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Developer says plans proceeding toward building Alaska gas pipeline
The Associated Press
Low prices may have idled or slowed development on some projects in Alaska’s oil patch, but that hasn’t affected the outlook for pushing a $12- to $15 billion natural gas pipeline across Alaska, a developer says.
“Despite record low oil prices the industry is seeing, the North Slope (gas pipeline) sponsor group is proceeding as planned. We have had no change to our budgets,” said David Lawrence, chairman of the consortium studying the gas project.
Lawrence provided an update about the gas project to Fairbanks business leaders on Jan. 12. He also works for ARCO Alaska Inc. as a gas commercialization and marketing manager.
ARCO and four other companies have committed $20 million for a 21-month study of the gas pipeline project. If initial design and marketing proves favorable, then the consortium plans to spend up to $100 million over the next four years to move the project toward construction.
“A good target date is 2007 for the first gas deliveries to the Asian Far East,” Lawrence said. “We need to do our work now to position ourselves for the future.”
That would be good news for project backers, since ARCO and British Petroleum — oil companies that own the bulk of the known natural gas reserves on the North Slope — have cut their capital spending in Alaska.
“We are very pleased that indeed is the case,” said Mary Marshburn, special projects coordinator with the state Department of Revenue. “That was a concern we had when we first learned of the budget cuts.” Record low ANS crude prices Crude oil prices dropped below $9 a barrel in late 1998, a record low after adjusting for inflation. Alaska North Slope crude oil prices closed Jan. 12 at $11.05 a barrel, a 54 cent decline from Jan. 11.
Market prices for liquefied natural gas tend to track that of crude oil, said Chuck Logsdon, a petroleum economist for the state Department of Revenue. “With these depressed oil prices, it’s really knocking the heck out of LNG prices as well,” Logsdon told the Fairbanks Daily News-Miner.
Those low prices make it difficult to build a profitable natural gas project, especially one that includes constructing 800 miles of pipeline across Alaska and buying a fleet of specialized tankers to haul the gas to Asian markets.
“It’s hard to attract capital to build projects at these very low prices,” Logsdon said. “That’s the same reason we’ve seen drilling rigs idled up on the North Slope.”
ARCO executives decided to spend their $7.4 million portion of the gas study because the proposed project fits in with overall corporate objectives, Lawrence said.
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