ANS gas owners release study results

Petroleum News Alaska Staff

The Alaska North Slope gas owners released the results of their $125 million study last week. Results indicate higher capital costs than numbers previously released by the joint gas study team, increased volumes of gas delivered and lower operating costs.

BP, ExxonMobil and Phillips concluded the project is not currently viable because risks outweigh rewards. Risks were identified as regulatory-political, fiscal, construction costs and market price volatility.

“Substantial additional engineering work” is “not justified at this time,” the report said.

Governments will play “a key role” in reducing project risks, it said, but even after the state, federal and Canadian governments have passed legislation such as the U.S. enabling regulatory language in the Senate energy bill, “a commercially viable pipeline project still must be identified.”

The cost of building the 52-inch gasline along the southern route delivering 4.3 bcf per day was estimated to be $19.4 billion, including $2.6 billion for a gas treatment plant at Prudhoe Bay, $11.6 billion for a gasline from Prudhoe to Alberta, $600 million for NGL extraction facilities, and $4.6 billion for a line from Alberta to Chicago.

Costs have a 20 percent variable.

The report, which does not contain a lot of detail, is likely to be the only part of the study that will be made public, Phillips Alaska spokeswoman Dawn Patience told PNA May 2.

“The working agreement between the three companies will hold the information as proprietary,” she said.