HOME PAGE SUBSCRIPTIONS, Print Editions, Newsletter PRODUCTS READ THE PETROLEUM NEWS ARCHIVE! ADVERTISING INFORMATION EVENTS PETROLEUM NEWS BAKKEN MINING NEWS

Providing coverage of Alaska and northern Canada's oil and gas industry
March 2008

Vol. 13, No. 9 Week of March 02, 2008

Analysis of LNG includes 4 alternatives

Part of issue with ConocoPhillips proposal is that BP, Exxon must agree; Pat Galvin says companies haven’t moved in negotiations

Kristen Nelson

Petroleum News

The public comment period on the TransCanada application under the Alaska Gasline Inducement Act closes March 6. How long will it take the commissioners of Natural Resources and Revenue to complete their analysis, Revenue Commissioner Pat Galvin was asked at the administration’s AGIA Juneau town hall meeting Feb. 22.

Galvin said that was “a subject of great interest amongst legislators,” because if the administration recommends granting an AGIA license to TransCanada, the Legislature then has 60 days to approve that license.

Once the public comment period closes March 6, the administration will have information from the public to help identify issues which need “full vetting and investigation,” he said. Generally the administration is looking at a month to three months after the public comment period to get everything together and issue a finding on whether the TransCanada application sufficiently maximizes returns to the state, Galvin said.

Four LNG alternatives

At the end of January Gov. Sarah Palin committed to compare TransCanada, the only application which made it through the AGIA completeness review, against liquefied natural gas.

Asked how that evaluation was being done, Galvin said the evaluation isn’t of any of the LNG AGIA applications.

He said they are still framing the LNG options, but one would look a lot like the Alaska Gasline Port Authority proposal, 2.7 billion cubic feet a day to Valdez; one would look something like the Little Susitna Construction Co.-Sinopec proposal with 4.5 bcf going to Valdez, and with two different designs, a 42-inch pipe and a 48-inch pipe; the fourth alternative would be a Y-line, with a large capacity line going to Delta Junction and then 4.5 bcf a day going to Canada and 2 bcf going to Valdez for liquefaction.

He said he believes “that within this group we’ve pretty much captured most of what has been discussed and analyzed thus far and that we’ll get a good comparison of that option compared to the TransCanada proposal.”

Galvin said the administration “had arranged to have LNG expertise as well as overland expertise on the evaluation team and so we’re taking advantage of the LNG expertise in evaluating and basically optimizing these proposals so that we have really the strongest LNG structure that is being compared against the TransCanada (application).”

The Legislature is also looking at LNG, and has asked Econ One to evaluate the port authority project.

What next?

In response to a question about what the next step would be if the commissioners reject the TransCanada application or the Legislature fails to approve a license, Galvin said that decision will be “made based upon the information that comes to us between now and then.”

What’s next will depend, he said, on why a license was not granted.

The commissioners might decide that TransCanada “fails for reasons that have to do with TransCanada itself” and that would point in one direction. If “LNG proves to be the better alternative then that might point in a different direction” and if the administration approves TransCanada but the Legislature rejects it, “that might point to another direction for us to take.”

But a different direction would still involve AGIA principles of “an open and competitive process,” he said, a process that maintains public confidence and “provides fairness for all entities that are interested in participating in the project.”

If the administration determined that LNG was the best way forward, Galvin said the administration would then be committed “to identify the most qualified person to advance an LNG option.”

The administration could go out with another request for applications, but “It’s going to depend upon what we have determined” through analysis of the TransCanada application and LNG alternatives.

Conoco not only issue in that proposal

Galvin said that when the administration looked at the ConocoPhillips proposal it saw it as directed at changing the fiscal system first, opposed to AGIA “where the state is participating with somebody to move the project through the initial design and sort of establishing the economics of the project before we’re looking at making changes in our fiscal system” or whether changes are really needed.

ConocoPhillips did not propose specific terms, he said: “The idea was sit down and negotiate those first and then we’ll proceed with our work in developing this project.”

But, he said, ConocoPhillips has also said the project would not go forward without the participation of BP and ExxonMobil agreeing to the terms and submitting gas at an open season.

That would require satisfying BP and ExxonMobil, “and at this point we don’t know what their demands are going to be.”

“We only know what they’ve told us up to now.”

What BP and ExxonMobil have said “has been fairly consistent and it has not changed. And it’s basically fiscal certainty across the whole gamut of economic terms associated with this project.”

Galvin said BP and ExxonMobil “have not given us any movement on those terms, and frankly, had not really moved a whole lot during the negotiations that the previous administration participated in.”





On the Web

See previous Petroleum News coverage:

“Port Authority reconsideration denied”

in Feb. 3, 2008, issue at www.petroleumnews.com/pnads/703961368.shtml

“Port Authority suggests parallel process”

in Feb. 17, 2008, issue at www.petroleumnews.com/pnads/790148466.shtml

“Legislature looks at Port Authority plan,”

in Feb. 24, 2008, issue at www.petroleumnews.com/pnads/342627722.shtml


Petroleum News - Phone: 1-907 522-9469 - Fax: 1-907 522-9583
[email protected] --- http://www.petroleumnews.com ---
S U B S C R I B E

Copyright Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA)©2013 All rights reserved. The content of this article and web site may not be copied, replaced, distributed, published, displayed or transferred in any form or by any means except with the prior written permission of Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA). Copyright infringement is a violation of federal law subject to criminal and civil penalties.