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Alaska has only two more weeks, Sempra says
Kristen Nelson Petroleum News editor-in-chief
Alaska has two weeks to get serious about providing liquefied natural gas for a proposed Sempra Energy LNG receiving terminal in Baja California � and only until the end of the year to sign a contract.
That was the bottom line of testimony from Greg Bartholomew of Sempra Energy, the company�s director of strategic planning and analysis, to the Alaska Senate Resource Committee Sept. 10 in Anchorage.
Resource Chairman Scott Ogan, R-Palmer, asked about the possibility of Alaska committing to provide gas at a later time. Bartholomew said the West Coast natural gas market is relatively small, and if Sempra expands its planned 1 billion cubic feet a day facility to handle 2 bcf, which is a possibility given the land the company has, and, �if 2 (bcf) a day were landed on the West Coast � it would make building a second terminal rather difficult.� The proposed Alaska 2 bcf a day LNG project would represent about a quarter of present consumption in the entire western states, he said.
Other possible sources Sempra is talking with all of the major gas suppliers on the Pacific Rim, and all of them are interested in delivering LNG to the West Coast, Bartholomew said.
�And to be honest, Alaska is close to or on the bottom of the list.�
Sempra has only been talking to Alaska for two months. And, while Alaska is still wrestling with whether it should move natural gas by pipeline or as LNG, other countries have made bringing gas to the West Coast their highest priority, and �Sempra has been meeting with many of the heads of state for many of these locations that want to bring gas to the West Coast.�
The stakes for some of the countries are �exceptionally high. And we�ve been working with many of these parties for a very long time.�
Alaska would keep money in the country �We would like Alaska to be a player because it keeps the money within the country. The question is whether Alaska can move fast enough, because at Sempra we�re ready to start construction and we have to have contracts very soon,� he said.
In response to a question from Sen. Georgianna Lincoln, D-Rampart, Bartholomew said competition for LNG doesn�t come down to whose LNG is most economic.
�The issue is not whose gas is more economic, the issue is which company, companies or countries are willing to take the price risk and are willing to make a commitment for the capacity first.�
�I�m not here to pressure Alaska. I just want to be honest with you about your situation.� The issue is basically �who�s got the greatest desire to do their project,� he said.
Sempra ready to build Sempra has received all of its significant permits from the Mexican government, Bartholomew said, the only company with Baja plans to have reached that stage.
�We�re ready to build,� he said, and plan to start building in January. �Prior to building, we will have contracts. We�re in final stages of commitment with many players.� The Indonesia announcement which came out Sept. 9 was non binding, �and certainly not exclusive,� he said, �but certainly an indication of the amount of interest that is in this terminal.�
Initial capacity will be 1 bcf a day, and that capacity could be doubled, or more, Bartholomew said. Sempra is also building a receiving terminal in Louisiana, and received a Federal Energy Regulatory Commission permit for that facility Sept. 9. Construction will also begin on that facility next year. Ogan asked if Sempra was in a position to buy gas, and whether the company was having discussions with the producers. �Yes, we�re having discussions with all the producers,� Bartholomew said. �Once Alaska is prepared to be earnest in its negotiations, then Sempra is very much prepared to talk about a contract,� he said.
Rep. Cheryl Heinze, R-Anchorage, asked about opportunities for Alaska to negotiate to sell gas at a later date.
�If Alaska � really wants to do LNG then it needs to make � to get very earnest within the next couple of weeks. � with the intention of finalizing some sort of contract by the end of the year. So all is not yet lost, but the window is closing very rapidly,� Bartholomew said.
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