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Back in the LNG game Port authority talking to proposed terminal about 1 bcf/day with no Jones Act issues Kristen Nelson Petroleum News Editor-in-Chief
After being left on the dance floor by Sempra, the Alaska Gasline Port Authority has found another partner for its proposed liquefied natural gas project, but can’t yet say who that new partner is.
Jim Whitaker, chairman of the port authority board and mayor of the Fairbanks North Star Borough, said July 20 that there was a confidentiality agreement and he couldn’t say much, but he could say that this proposed terminal wouldn’t involve Jones Act issues — giving rise to speculation from Alaska Natural Gas Development Authority board members who heard the presentation that the receiving terminal must be on foreign soil, since the Jones Act requirements apply to ships moving between U.S. ports.
The port authority proposal is for a pipeline to a liquefaction facility in Valdez, with LNG going to the West Coast.
Whitaker said the new agreement is with a receiving terminal that needs 1 billion cubic feet a day of LNG beginning in 2009, and since Alaska gas won’t be available until 2012 a bridging agreement will be required with gas coming from elsewhere until then.
The deal hasn’t been approved by the port authority board, he said at a meeting of the ANGDA board July 20 in Anchorage. He said the port authority would be briefing Alaska Gov. Frank Murkowski about the new agreement July 22.
This agreement was reached July 15 “with another receiving facility” which could serve both the West Coast and the Midwest markets, Whitaker said. The 1 bcf a day requirement will grow to 2 bcf a day in 2012, he said, with opportunity for further expansion.
What the port authority wants from the state, Whitaker said, is an agreement for its royalty gas. The port authority believes royalty gas can be supplemented with gas from minor producers and provide enough to fill a 1 bcf a day contract, he said, eliminating the need for the port authority to reach a gas sales agreement with the producers. Gulf Coast could take market The port authority and Sempra negotiated separately with the producers over gas, “with very little success,” Whitaker said. While the port authority’s formal relationship with Sempra ended some six weeks ago, the relationship remains cordial, he said, and Sempra has indicated that if Alaska LNG becomes available in the future it would be interested.
Whitaker said the port authority is concerned that Alaska’s North Slope gas producers — BP, ConocoPhillips and ExxonMobil — are, in effect, Alaska’s major competitors. All three companies are funding LNG receiving projects on the Gulf Coast and Alaska, he said, is on the verge of loosing Midwest market opportunities to LNG coming in through the Gulf Coast, which already has a distribution system to reach Lower 48 markets, especially the Midwest.
The port authority — Valdez, the Fairbanks North Star Borough and the North Slope Borough — is negotiating with the administration under the Alaska Stranded Gas Development Act, but Whitaker said the administration has made it clear that its main focus is on negotiations with North Slope producers for fiscal terms for a gas pipeline through Canada to take gas to the Lower 48.
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