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In-state gas needs study looks at two periods
Kristen Nelson Petroleum News
A study of in-state gas consumption needs was completed for TransCanada Alaska Co. and the study was submitted, as required by the Federal Energy Regulatory Commission, as part of the open season plan TransCanada submitted to FERC at the end of January.
TransCanada asked for, and received, approval from the state to use the study in the company’s FERC open season notice.
The commissioners of Natural Resources and Revenue told TransCanada that they approved the use of the study by TransCanada and other Alaska gas pipeline sponsors “as a reasonable assessment of in-state natural gas consumption needs based on the facts currently available.”
The commissioners noted that the study “correctly acknowledges the difficulty in predicting in-state gas demand in the relatively small Alaska market over a long period of time.”
Northern Economics Inc. prepared the study with assistance from SAIC Inc. and the University of Alaska’s Institute of Social and Economic Research.
Projection of potential demand The study looked at potential demand within the state in two different timeframes — the first five years of gas pipeline operation and years 10 to 15 of gas pipeline operation. The year 10-15 timeframe “captures potential demand of various economic development projects or prospects that are expected to take a longer time to develop,” the study said.
The study also looks at the two lines proposed by TransCanada, the North Slope to Alberta line and the North Slope to Valdez line, which would terminate at a liquefied natural gas facility and marine terminal.
Natural gas and propane demand are evaluated for industrial uses, electric power generation and heating demand.
Because historic demand for natural gas “has been greater for gas-intensive industries than for all other sectors combined,” the future demand for gas is “substantially affected” by the future of gas-intensive industries in the state.
No, current or growth industry Three scenarios were developed: no industry — in-state demand without a large industrial load; current — continuation of current trends including industrial demand equivalent to full demand at the Nikiski LNG facility; and growth industry — no greenfield projects in the first five years, but with industrial demand equivalent to doubling of the LNG facility’s current capacity.
The in-state demand for those three scenarios, in cubic feet per day, is 260 million for no industry; 490 million for current industry; and 740 million for growth industry. The report pegs the expected chance of those scenarios occurring at 29 percent, 38 percent and 12 percent respectively.
“In years 10 to 15, greenfield projects with reasonably likely economic feasibility are included under the Growth Industry case,” the study said, and the estimates for those three demand scenarios are 290 million, 520 million and 1,120 million, with the percentage chances of the scenarios put at 14 percent, 18 percent and 6 percent. Valdez project The study said the Valdez route — not counting demand from a new Valdez LNG facility — is expected to have a higher demand than the Alberta route “due to the additional industrial demands in the Valdez area with the availability of natural gas.”
For the first five years those estimates (in cubic feet per day) are 270 million for the no industry case, 500 million for the current case and 750 million for the growth case, with chances of those scenarios happening pegged at 61 percent, 30 percent and 9 percent, respectively.
The study said there is expected to be a keen interest in propane because it is anticipated to cost less than distillate fuels. There is a 48 percent chance that in the initial years the propane demand will be about 3,500 barrels per day, with a 67 percent chance of that demand growing to 35,000 bpd in the 10-15 year period as propane infrastructure is built.
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