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ANGDA talks contracts with prospective bidders Requests for proposals planned by mid-October for LNG project definition Kristen Nelson Petroleum News Editor-in-Chief
The explosion at an Algerian liquefied natural gas plant in January raised concerns among financiers about how close together LNG trains should be built, says Harold Heinze, chief executive officer of the Alaska Natural Gas Development Authority.
The loss of three trains was unacceptable to investors, and may change where an Alaska LNG facility could be built, he said.
That is one issue that will be addressed in $775,000 worth of contracts, including competitive sealed bids and some sole-source contracts that the authority is now in the process of letting. Heinze and other authority officials met Oct. 7 with prospective bidders for the larger contracts, for which state requests for proposals will be issued in mid-October.
The largest contracts, $200,000 and $150,000, are LNG-related; there is also a $100,000 spur line contract.
The $200,000 contract will be for LNG project definition, Heinze said: what is the best project for us in Alaska? The authority has looked at the Yukon Pacific proposal, and the project definition contract will be to look at an Alaska LNG project more broadly, and see if the authority can improve on the project, he said.
Elements include application of advances in pipeline technology to an Alaska LNG project and magnitude of potential cost savings; implications of a 2 billion cubic feet per day project vs. a 1 bcf per day project; phasing of the project with respect to building up to market capacity; timing construction of the project components to match the Alaska labor force; and two items for which the LNG plant concepts contractor will be the lead — LNG plant footprint (primary lead on this item is the LNG plant concepts contractor); and LNG plant locations in Valdez and Cook Inlet (primary lead on this item is the LNG plant concepts contractor).
Heinze said while the authority knows some of the major questions, it wants contractors to help it determine what needs to be studied and how it should be studied. Separate contracts will be awarded Heinze said the authority does not intend to issue the LNG project definition and LNG plant concepts contracts to the same contractor because it wants the “richness of thinking” that comes from more than one group.
But it will be a cooperative venture. The boundaries between the two LNG contracts are vague now, he said, but when the authority has contractor proposals it will “cut and fit” to eliminate overlap.
Heinze said the authority is looking for contractors who will work the project out of Anchorage so that the authority and contractors can hold weekly coordination meetings with Tim Bridgman, the authority’s contract coordinator for the LNG project.
The product of the contracts will be reports which will be a public document published on the authority’s web site, and Heinze said he expects that executive summaries for the reports will be written to policy makers in the state of Alaska, with more technical parts probably of more interest to the authority itself.
The $150,000 LNG contract for plant concepts includes the maximum natural gas liquids content in a North Slope pipeline; optimum LNG train size, plant layout and footprint; implications of a 2 bcf a day vs. 1 bcf a day capacity; use of large electric motors as drivers in compressor stations and LNG plant; availability and uses of electric power; LNG tank storage technology; LNG plant footprint; LNG plant locations in Valdez and Cook Inlet; build-in-place vs. modular construction of plant components; barging LNG plant modules and sinking barges in place as permanent foundation; phasing of project with respect to market capacity; and timing construction of project components to match Alaska labor force.
Sealed bids will be due at 3 p.m. Nov. 17 and the authority expects to award bids in mid-December, with a Jan. 6 kick-off meeting for successful contractors, draft reports due March 15 and final reports due April 5. Application for spur line right of way The spur line contracts will answer questions in the state’s right-of-way lease application which the authority will file for the Glennallen to Palmer gas spur line project. There are four contracts: engineering design $100,000; alignment land issues $50,000; environmental $50,000; and public outreach process $50,000.
Heinze said the authority is in discussions with at least three other parties interested in building a spur line by themselves or as part of a group, and Enstar has said they would like to be involved.
The authority plans to submit a right-of-way lease application at the beginning of April, as the state right-of-way review team is finished with TransCanada’s application, finish the state right-of-way lease process before mid-year and have a right of way by mid-July, Heinze said.
The authority’s spur line project would deliver 500 million cubic feet per day of natural gas through 140 miles of 24-inch high-pressure gas line, with a projected $300 million construction cost, for a tariff of 15 cents per million British thermal units.
Heinze said that in addition to the all-Alaska LNG project, the authority is working on helping the highway gas line through analysis of in-state gas use and benefits and analysis of how to use the state’s financial strengths to participate in the project, as well as studying how to get North Slope gas to Cook Inlet.
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