet LNG currently being trucked to Fairbanks.

The other projects, much larger, involve pipelines to take North Slope natural gas to Southcentral.

The Alaska Stand Alone Pipeline, ASAP, would move a maximum of 500 million cubic feet a day from the North Slope to the western side of Cook Inlet, with a smaller lateral line to serve Fairbanks.

The mega Alaska LNG Project would move several billion cubic feet a day of natural gas from the North Slope to Nikiski on the Kenai Peninsula, where the gas would be liquefied for shipment to Asia as LNG, and would include off-take points along the pipeline to allow for service to Alaska communities.

The state of Alaska is involved in all three projects.

Alaska LNG Project

Earlier this year, with the passage of enabling legislation, the state took an equity position in the largest of the projects, the Alaska LNG Project, with the Alaska Gasline Development Corp. designated to head up the state’s efforts.

Dan Fauske, president of AGDC, said AGDC was mandated to get energy to all residents of the state. But, he said, you need a pipe in place before you can get gas to rural residents. AGDC has responsibility for both ASAP and for the state’s role in Alaska LNG. Both won’t happen.

Fauske said the state doesn’t have enough information to make a decision on which project to back at this time.

Larry Persily, federal coordinator for Alaska Natural Gas Transportation Projects, said the large Alaska project has a number of advantages: no exploration risk; low-cost production; liquefaction efficient in cold climate; shorter route to Asia for tankers; high Btu natural gas, which fits the Asian market.

And, he said, after 40 years, it’s time to turn North Slope gas into cash.

State investment is a big step, Persily said, and reduces the risk to producers - but, he asked, can Alaskans keep politics out of it?

ASAP

Dave Haugen, director of project management for ASAP at AGDC, said the goal for ASAP is to get North Slope natural gas to Fairbanks and Cook Inlet at the lowest possible cost, and that cost needs to beat the cost of LNG imported into Cook Inlet: If LNG can be imported for less, ASAP doesn’t make sense.

The 500 million cubic feet per day ASAP moves would be utility grade gas, Haugen said, burner-tip ready.

ASAP is on a stage gated approach, and is looking at an open season in 2015, he said, with start of construction in mid-2017 and first gas in 2021.

ASAP is in conversations with Enbridge to come in as OBO, owner builder operator, for the project, which has a state right of way and a supplemental environmental impact statement out for approval. A record of decision is expected in 2016, he said.

A $7.7 billion cost estimate was prepared in 2012, a 30 percent plus or minus estimate, with refinements ongoing and a more refined estimate by December.

Interior energy

Gene Therriault, deputy director, energy and policy outreach for the Alaska Energy Authority, said the Interior Energy Project is aimed at getting North Slope natural gas to Interior Alaska using a liquefaction plant on the North Slope, transporting LNG by truck to Fairbanks and storing it there for distribution. He said the governor’s goal is to get gas to as many as possible, at the lowest possible cost and as soon as possible.

The Legislature authorized funding and bonding by the Alaska Industrial Development and Export Authority, AIDEA. A private sector partner, MWH, is working with AIDEA.

Therriault said the target was to deliver natural gas at $15 per million cubic feet, which would be about half the equivalent cost of heating fuel.

Pad and access road construction is completed on the North Slope for the liquefaction facility, he said, with construction planned for next year.

Fairbanks Natural Gas, the company trucking LNG to Fairbanks from Cook Inlet, has a build-out under way of its distribution system, with 29 miles of new pipe installed so far of 30 planned for this year, and an additional 15 miles planned next year.

Therriault said the trucking project is a bridge to a pipeline, with initial gas delivery expected in 2016. The North Slope liquefaction plant is modular, he said, and has a life beyond trucking.



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