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BP Exploration (Alaska) looks at three gas development options Front-end engineering done for gas-to-liquids pilot plant, request for company approval expected by summer although plant location still not set Kristen Nelson PNA News Editor
Ken Konrad, BP Exploration (Alaska) Inc.’s business unit leader for gas, is upbeat about North Slope gas development, about what has been achieved to date and about what’s to come:
“I think it’s a bright future. Watch this space. There’s more to come,” he told PNA April 19.
BP Exploration (Alaska) is looking at three options for developing North Slope natural gas: gas to liquids, liquefied natural gas and a pipeline to the Lower 48.
A 300 barrel-a-day gas-to-liquids pilot plant is first in line for actual development.
“We are just actually this month finishing up our front-end engineering (for the pilot plant),” he said, “so we know exactly what we want to build now, if you will, and we’ll be going forward for approvals here shortly” and hope to make an announcement of formal approval of the pilot plant in a couple of months.
The GTL pilot plant, Konrad said, is “a technology that we’re pursuing on the behalf of BP Group, not just BP Alaska. And they’ll be a number of specialists working building that and working on that.”
The pilot plant will use about 3 million cubic feet a day of feed gas. Konrad said the company has confidence that the 300 barrel-a-day plant “will demonstrate our technology” and provide “confidence that from that scale that we can scale up to commercial.
“So we’ll be looking to validate our science, if you will, at that pilot scale. And then also look at ways to tweak the process to make it better. It is a new technology and hopefully we can improve it. That’s what the pilot plant is for.”
Konrad said that no final decision has yet been made on a plant location. The company is reported to be looking at both the North Slope and the Kenai Peninsula.
If the pilot plant is approved, site work would begin at the end of this year. “We’re already placing orders for materials. We would then expect to have the plant on line producing in first part of 2002, first or second quarter of 2002.”
BP part of LNG sponsor group BP Exploration (Alaska) is a member of the LNG gas sponsor group, along with ARCO Alaska Inc., Phillips Petroleum Corp., Foothills Pipe Line Ltd. and Marubeni Corp. Phase I work by the liquefied natural gas sponsor group should wrap up this summer, Konrad said, and at that point the sponsor group owners would take a look at results to date and decide what the next activity should be.
There have been “a lot of successes out of the gas sponsor group,” he said.
“They’ve put together a scheme called a market-viable project which is a somewhat smaller scale project that can be expanded but a project that can fit into the market” and has also worked at reducing costs and applying technology.
Asia Pacific “remains a challenging market for the volumes of North Slope gas that we have available to sell,” Konrad said.
Asked about a decision on where an LNG plant would be located, Konrad said he didn’t think that would be a Phase I decision, but instead would be “a decision taken closer to the time we actually thought we were going to build it.” He said looking at a route to Kenai as well as a route to Valdez is “to find the route that delivers the most value for the producers and for the state of Alaska. It’s just all about looking at every option to optimize what we all know is a challenging project.”
Gasline to Lower 48 also under consideration The natural gas resource on the North Slope can support more than one project, Konrad said, and in addition to GTL and LNG, the company is also looking at is a gas pipeline to the Lower 48 through Canada. BP Exploration (Alaska) is working closely with BP Amoco in Canada on that option, he said, with some folks from the Alaska gas business unit actually working in Calgary on the pipeline piece of that project.
“Again,” Konrad said, “it’s about looking at all options to make sure we do the right thing. But we are very excited about the pipeline option.”
BP Amoco is locating some of its technical staff in Anchorage to support work on GTL, LNG and gas pipelines, Konrad said, as well as carbon dioxide management. The head of BP Amoco’s global carbon dioxide effort will be working with the team in Alaska, Konrad said.
The gas at Prudhoe Bay contains about 12 percent carbon dioxide, Konrad said, and today it is reinjected. But, he said, “if you’re actually selling the gas to a consumer, they don’t want to buy CO2, so you have to remove it from the gas stream and you have to do something with it.” Part and parcel of any gas development, he said, will be managing carbon dioxide emissions.
The company is looking at several possibilities for handling North Slope carbon dioxide: using it as part of viscous oil development; mixing it with existing miscible injectant to recover more oil; or reinjecting it into the gas cap for pressure maintenance.
“So lots of possibilities there but what we’re trying to do is turn a byproduct into an asset.”
Alignment at Prudhoe Bay sets better foundation Konrad noted that the company had been working on North Slope gas possibilities even before the recent alignment of oil and gas ownership at Prudhoe Bay.
“But I think the alignment in Prudhoe Bay simply sets an even better foundation for all the producers to work together cooperatively because all of our commercial interests are now aligned. And that simply is going to facilitate progress,” he said.
“So it’s a positive development on top of our positive perceptions around gas to start with.” In addition to opportunities in gas, Konrad said, the alignment also creates opportunities for satellites and other development projects at Prudhoe Bay by “lowering the cost base to allow more investment.”
He noted that BP also “deepened our position in Point Thomson” as a part of the alignment.
Point Thomson is a gas condensate field — a gas field that produces condensate — not an oil field that produces gas, as at Prudhoe Bay, Konrad noted.
The opportunity to commercialize gas on the North Slope makes Point Thomson “a potentially much more attractive proposition,” he said.
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