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Energia Cura looking to buy Slope gas Company behind Fairbanks Pipeline Co. project would negotiate with producers to purchase gas; also wants contract for processing Kristen Nelson Petroleum News
Of the various projects to move North Slope natural gas to consumers, Energia Cura’s Fairbanks Pipeline Co. would be the first, with startup pegged for mid-2014.
This small-bore high-pressure line would run from the North Slope to North Pole in Interior Alaska, and estimates from the ongoing nonbinding open season suggest that the annual volume could exceed 19 billion cubic feet, some 53 million cubic feet per day.
Alex Gajdos and Thomas Chapman of Energia Cura are behind the project and are funding development work.
The goal is to bring affordable energy to Interior Alaska, and to do it with an Alaska-based company, thus keeping value from the project in the state, Gajdos told Petroleum News in a Dec. 14 interview.
The project was originally pegged at a 10-inch line, but when expressions of interest for gas from the line rose from some 12 bcf a year to 19 bcf a year in the continuing nonbinding open season, the line diameter was increased to 12 inches. The 10-inch line was almost precisely scaled to 12 bcf a year, Gajdos said, so the increase to 19 bcf was good news.
While going from 10 inches to 12 inches increases the capital cost for the pipe roughly 32 percent, he said, it increases the capacity 62 to 63 percent. The nonbinding open season has been extended, and Gajdos said Energia Cura is working with the state’s congressional delegation to have Eielson Air Force Base at least look at using North Slope natural gas.
Market the issue With the Alaska Gasline Development Corp. looking at a bullet line from the North Slope to Southcentral, Energia Cura has proposed increasing the size of the line from the North Slope to Livengood to 18 inches, with a 10-inch line to North Pole running along the Elliott and Richardson highways.
Gajdos said while AGDC is proposing a 24-inch line from the North Slope, that project has to find large industrial users to justify the line.
An 18-inch line would be more than adequate for Cook Inlet’s needs well into the future, he said.
With that 18-inch line installed as far as the Interior, with a flange, and combined with price collars established in a recent Cook Inlet gas contract, known costs to move natural gas from the North Slope to Cook Inlet and an established line running as far as Livengood, Southcentral Alaska can wait and watch, Gajdos said.
If there is upward pressure on the price ceiling for natural gas in Southcentral, costs to build the line from the Interior to Cook Inlet can be updated and the line to Cook Inlet could be built if justified.
Working with producers Gajdos said he has begun talks with the North Slope’s major producers about selling gas to the project, which would offer a bundled package of gas and transportation.
The cost of service is essentially what others call a tariff, he said, and includes the capital cost (the pipe) and the operating cost; the bundled cost would also include the gas.
“For a bundled service, which includes the commodity delivered to the curb, you have to include the gas,” Gajdos said.
Energia Cura has had preliminary meetings with all of the majors, he said. The company proposes to buy natural gas and also wants the producers to provide compression and treatment facilities and recapture their investment for those services, and required margins, through commodity sales.
It would cost about the same for Fairbanks Pipeline Co. to build the North Slope facilities, but operation and maintenance on the North Slope would be very costly for FPC, while the North Slope producers could leverage their existing facilities and personnel to operate and maintain the compression and treatment facilities, Gajdos said.
The capital cost for the pipeline portion of the project is about $716 million, he said.
A GTL future for North Slope gas? Gajdos said he’s been following with great interest the gas-to-liquids plant Shell is building in Qatar, a third-generation Fischer-Tropsch facility.
“This plant will be a major, major step forward” in commercial opportunities for GTL, he said.
And if the numbers are correct for Shell’s Pearl plant — which should be known fairly soon as the plant goes into operation in 2012 — then “a small GTL plant up north … could defeat any of these other plans (for major gas pipelines),” Gajdos said.
GTL takes gas out of the gas economy because GTL is a liquid, increasing its value.
And it doesn’t require infrastructure to transport it to tidewater or to the Canadian border — it makes use of the existing trans-Alaska oil pipeline, he said.
GTL would be injected into the line, along with the crude oil, and would increase the volume of middle cuts such as gasoline and fuel oil, which have the highest value, enhancing the overall value of the liquid moved through the line.
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