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ConocoPhillips talks natural gas project Hirshberg tells ‘Meet Alaska’ audience about company’s major project experience, challenges company sees for AKLNG project KRISTEN NELSON Petroleum News
The Alaska Support Industry Alliance’s “Meet Alaska” conference heard a ConocoPhillips perspective on the Alaska LNG Project Jan. 8 from Al Hirshberg, the company’s executive vice president for technology and projects.
Hirshberg reviewed two other major liquefied natural gas projects in which ConocoPhillips has participated.
Qatargas 3, an LNG mega-train with a capacity of 7.8 million tons per annum, included three unmanned platforms, 33 wells and two subsea pipelines. ConocoPhillips partnered with Shell on Qatargas 3, Hirshberg said, and also worked closely with ExxonMobil because of facilities that company was building.
Success factors at Qatargas 3 included working closely with the government, which in Qatar is regulator, tax collector and partner, he said. That project also had effective joint venture LNG marketing with the partners bringing marketing experience in selling both their LNG and the government’s.
Hirshberg also talked about Australia Pacific LNG, which announced Jan. 11 that it shipped its first LNG cargo, a partnership between ConocoPhillips, Origin Energy Ltd. and Sinopec. APLNG produces gas from coalbed methane wells, with more than 1,000 wells and two production trains with a capacity of 9 million tons per annum. ConocoPhillips brought LNG technology to that project, he said, and is downstream operator, having built and now operating the plant. Origin Energy is the project’s upstream operator, drilling wells and building gas plants. The third partner, Sinopec, is a major LNG buyer.
Success factors included a strong joint venture partnership and showed the importance of early engagement with stakeholders. Because of the brackish water produced by dewatering coalbed methane wells the project included reverse osmosis plants to handle 100 percent of the water. That was a win-win situation, Hirshberg said, providing water disposal for the project and irrigation water in the area.
Success factors Hirshberg listed mega project critical success factors and said they fell into three buckets: alignment among all the players; a strong effort to identify project risks and putting together a plan to manage risk; and economics - driving down the cost of supply enough that the project can be successful in the marketplace.
Challenges for the Alaska LNG Project, prior to final investment decision, include commercial agreements between all co-venturers, including the state; certainty around fiscal terms; FERC/state permitting issues; and global LNG project competition, he said.
With smaller projects commercial agreements could be pushed out in time, Hirshberg said, but with a project the size of AKLNG those agreements need to be locked down in the pre-front-end engineering and design phase.
He said he’d worked on a number of big important projects but called AKLNG unprecedented in terms of complexity and cost and said there was no room for loose ends.
Hirshberg also reviewed the global LNG market. The total world demand in 2014 was 200 million tons per year, he said, with the demand through about 2025 projected at another 200 million tons per annum.
Of that 200 million, about 140 million is already spoken for, he said, leaving about 60 million tons, of which Alaska is about 20 million tons.
Chasing that are announced discoveries of some 780 million tons per annum, of which about 210 million tons are in projects spending serious money on engineering, some three to four times the estimated need.
The ticket to admission, Hirshberg said, is the cost of supply and if AKLNG can’t drive down the cost, customers won’t be interested.
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