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Thompson proposes natural gas trading hub in Interior
Kay Cashman
A natural gas trading hub near Fairbanks or Delta Junction connected to a gas line from the North Slope would give Alaskans entree to the global natural gas business, not just a gas pipeline project, Ken Thompson told PNA Jan. 21.
“People are talking about this project or that project, trying to decide which is the best gas line project,” the former president of ARCO Alaska Inc. said. “They have a project mentality. ... Alaskans ought to take a 50 year view. We need to create a natural gas industry in Alaska that gives us access to multiple markets.
“Prices and market cycles are unpredictable. Access to several markets will allow us to hedge price swings. For example, the Asian liquefied natural gas market currently is not optimal for Alaska gas commercialization, but the Lower 48 market is. Five years ago, the reverse was true. ... Five years, 10 years, from now things could change in Asia. Security concerns or a substantial increase in demand could make the Asian market lucrative for Alaska.”
Thompson said a gas trading hub in the Interior “would not only allow smooth placement of gas to the Lower 48, but also position future projects to plug into the hub if and when they become commercially viable,” Thompson said.
Future projects might include a LNG project with a line to Valdez for export to Asia, a gas pipeline to Southcentral for residential and commercial use, and a spur line to Haines or Skagway so that gas could be barged to Southeast communities.
“In the Lower 48 and Canada huge amounts of gas pass through trading hubs,” Thompson said. “Trading hubs are even beginning to appear in Southeast Asia.” State should invest Thompson believes the state of Alaska should invest at least 12.5 percent, its equivalent royalty share, in a gas line from the North Slope to the Fairbanks or Delta Junction trading hub and in “the valves and manifolds that would make up the hub facility.”
As part owner, he said the state would be “privy to details of operations and transportation costs of getting natural gas to the hub for clear and transparent pricing for future contracts to multiple markets.”
In addition to building a hub, Alaska must “establish trading policies for clear pricing of natural gas at that hub,” Thompson said.
Editor’s note: Watch for an in-depth report on this subject in the February issue of Petroleum News • Alaska.
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