TransCanada Chief Executive Officer Russ Girling doubts there is enough natural gas available from northern Alaska to support both an LNG export scheme and an overland pipeline to the Lower 48.
Given that a Lower 48 system requires 4 billion cubic feet per day to make the project economic, “there isn’t sufficient gas to go in two different directions,” he told analysts April 27.
Girling said the next step in the development of Alaska gas is to complete a feasibility study.
“At the same time the state and producers need to negotiate a fiscal framework that will make it economic for producers to move forward,” he said.
While he expects the original state funding under the Alaska Gasline Inducement Act to remain in place, he said the first round of the LNG export alternative requires more market feasibility work than technical work.
“So we expect, from a total perspective … TransCanada’s portion of the costs and the state’s portion of the costs would be less,” he said.
Some work useful for LNG
Girling also said some of the work already done on the Lower 48 pipeline will be preserved and some of it will be useful in to the LNG studies “because somewhere between one-third and one-half of the route is similar between the two projects.”
He said the original pipeline plan had always targeted early in the 2020s to monetize Alaska’s stranded gas and “we think it’s in the mind of producers.”
On the Canadian side of the emerging LNG export option, Girling said that “to the extent that customers want us to participate in a liquefaction facility, we’d look at that,” while doubting whether liquefaction would represent “a whole bunch of value-added” for his company.
But TransCanada’s “true expertise” lies in being one of the only companies in North America with the ability to build large-diameter pipelines through the “treacherous and very-difficult” mountain terrain to the British Columbia coast.
Girling said the decision by partners to stop financing Canada’s Mackenzie Gas Project does not mean development of the “tremendous” Arctic resources has been abandoned.
He said that with conventional gas supplies in North America declining by 15 percent to 20 percent every year and shale supplies falling by an “even greater” percentage, North America will have to replace its gas supply by three times over the next 10 years-15 years.
“Things change very quickly and we need to maintain our options (for Arctic gas) in a developed form,” Girling said.
