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AGPA again pushing Valdez LNG project Port authority’s Bill Walker tells chamber it’s time to dump AGIA, but cautions 2 wrongs — AGIA and ASAP — don’t make a right Kristen Nelson Petroleum News
It’s time for the State of Alaska to get out of its Alaska Gasline Inducement Act contract with TransCanada, Bill Walker told the Anchorage Chamber of Commerce Aug. 8.
It’s time for the state to decide, he said, whether Alaska will lead or lose the energy race.
The Legislature has signaled the desire to get out of the AGIA contract, a project to take North Slope gas through Canada to North American markets, Walker said, by promoting the bullet line, the Alaska Stand Alone Gas Pipeline project or ASAP.
But both are wrong for the state — and two wrongs don’t make a right, he said.
Walker, general counsel for the Alaska Gasline Port Authority, said the right step for the state is to build a gas pipeline from the North Slope to Valdez, providing the infrastructure for natural gas to be shipped to Valdez where it would be liquefied at a facility built by private industry and shipped to the Asian market.
Because Asian LNG prices are indexed around crude oil prices, the state would make a profit from LNG, as well as meeting in-state energy needs at the best possible price.
The port authority was formed in 1991 and has been somewhat silent in recent years in face of enthusiasm for a pipeline to take North Slope gas to North American markets.
AGPA’s revived enthusiasm for its LNG project is the result of booming shale gas development in the Lower 48 and Canada which is resulting in plans to export LNG from the Lower 48 and the conclusions of a recent study done for the group by Wood Mackenzie which found an Alaska project would be competitive with other proposed projects.
Alaska can compete AGPA asked Wood Mackenzie, an international energy consulting firm, to see if Alaska would be competitive with proposed LNG projects (see story in Aug. 7 issue), in spite of the 800-mile gas pipeline required to move North Slope gas to Valdez.
Wood Mackenzie used data from TransCanada’s Federal Energy Regulatory Commission filings and concluded that because ANS gas was already coming out of the ground, the upstream development cost would be 26 cents per million Btu.
That compares, Walker said, to Kitimat, which is trying to get financing for an upstream cost of $5.20.
Walker doesn’t believe that getting the gas wouldn’t be an issue. With reasonable expectation of profits, the owners will ship, he said. They just don’t want to take all of the risk; and they don’t owe us a gas line.
As for exporting, he said projects have been getting export licenses to move LNG from the Lower 48.
He said the state needs to announce to the world that Alaska’s gas will be available for the Asian market, work with the North Slope producers to market North Slope natural gas to Asian markets, begin working toward financing of a gas line and the LNG project and once long-term gas contracts and financing are secured, begin construction.
Pipeline as infrastructure The gas pipeline should be viewed as infrastructure, he said — and the state should share and shoulder some of the project risk. Walker said we wouldn’t expect Lynden or Carlile, major truckers in the state, to build a highway, and we shouldn’t expect the producers to build a pipeline.
It makes sense for the state to get the gas line built, he said, just as it made sense for the Canadian government to own the first gas pipeline across Canada. But once the Canadian line was built, it was immediately sold, Walker noted.
ASAP, the small in-state line, wouldn’t have the same benefits as a larger line to export LNG, he said, and wouldn’t provide the lowest-cost energy to Alaskans.
Because the gas moved by ASAP would be for in-state use there would be no state revenue.
And because of the small volume, there would be no incentive for natural gas exploration on the North Slope, which is widely expected to result in more oil being found as well as more natural gas.
Walker said only one gas line will be built in the state, and it should be one that benefits all of Alaska.
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