Foothills Pipe Lines optimistic about Alaska LNG project

Gary Park

PNA Canadian Correspondent

Surging energy demands from Japan, China, Taiwan and South Korea over the next decade and the growing need for “clean fuel” give hope to Calgary-based Foothills Pipe Lines Ltd. that the world’s largest LNG project will proceed in Alaska.

That bold prediction was made this month to a North American Pipelines Superconference in Calgary by Terry Cameron, senior vice president of Foothills, a 22 percent partner in the venture. The other participants are ARCO Alaska Inc., Japanese trading house Marubeni Corp., Phillips Petroleum Co. and CSX Corp.

Cameron said East Asian energy demands are expected to grow by 1 billion metric tonnes of oil equivalent by 2010 and Alaska has the potential to be a faster and cheaper source of LNG than rival suppliers in Australia, Indonesia and the Middle East.

“In Alaska, the gas has been found and to a certain extent developed. Therefore, adding everything up, field development costs will be modest compared to other LNG operations,” he told conference delegates.

“We’re looking at developing the world’s largest LNG project, almost twice as large as anything built to date.”

He said the $12-$15 billion proposal includes a 770-mile pipeline from the North Slope, where proven reserves are 31 trillion cubic feet and potential reserves are calculated at 100 trillion cubic feet, to tidewater at Valdez or Cook Inlet for operation by 2007 to 2010.

A gas liquefaction plant would produce about 14.5 million tonnes a year for shipment to market by 14 LNG tankers.

The Alaska government has passed enabling legislation to strengthen the project’s competitive edge, he said. That agreement will, on completion of the project, see the state forego all taxes, royalties and severance payments in return for a series of payments once the project becomes profitable.

Cameron also emphasized the rising demand by environmentally aware citizens for “clean fuel.”

He said Japan, already the world’s largest importer of LNG, is likely to see that role expand as citizen opposition, high capital costs and lengthy lead times link up to block a growing reliance on nuclear energy.