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Look to future not to past for value of Asia market to Alaska Need for North Slope LNG to expand as Asia embraces portable, clean burning fuel; nuclear power growth stirs environmental concerns
Steve Sutherlin PNA Managing Editor
Shiguru Muraki, general manager of the gas resource department of Tokyo Gas Co. Ltd., has this message for Alaskans: As the LNG market matures in Asia, the chances are quite good that North Slope LNG could be sold for a fair price in the region. Ongoing cost reductions in the LNG chain will sweeten the economics of the LNG business in Asia.
LNG is becoming more competitive with competing fuels, and growth in its demand may exceed expectations because of concerns over proposed nuclear power generation and the cost of natural gas pipelines proposed in the region.
Asia uses 72 million tons of LNG annually and will require 108 million tons or more in 2010, according to studies done by Tokyo Gas, the number two consumer of LNG in Japan after Tokyo Electric Power Co.
LNG use in Japan, Taiwan and Korea will grow quickly over the next decade, Muraki said. China will take its first shipment of LNG in 2005 and will consume between six and nine million tons by 2010.
In China the government has put a priority on pipeline supplies but will rely on LNG to feed its south coast areas; if proposed pipelines don’t materialize, LNG demand in China will be much higher. India will burn 15 million tons by 2010 if high-case projections prevail.
Alaska has a disadvantage. The product must be carried in high tech vessels with a horrific daily operating cost. There are sources including Sakhalin that will compete fiercely with Alaska for the gas trade. The Japanese are considering an undersea pipeline from the southern end of Sakhalin Island to Tokyo. The line would cost more than $2.5 billion and a big question mark because if LNG handling costs drop as expected by Tokyo Gas, the line may not be economic.
Even so, Muraki said Tokyo Gas sees a need for North Slope LNG in the Pacific under all of its scenarios for the region. Japan considers the United States. and Australia to be the most stable suppliers of LNG.
LNG trade is getting large enough that it won’t be long before a Pacific LNG market price is assigned to the fuel floating free of the fluctuations in the oil price.
“This is the century of natural gas,” Muraki said.
LNG is becoming more price competitive with other energy sources, and growth in its demand may exceed expectations because of concerns over proposed nuclear power generation and the cost of natural gas pipelines proposed in the region, Muraki said.
Tokyo Gas is investing in needed infrastructure, building two state-of-the-art LNG tankers with ice resistance designed for Alaska waters, Muraki said.
He told PNA his greatest challenge is that no central U.S. authority can commit all the pieces to make a North Slope LNG project happen. He is coming to grips with the fact that his firm will have to keep a lot of plates spinning to secure North Slope gas for Japan.
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