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ANGDA continues propane project work
Kristen Nelson Petroleum News
The Alaska Natural Gas Development Authority is continuing to work on its proposal to pull propane from Prudhoe Bay natural gas and truck it south. The project would be a partnership between ANGDA, working “inside the fence” at Prudhoe Bay with the Prudhoe Bay owners, and a private party or parties building facilities “outside the fence” and transporting the propane.
Mary Ann Pease, the ANGDA propane supply coordinator, said at the authority’s Sept. 8 board meeting that she and ANGDA CEO Harold Heinze have been continuing discussions with Prudhoe Bay producers and BP, the Prudhoe Bay operator.
She said the project has reached the point where ANGDA needs “to get a consensus from the producers on the North Slope” that by changing the off-take location for project gas the cost of facilities could be reduced, increasing benefits to end users.
Pease said what is needed now is a “consensus among the producers that the Prudhoe Bay unit operator should move forward with the propane project.”
Numbers staggering Heinze called the Prudhoe Bay numbers “staggering.”
“We estimate …75,000 barrels a day of propane is being re-injected in the ground right now,” half to recover more oil and half as part of residue gas returned to the ground.
ANGDA’s interest, he said, is in capturing a few thousand barrels a day of propane.
But the unit is producing a few hundred thousand barrels a day of oil, “and so propane becomes a relatively minor, small percentage of this whole revenue stream and operation. … And it’s very hard to get people to focus on secondary and tertiary type levels of contribution to their bottom line.”
Value in public perception Heinze said ANGDA isn’t asking the Prudhoe Bay unit owners for “some huge commitment of money or resources or other things.”
But, he said, the benefit to the Prudhoe Bay unit owners could be far beyond a couple of thousand barrels a day of propane in terms of public perception.
ANGDA is promoting propane as a way to get lower-cost energy to rural Alaska communities, and is requesting letters of support for the project from communities such as those in the Northwest Arctic Borough that could benefit from having access to propane to replace high-cost diesel.
Heinze said the importance of letters of support is to show the leadership of the corporations which are owners in the Prudhoe Bay unit that the propane project “is something of importance to many Alaskans.”
He reminded the board that no more than two-thirds of Alaskans will probably see natural gas coming down a pipeline, but the other one-third could benefit from propane.
Bulk storage Larry Osgood of Consulting Solutions LLC, a consultant on the propane project, told board members by phone from his office in Colorado that one of the key items which needs to be optimized is bulk storage in Alaska.
Propane is certainly stored in conditions like those in Alaska, he said, but by providing information on optimizing storage and the cost of that storage, the Northwest Arctic Borough and others looking at significant bulk propane storage “would have better information up front on how to optimally store that propane and what it would cost so they can do a better job of planning for what their needs and costs would really be if they moved segments of their energy use over to propane.”
Osgood also told the board that by assembling different uses of propane — the quantities and ramp-up rates over a period of years — that current and future supply needs can be projected, “so that we can show investors in a North Slope propane project that the volume increases really can happen in the different market segments.”
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