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ANGDA moving on propane, supply co-op Authority board wants to meet with new governor, energy advisor; still working evaluation of route for gas line to Southcentral Kristen Nelson Petroleum News
The Alaska Natural Gas Development Authority met Sept. 3 in Anchorage, heard from contractors on propane and supply co-op projects, but didn’t resolve how it will tackle the role the Legislature assigned it at the end of this year’s session — to be the public voice in picking a route for a gas line coming into Southcentral Alaska.
At a July meeting the board came up with a laundry list of factors to consider in making such a decision. Over the interim the staff found a product designed to analyze inputs from varied stakeholders, based on facilitated stakeholder meetings, and the board saw an overview of that product.
Work needed to support the board’s route selection would be done by the contractor hired by Harry Noah, the governor’s in-state gas coordinator, Deputy Revenue Commissioner Marcia Davis said at the July meeting. The Legislature provided funds earlier this year for in-state gas line work, funds which went to Noah, selected by former Gov. Sarah Palin early this year as project manager to get in-state gas to Southcentral. Palin’s plan included aligning gas owners with potential gas buyers, applying for permits and rights of way, estimating the tariff, developing a business plan and choosing a private sector company to build and operate the pipeline.
What the governor wants was an issue raised in the July board meeting, which occurred after Palin announced her resignation but before then-Lt. Gov. Sean Parnell was sworn in as governor.
Board member Kate Lamal raised the issue in July and again at the September meeting, noting that the state was coming out of a “tumultuous time” and saying that she would like clarification on the views of the current governor and the new energy coordinator, Gene Therriault.
Board members agreed and member Dan Sullivan undertook to talk with the governor about meeting with the board.
How to evaluate There was considerable discussion about evaluating the route for a line to Southcentral.
Board member Brian Rogers told Heinze he thought ANGDA staff had wasted six weeks in not communicating the list of criteria developed at the July meeting to Noah.
Heinze said the availability of commercial products, such as the one the board saw demonstrated at the meeting, would allow the board to understand the full range of risks and benefits, and would also provide a third-party contractor to take part of the load of that work off the board.
Davis said she thought the public would have more confidence in a professional evaluation done by a third party.
Propane project moving Mary Ann Pease, an ANGDA contractor, updated the board on the propane project, which could be up and running with deliveries in less than three years.
ANGDA is in the process of finalizing an agreement with an unnamed North Slope producer to provide natural gas for the propane project, something which would be done “inside the fence” at Prudhoe Bay.
Private industry would take over “outside the fence” and build and run a propane plant, a carbon dioxide scrubber, a line taking the CO2 back to the Central Compressor Plant at Prudhoe Bay, propane storage and propane loading facilities for trucks, ISO containers or barges for delivery to in-state consumers.
Pease and Heinze have met with potential partners interested in moving forward on the “outside the fence” relationship and discussions are continuing with the North Slope producer.
Heinze said his rough estimate is $100 million for the project — $25 million “inside the fence” at Prudhoe and $75 million outside the fence. A contractor is developing an independent cost evaluation.
For some financial firms $100 million isn’t even on the radar, he said, but they are interested because they are interested in the North Slope; for others $100 million is of interest.
Pease said NANA WorleyParsons has completed a technical review and economic sustainability has been confirmed with base-load end users.
Propane would be a “bridge solution” which could be up and running in two years.
Heinze said the response from companies with Alaska operations has been strong and enthusiastic, with some interested in doing the entire project and some interested in parts.
ANGDA would be the facilitator for the project, but ultimate responsibility is with the private sector.
Inside the fence the project would have the capability of taking up to 1 billion cubic feet a day, sufficient to produce up to 10,000 barrels per day. But the startup projection is much smaller, and facilities inside the fence would be designed so they could go to 1 bcf a day, not built out, but easily and cheaply expendable to 1 bcf a day.
Outside the fence the project is planned for one propane plant, but could be expanded to three.
Natural Gas Supply Co. ANGDA contractor Tony Izzo updated the board on the Natural Gas Supply Co., certified under Alaska’s co-op statute earlier this year. The entity exists essentially on paper he said.
The co-op, which would provide a way for utilities to get together to purchase gas, something which can be a daunting prospect for utilities without in-house expertise, Izzo said.
Homer Electric Association and Matanuska Electric Association have joined, and discussions are ongoing with others. Izzo said another name or two could come onboard shortly.
The co-op is working to increase the economies of scale, based on models in the Lower 48, and is targeting near-term supply, in 2011 through 2014.
Heinze noted that the co-op is focused on electric utilities, which may have different short-term storage options than Enstar, and said the co-op has initiated discussions with Cook Inlet producers, pursuing the concept of a big tranche of gas to fill certain electric needs.
ANGDA is also working with the Alaska Energy Authority on gas supply concepts and continuing work on aggregating needs for an open season for the main line.
The TransCanada connection Heinze said at the July board meeting that he had attempted to meet with TransCanada but was not satisfied he was making the right connections and talking about the right things.
Since that meeting ANGDA had a visit from the TransCanada-ExxonMobil commercial team, based in Houston and Heinze said he’s now “a big fan” of TransCanada and ExxonMobil.
The team came and had a conversation and it was exactly the conversation you want to have with a pipeline company six months out from open season, he said.
Heinze said ANGDA’s goal is to participate in the open season as the smallest anchor tenant on the main line.
Davis said the TransCanada-ExxonMobil team got their pens out and started to take notes on the prospect of a spur line being pre-built from Cook Inlet to meet a main line and on the propane project.
A line pre-built from Cook Inlet, Davis said, would enable the main gas line to pretest compressor stations up line. And if the propane project is up and running, that could be a cost-reduction item for them, she said.
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