|
TransCanada AGIA focus shifts to LNG State Natural Resources, Revenue commissioners OK project plan amendment; FERC application deferred from this October to 2014 Kristen Nelson Petroleum News
The State of Alaska is shifting focus under the Alaska Gasline Inducement Act or AGIA from work on a line to Lower 48 markets to work on a large-diameter line from the North Slope to tidewater for in-state use, liquefaction and export.
The Alaska Gas Pipeline Project Office said May 2 that Natural Resources Commissioner Dan Sullivan and Revenue Commissioner Bryan Butcher had approved a project plan amendment for TransCanada Alaska under AGIA, allowing TransCanada to shift its focus to liquefied natural gas.
Because of the transition to an LNG project, the date for filing an application for an Alberta line with the Federal Energy Regulatory Commission has been moved two years — from this October to October 2014.
TransCanada, ExxonMobil, ConocoPhillips and BP said March 30 that they would work together on commercializing North Slope natural gas and would focus on large-scale LNG exports from Southcentral Alaska under an AGIA framework.
The project plan amendment, approved May 2, calls for TransCanada Alaska to complete initial work on an LNG project by September and conduct a comprehensive market solicitation by year’s end.
TransCanada will provide an updated project plan amendment early next year, reflecting details of the LNG project and its associated timeline. That amendment will also need commissioner approval.
The Alaska Gas Pipeline Project Office said that approximately half of the work done by TransCanada so far on the Alberta option is applicable to the LNG line.
Parnell nudged plan to LNG The shift to LNG began Oct. 27 when Alaska Gov. Sean Parnell told the Alaska Oil and Gas Association annual luncheon that there needed to be greater alignment among shippers of gas and called for that alignment around a line going to tidewater in Southcentral Alaska, with natural gas going to the Pacific Rim as LNG.
The governor cited the lack of commercial alignment on a line to Lower 48 markets and said the market may have shifted since AGIA was passed, with the 2011 tsunami in Japan and that nation’s shift away from nuclear power, combined with changing market conditions in the Lower 48.
Parnell set a target of the first quarter for alignment, and in a March 30 letter to Parnell the CEOs of ExxonMobil, ConocoPhillips and BP said the companies were making progress on “the next generation of North Slope resource development.” That resource, natural gas, has been re-injected to increase oil production, but, the CEOs said, “under the right business climate, the full commercial potential of this world-class resource can be unlocked.”
Among the challenges the CEOs cited was a requirement for the establishment of “competitive and stable fiscal terms with the State of Alaska.”
In his January state-of-the-state address Parnell listed benchmarks for an LNG project, and said if those benchmarks were met the 2013 Legislature would take up gas tax legislation designed to move the project forward. Parnell has said in the past that he won’t negotiate separately with the players on a fiscal system for gas, but only with a project.
Changed circumstances The commissioners said in their May 2 letter to TransCanada that changed circumstances since the issuance of the AGIA license in 2008 justify the plan amendments. Those changed circumstances include: substantial increase in U.S. shale gas reserve estimates; significantly higher natural gas prices in Asia reflecting a higher oil to natural gas price ratio; the U.S. Energy Information Administration’s projection that the U.S. will become a net exporter of natural gas; and the interest of the Alaska North Slope producers in aligning their work effort behind an LNG alternative.
The commissioners also said that work will continue on the Alaska-Alberta project but with reduced expenditures on that option “during the period the LNG alternative is being evaluated.” Because the plan amendment postpones the FERC filing date for the Alberta plan by two years, a reduction of fiscal year 2013 state-reimbursable expenditures on the Alaska-Alberta project under the AGIA license is expected.
| 