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Project looking for the best combination of pipeline, plant, ships, financing John Miller, engineering manager for the Alaska North Slope LNG Project, tells RDC project includes virtual teams from throughout project companies, not just Anchorage group Kristen Nelson PNA News Editor
John Miller installed the central compressor plant for ARCO at Prudhoe Bay in the 1970s — with a valve marked gas sales.
“We planned on gas sales in 1979,” said Miller, now engineering manager for the Alaska North Slope LNG Project. “Maybe we were a little optimistic,” he told the Resource Development Council’s 19th annual conference in November.
Miller is now part of the ARCO Alaska Inc.-lead project organized over the summer to put together a commercial plan to export North Slope gas to the Far East as liquefied natural gas.
There are about 35 trillion cubic feet of gas at Prudhoe Bay, and “ARCO on behalf of the oil producers has been re-injecting and recycling all that gas over and over again,” Miller said. The LNG project involves moving that gas off the North Slope to an ice-free port in south Alaska, Miller said, liquefying the gas to form a liquid and transporting that LNG in special ships to markets in East Asia. With technical and commercial success, he said, the first LNG delivery should begin in late 2007. Kenai deliveries for nearly 30 years North Slope plants associated with the LNG project would connect to the existing central gas facility. A gas conditioning plant for the project, he said, would be about three football fields in length and contain more piping — some 1,000 miles —than the gas line itself.
At the other end of the line would be a plant to liquefy the gas. The LNG plant in Kenai has been making deliveries to Japan for nearly 30 years, Miller said; a plant for the North Slope LNG project would be 10 times larger than the Kenai plant. Other challenging projects Difficulties with this project, Miller said, are “not that different than what goes on everywhere else in the world. But it’s also a very complicated project that has both technical and commercial implications.”
Miller managed ARCO’s Norway interests. An oil and gas discovery was made in the late 1980s, he said, “but ARCO couldn’t produce oil until we found a market for gas.” A mid-1995 startup was the goal, and today there is a chemical plant and Norway is marketing gas to all of Europe from Troll, from reserves about the same size as Prudhoe Bay - markets which didn’t exist when the oil and gas was discovered.
“If everyone knew there was a market, then there would be no market,” Miller said.
Gas now being supplied to Hong Kong, he said, comes from a remote field discovered in the late 1970s. Engineering began in the early 1980s and today the pipeline is in and the field is supplying gas to Hong Kong.
To do that, Miller said, all of the burner tips in the homes in Hong Kong had to be changed because they burned a different kind of fuel — “every house had to be changed.” Four-point work plan geared to innovation “We have a four-point work plan — we don’t have all the answers, we just got started, but we’re going to look at improving project economics; develop a viable commercial structure; secure a long-term market; and improve fiscal and regulatory requirements,” Miller said.
The project approach, he said, is not purely technical, “it’s an all encompassing approach, because everything is interrelated on this project...”
There will be about a $20 million investment in the current 21-month stage of the project, Miller said. The agreement covers four years and $75-$100 million.
The project includes a gas treating plant, an 800-mile pipeline, an LNG terminal and special ships to carry the LNG. “That’s a very complicated mix and a very unusual mix for anywhere. In math terminology I’d call it a nonlinear equation. The big forcing constant is the market. But we need to be positioned because the market changes rapidly....,” Miller said.
“Now when it comes to the current economic downturn, the Asian flu, we believe that economic recovery and LNG demand will be back on track within the time frame of this project. And we want to be positioned for success,” Miller said. Virtual teams There are five different companies involved — with five different strengths, “and so we’re not going to organize according to a traditional project approach,” he said.
“We’re going to use more of a virtual team approach. We’re going to use all of the assets of those companies rather than just staffing a group here in Anchorage and pressing on with the technical studies. We want to assure that we get a good cross-functional horizontal look at this whole project from soup to nuts... And we don’t want to exclude any ideas — but we also don’t want to reinvent the wheel. There’s been a lot of work done over the years...”
“We’re not looking for the best pipeline design. We’re not looking for the best plant design. We’re looking for the best viable project.” By working with virtual teams— people from across the project companies rather than just the project team in Anchorage, Miller said, “we feel we have a better chance of achieving that — and in my experience that’s worked much better than the traditional approach.”
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