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Mitsubishi offers to help Alaska Company willing to assist gas authority with LNG review Larry Persily Petroleum News Juneau Correspondent
Mitsubishi Corp. is offering free help to the Alaska Natural Gas Development Authority, including studying shipping needs, gas liquefaction and storage facilities and sharing information on market conditions.
The Tokyo-based company and the gas authority are working out a memorandum of understanding to govern a joint review of financial and market feasibility of the state’s plan to develop a liquefied natural gas export project in Alaska.
“This is just an incredible opportunity,” said Scott Heyworth, one of seven members appointed to the gas authority board this past summer and the force behind the voter initiative that called for creation of a state gas authority.
The board voted at its Oct. 21 meeting in Anchorage to send back to Mitsubishi its edited version of the draft memorandum the company presented last month. The state’s edits to the draft make clear that Mitsubishi would not be paid for any of its work, and also make clear that much of the company’s work would be subject to release under Alaska’s public records law. Copies of the draft memorandum were kept confidential until the Oct. 21 meeting.
The authority at its September meeting described Mitsubishi’s offer as an opportunity to share knowledge and, in part, as a sales pitch from the international energy and shipping company.
Talks started earlier this fall The authority has been talking with Mitsubishi officials since earlier this fall, after the company announced its proposal to build a liquefied natural gas receiving terminal at the Port of Long Beach, Calif. Sound Energy Solutions, a Mitsubishi subsidiary, is pursuing plans to build an LNG receiving and regasification terminal at Long Beach to handle as much as 700 million cubic feet of gas per day.
Construction costs are estimated at up to $400 million, with start-up of operations perhaps five years away.
Although Mitsubishi’s draft memorandum to the state does not include an offer to buy Alaska LNG for its proposed California terminal, board members said it still is a significant move forward to getting the information the state gas authority needs if it is to proceed with its own plan to build a $12 billion pipeline and LNG terminal to move North Slope natural gas to market.
And, as board members said Oct. 21, the company has talked with the authority about perhaps buying Alaska LNG at some point in the future. In addition to answering construction, cost and shipping questions, the authority would need to find a long-term buyer for its LNG and would need to reach a deal with North Slope producers to sell their gas to the state agency. Mitsubishi has wide experience The memorandum explains that Mitsubishi “has long been engaged in many LNG projects from upstream to downstream, including LNG marketing, LNG liquefaction and storage and LNG transportation, and is ready to assist the authority in analyzing and evaluating the project.”
Among the company’s many subsidiaries, for example, is Mitsubishi Heavy Industries Ltd., which builds LNG tankers.
Under the memorandum, Mitsubishi would study the most economical liquefaction and storage facility for Alaska, and would look at shipping requirements to move the LNG to market. That work would include determining the size and number of tankers, shipbuilding, operation costs and shipping berth design.
The memorandum also includes provisions to protect confidential business information. State law limits confidentiality Assistant Attorney General Leonard Herzog told the board state law would limit what could be held confidential and said he had edited the draft agreement to make certain that Mitsubishi would understand that requirement.
The agreement expires one year after its signature, with the option of one-year renewals to 2010. The memorandum does not include a deadline for completion of any of the studies.
Herzog also explained to the board that he had edited the memorandum to state clearly that Mitsubishi would not receive any preferential consideration from the gas authority should the state at a later date contract for any of the services covered in the company’s analysis.
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