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Alaska North Slope LNG group addresses commercial issues
Kristen Nelson
The House Special Committee on Oil and Gas has a number of concerns about the Alaska North Slope LNG Project and Steve Alleman, commercial manager of the project and George Findling, Phillips Alaska Inc. manager of external strategies for gas commercialization, were peppered with questions at a Feb. 27 committee meeting. Competing projects a concern In response to questions about whether other Asian LNG projects in which North Slope producers are involved would delay or prevent an Alaska LNG project, both Alleman and Findling said economics was the main problem for this project, not other projects of North Slope gas owners.
“We’re still trying to make this a commercially viable project,” Alleman said.
And Findling said what’s at issue is “the fundamental cost structure of projects. … The fact that it’s 800 miles away from tidewater is an issue that we have to find a way to overcome through some kind of innovation.”
Alleman said that the second phase of the project, now under way, continues to address the economic issues, as well as continuing to look at ways to minimize commercial restraints. How the Alaska project stacks up in comparison to other projects, including a comparison of cost of service, will be addressed, he said.
Phase two of the project will also look at ways to share costs with a Lower 48 gasline project, Alleman said. And Mexico and the U.S. West Coast will be looked at for markets, as well as Asia.
Asked if the project was looking at the benefits of a joint project with a public entity such as the Port Authority, Findling said that the “tax exemptions and tax relief that the port authority gets — the moment they try to pass that benefit on to a private party it becomes taxable.” Gas-balancing a concern Asked if the North Slope producers had a gas balancing agreement, Findling said no gas balancing agreement exists on the North Slope, but said that such agreements establish a process to protect rights of gas owners in situations where gas deliveries are under way. Asked if the lack of a gas balancing agreement could hold up a project, Findling said the historic pattern in other fields has been that: “…the economic interests converge and there’s a desire to move forward — then these kinds of agreements are worked out.”
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