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ANGDA study looks at Alaska gas demand SAIC report for DOE expected to be released soon looks at what industries could pay for natural gas in Cook Inlet in future Alan Bailey Petroleum News
At the March 13 board meeting of the Alaska Natural Gas Development Authority Harold Heinze, ANGDA CEO, spoke about a study into Alaska natural gas demand that SAIC has done for the U.S. Department of Energy. The report from the study has gone through two reviews and will be released in a week or two Heinze said.
Heinze said that the SAIC analysts have constructed a series of gas scenarios and price regimes into the future, to estimate what the demand for different types of Alaska gas usage might be and whether those demands would be viable at potential gas prices.
“They have for a whole bunch of industries back calculated what prices they can afford to pay in Cook Inlet and be competitive in the world market under a certain set of assumptions,” Heinze said.
As an example of the results of the work, a chart for 2025 shows projected natural gas demand levels for a series of gas usage sectors, set against a range of projected gas prices at that time. At 2025 gas prices the chart indicated that residential use and power generation would be viable uses of gas and might account for about 300 million cubic feet per day of demand. Gas to liquids, liquefied natural gas and fertilizer do not appear to be competitive on world markets at that time. Devil’s in the details Although Heinze commended the expertise and thoroughness that has gone into the study he also expressed some notes of caution regarding some of the assumptions that the analysts made.
“As with all these things the devil’s in the details,” he said.
He pointed out, for example, that the report assumes that LNG would be exported at Henry Hub prices.
“Right now that doesn’t mean anything,” he said. “… The LNG that’s being sold, for instance, at the Kenai plant … the price for the LNG that is delivered in Japan is set by oil prices.”
And fertilizer is undervalued, he thinks.
“The price of fertilizer in the world is set by the marginal producer, who uses oil,” he said.
The 2025 chart also shows the possibility of gas demand from Alaska petrochemical and LPG (propane and butane) industries. But Heinze commented that these industries do not currently exist in Alaska — who would bid for gas supplies for these industries in a pipeline open season, he asked.
However, the analysts took a comprehensive look at many different future scenarios, he said.
“The basic analysis that is done there is very usable in terms of modifying to the situation at hand,” he said.
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