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AKLNG technical work progressing Project manager Steve Butt tells legislators $376 million spent on pre-FEED through end of 2015, $293 million in that one year KRISTEN NELSON Petroleum News
Preliminary front end engineering and design for the Alaska LNG Project is proceeding according to schedule, Steve Butt, senior project major, told Alaska legislators in reports to the House and Senate Resources committees Jan. 25.
Since the last quarterly project update in September, the state has bought out TransCanada’s role, becoming a full 25 percent participant in the project, and Butt said he was addressing legislators as the board of directors for one of the project’s four owners. The state is in partnership with the North Slope’s natural gas owners, BP, ConocoPhillips and ExxonMobil, based on the state’s expected ownership of 25 percent of the natural gas, when the state’s production tax is translated into gas molecules and the state’s royalties are taken as royalty in kind.
Butt said he wanted legislators, as representatives of owners, to be comfortable that they have enough information.
Design scope Butt said the initial design scope was about 85 percent complete for the project as of the end of 2015, with $376 million spent through the end of 2015, $293 million in 2015 alone. The initial design scope has been updated to reflect optimization work, he said.
For 2016 priorities include evaluation of a proposal from the governor to expand the pipeline from 42 inches to 48 inches, additional geological and geophysical work, contract strategy development and market management - all designed to provide the owners with the information they will need to make a FEED decision.
The gas treatment plant is optimized by handling natural gas from both Prudhoe Bay and Point Thomson, Butt said, because while Prudhoe Bay contains 12 percent carbon dioxide - more than any other LNG project in the world and which has to be removed before the gas can be shipped - Point Thomson has only 4 percent. With about three-quarters of the gas coming from Prudhoe, that means the same size plant can remove CO2 from both fields as from just Prudhoe. The gas treatment plant is a critical element of the project, he said, with 25 percent of the cost before the gas even goes into the pipeline.
Optimization studies focusing on GTP cost reduction include reducing total module weight and optimizing layout; meeting the required electrical load with minimum equipment; selecting machinery which will provide the highest reliability at the lowest cost; reviewing utilities for optimization opportunities; and streamlining the project execution plan to identify the lowest cost.
Pipeline, LNG plant work Initial design scope work on the pipeline is 91 percent complete. The project is evaluating the cost and schedule impacts of a 48-inch pipeline, with cost estimates in the final stages, offshore installation feasibility studies underway and a decision for a 42-inch vs. a 48-inch pipeline expected in April.
Optimization studies for the pipeline include fine tuning the pipeline route and reducing gravel requirements; logistics and procurement opportunities for camps; safety evaluation of aspects of pipeline design; and cooperation on routing and data sharing with the Alaska Stand Alone Pipeline, the in-state line the state is also considering.
For the LNG plant and marine terminal, pre-FEED design is completed and optimization studies have been initiated. Those studies are focused on cost reduction and include technical qualification of new gas turbine drivers; use of current limiters to eliminate electrical equipment; modularization improvements through revised layout and increased density; an evaluation of alternative tank technology to reduce cost and schedule; the potential to reduce total LNG storage capacity; reducing the material offloading facility size; and evaluating alternative ice management options.
Logistics, contracting An Alaska LNG logistics study for pre-FEED has been completed, and optimization, focused on cost reduction includes optimizing project-wide logistics routes and transport alternatives; evaluating identified opportunities for most efficient methods to move materials and equipment; identifying logistics infrastructure synergies across the project; and incorporating logistics into project execution and contracting strategies.
On contracting Butt said focus was on combining global LNG and local Alaska experience, combining the expertise of Alaska businesses with the experience of global prime contractors.
The 2016 summer field season will be the last before Federal Environmental Regulatory Agency filing planned for October. Butt said the project was nearing completion of the second draft resource reports.
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