Providing coverage of Alaska and northern Canada's oil and gas industry
April 2012

Vol. 17, No. 17 Week of April 22, 2012

New study favors Valdez as LNG port

Cook Inlet’s ice, big tides make it less desirable as a place to load huge tankers for exporting North Slope gas, report says

Wesley Loy

For Petroleum News

Port Valdez would be a better choice than Cook Inlet for loading giant tankers to export liquefied natural gas from Alaska, a new study concludes.

Valdez, in Prince William Sound, already serves as the pickup point for tankers hauling North Slope crude that comes down the trans-Alaska oil pipeline.

Port Valdez has distinct advantages over Anchorage or other potential LNG ports in Cook Inlet, says the comparative risk analysis prepared for the Alaska Gasline Port Authority.

“The Port of Valdez has already proven that it is a world-class oil export facility, with the infrastructure in place to export large volumes of North Slope gas in the form of LNG from Alaska,” the study says.

Jeff and Jonathan Pierce conducted the study for the port authority. The authority is a partnership of the Fairbanks North Star Borough and the city of Valdez seeking to commercialize Alaska’s stranded North Slope gas reserves.

Jeff Pierce is a licensed oil tanker pilot with extensive experience in Alaska waters.

Recently, interest has flared anew in the idea of piping North Slope gas to a tidewater port somewhere along the state’s southern coast. There, it would be converted to liquid form and loaded onto special LNG tankers for shipment to Asia, where the price of gas currently is high compared to gas prices in North America.

Something of a regional rivalry exists as to where a gas pipeline would terminate — the Cook Inlet area or Valdez. For local economic development boosters, an LNG terminal would be a real prize.

When it comes to the practical and safety considerations of shipping, Valdez is the “port of preference,” the study concludes.

And Bill Walker, spokesman for the port authority, noted that Yukon Pacific Corp. once held government approvals to export LNG from Port Valdez.

Valdez is a deepwater port and the northernmost North American port free of ice year-round, the study says. It has hosted oil tankers since 1977, when crude began flowing down the pipeline.

Port Valdez waters are relatively docile compared to Cook Inlet, the study says. A fleet of powerful escort tugs are stationed there, as well as a U.S. Coast Guard system to monitor vessel traffic.

In contrast to Port Valdez, Cook Inlet is characterized by extreme tides, shoals, strong currents, less tug and Coast Guard support, and the need for dredging to maintain adequate depth for ships arriving at Anchorage, the state’s largest city and main seaport.

The Matanuska-Susitna Borough is developing a new port at Point MacKenzie, just across Knik Arm from Anchorage.

The study also describes ice floes that can choke Cook Inlet during winter months. The current-driven floes are dangerous, capable of exerting enough force to tear a ship from its moorings. This happened in 2006 with the oil tanker Seabulk Pride, which broke away from a dock at Nikiski.

Prince William Sound does have the threat of icebergs from Columbia Glacier drifting into the shipping lanes. This threat was a factor in the Exxon Valdez tanker disaster in 1989. But the port authority study says the amount of ice coming from the receding glacier has diminished over the last 20 years.

Very large LNG ships — larger than the oil tankers calling at Valdez, with three times the capacity of ships loading at the ConocoPhillips LNG facility at Nikiski — likely would be needed to carry the huge volumes of North Slope gas.

The study concludes Cook Inlet isn’t well-suited presently to accommodate large LNG ships in winter.

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