|
BP studies three routes for gas pipeline route to Lower 48 Company would like to kick off formal regulatory process in 2001; purchasing would take a year, construction another three Kristen Nelson PNA News Editor
A gas pipeline to the Lower 48 wouldn’t just move Alaska North Slope natural gas to market, BP Exploration (Alaska) Inc.’s Ken Konrad told PNA Sept. 6, it could create a whole new industry around gas: exploration; production; modules.
“If we’ve got a great market here (in the Lower 48) and we connect the dots for $2 or less (per million British thermal units),” said Konrad, BP Exploration (Alaska) senior vice president and business unit leader for Alaska gas, “then what we do is not just build a pipeline but we actually create an industry.
“And just like today we’re out exploring for oil fields, building modules to produce those oil fields and moving into production operations — things like Northstar and Alpine — then there will be sufficient incentive for people to go out and find new gas and do the same thing around gas in Alaska that we’ve done for 30 years around oil.” Gas pipeline study ongoing BP began a major study in the February-March timeframe to fully evaluate all aspects around a gas pipeline. Konrad said the study encompasses understanding the markets, understanding the reservoirs, understanding the construction techniques and understanding the attributes of the various routes — environmental attributes, construction attributes, cost attributes.
BP described the three routes it is studying in a brochure on Alaska gas published this summer. A southern route — the longest at some 1,940 miles — following the Alaska Highway through Fairbanks into southern Alaska before turning east to Canada, may have permitting advantages, BP said, and “shares potential synergies” with a liquefied natural gas option.
A northern route (1,617-1,650 miles, depending on routing) would go across northern Alaska to the Mackenzie Delta and south through Canada, allowing for gas supplies to be picked up in the Northwest Territories and in Alberta.
A central route (1,816 miles) would follow the trans-Alaska pipeline through Atigun Pass and then turn east and south of the Arctic National Wildlife Refuge and connect with the proposed northern Mackenzie Delta pipeline.
BP said that with 35 trillion cubic feet of discovered on Alaska’s North Slope, it believes there is sufficient gas to support a total of 2 billion to 4 billion cubic feet per day of gas sales for more than 30 years via one or more gas sale projects. All routes technically possible Konrad said the study is coming together and will probably be finished late third quarter or early fourth quarter. That work will be used, he said, as a stepping stone to the next phase study which will be the next level of detail.
Although the present study isn’t complete, Konrad said it looks as though — from a technical perspective — the pipeline could be built along any of the three routes. From an environmental perspective, he said, the pipeline will be buried with buried river crossings and fewer compressors stations than would have been possible in the past.
Cost studies are also under way. The numbers haven’t been added up yet, but “as you might conclude,” Konrad said, “the northern route being shorter is less expensive and the southern route being a fair amount longer is somewhat more expensive.”
The studies will provide “a baseline for ongoing dialogue with communities and the state of Alaska and our colleagues on the other side of the border in Canada to really get into a good dialogue, not just with the producers but also with the governments and decide what the best path forward is,” Konrad said. Technology has improved Pipeline technology has improved over the last 20 years, Konrad said, and “the big alignment at Prudhoe Bay is just an enormous milestone and it sets a great foundation.” In the market, he said, “North American consumers have very clearly recognized the attraction of gas.” It’s clean and combined cycle plants can use gas to manufacture inexpensive electricity, he said.
BP is one of the largest marketers of natural gas in North America and has recently acquired a number of other gas marketing firms. “It’s a big and growing piece of business which gives us a very deep and rich understanding of the most fantastic gas market in the world,” Konrad said.
Some leading-edge green 21st century technology — automated welding, high-strength steels, high-pressure operations, extremely low fuel usage along the line — lowers the cost of moving the gas from the North Slope into Canada, where pipelines have been built that didn’t exist when moving North Slope gas was first proposed in the 1970s, Konrad said.
“So we’re increasingly confident that there’s a real possibility of moving gas into the core of North America for $2 or less (a million British thermal units, roughly the same as a thousand cubic feet) which we think would result in an attractive value proposition for the state and for the producers.”
The cost would have probably been about double for construction in the 1970s, Konrad said, because the producers were then looking at needing $6 gas markets to support the project. No route recommendation from these studies The studies that BP will complete this year won’t result in a route recommendation, Konrad said. “It’s simply a part of doing a thorough baseline piece of work,” he said. “What we’re saying is we need to understand the routes, we need to share that information with our partners. We need to share that information with the multitude of governments that this project will touch and get those facts out on the table and from there enter into a dialogue.”
With continued success, everything working well, BP thinks “that sometime during 2001 that we would be in a position to kick off a formal regulatory process to support a project,” Konrad said.
“We know a project will take about three years to build,” he said. “We know it will take a year to buy the steel and pipe — the materials necessary to build it. So there’s kind of four years necessary for that physical activity. And as we start thinking about when first gas might be, it’s adding four years onto the end of the regulatory process.”
Site work done at Nikiski
In addition to a gas pipeline, BP is looking at gas-to-liquids to commercialize North Slope gas. Konrad said site work was completed this summer at Nikiski where the company will build an $86 million GTL test facility next year. Detailed engineering for the test facility is just about complete, he said, and a lot of the major vessels like the compact reformer are in late stages of fabrication so equipment is starting to show up in Alaska.
BP is also a member of the liquefied natural gas sponsor group, which has completed a phase I study. Phase 2 will be more commercially focused, Konrad said. “Before we embark on multi-billion dollar investments around gas in Alaska we want to make sure that we fully understand all the options and indeed investigate possible synergies between the options.
“As we’ve said all along, these aren’t mutually exclusive. There’s a lot of gas on the North Slope.”
| 