Port Authority says interest exceeds requirements
Energy companies from Korea and Indonesia want to buy liquefied natural gas from Alaska. In fact, the companies have said so in writing and have submitted several non-binding letters of interest to Alaska Gasline Port Authority, who quietly sought “Solicitation of Interest” or SOI from Asian countries to see if there is indeed an overseas export market for LNG.
Not only is there an interest in buying LNG via a gasline from the North Slope to Valdez, the amounts of gas needed exceeds the amount needed to make an all-Alaska pipeline viable.
“The volume of gas nominated by these Asian companies plus projected instate volume exceeds the volume targeted by the AGPA for the proposed gasline to Valdez,” the Port Authority said in a press release dated Sept. 17. “The target volume of gas for the gasline from Prudhoe Bay to Valdez is 2.7 billion cubic feet per day (bcfd). The non-binding nominations AGPA received from the Asian market for LNG off-take amounted to 2.8 bcf per day. When combined with projected in-state gas market (.25bcfd -.50 bcfd), the total volume nominated for the large diameter gasline is 3.3 bcf per day.”
“They put it in writing to us,” said Bill Walker, attorney for the Port Authority. “We exceeded our goal.”
The Port Authority sought the non-binding SOI at the behest of ExxonMobil and TransCanada, who are studying a state-backed project under AGIA, the Palin-era Alaska Gasline Inducement Act.
Walker said the SOI is one of many steps that are industry standard in the development of pipeline projects.
“The letters of interest were the result of four to five meetings per company,” Walker said.
The companies that expressed interest in the Port Authority’s plan include POSCO (Korea), Korea East West Power, KOGAS (Korea), GS Energy (Korea), PTT International Co. Ltd. (Thailand) and PT PGN LNG Indonesia.
Walker said that not all companies specified the volume of LNG needed.
He also said specific details are lacking in how gas for in-state use will be distributed. He did say he believes existing energy providers will step into the market that will develop if natural gas or other gases such as propane become available in Alaska.
The Port Authority has also applied for an export license from the U.S. Dept. of Energy, and Walker said the group hopes for a response in the coming months.
Despite the significant development, Walker said a gasline to Valdez is not yet in the bag, and sees problems with AGIA.
Walker said it is awkward that the lease holders on the North Slope are being allowed to make the decision as to whether or not natural gas will be sold. The problem with this scenario is the fact that ExxonMobil, as well as other leaseholders on the Slope have competing natural gas projects across the globe, most of which require the gas be developed, which is not the case in Alaska.
Walker called the situation awkward.
“The decision is left in the hands of the competition,” he said, noting the producers have “significant competing projects.”
Other obstacles to a gasline project also remain.
Walker did not point fingers, but state officials appearing before the Alaska LNG Summit 2012 in Valdez two weeks ago have been noncommittal.
Tuesday morning, Alaska governor Sean Parnell began conducting what was described as an economic trade mission with energy officials in Japan and the Republic of Korea.
“The focus is on promoting Alaska's natural gas to Pacific Rim markets,” a press release from the governor’s office said. “Over the next week, Governor Parnell is meeting with Japanese and South Korean officials and business leaders to discuss opportunities that will benefit both economies.”
While the news seems good on the surface, critics of the Parnell administration’s efforts to develop the state’s natural gas reserves point out that Port Valdez has never been specified in the latest state proposals for a gasline. “Tide water” is frequently cited by the governor’s office, but not Port Valdez.
Numerous studies have shown Port Valdez to be the most beneficial port for the terminus for an in-state natural gas pipeline. The benefits stem mainly from the existing infrastructure and permits already in place that slash project costs for the multi-billion dollar project that would follow the existing trans-Alaska oil pipeline to Valdez. This fact alone cuts start-up and development costs.
A series of studies paid for by the Port Authority issued by PDC Harris Group LLC, Wood Mackenzie and other industry consultants have consistently pointed to Port Valdez as the most economic port for an Alaska gasline. Energy savings of 50 to 80 percent have been projected to communities as diverse as Valdez, Fairbanks and Bethel under the Port Authority’s plan.
“Even 50 percent would be a huge savings,” Walker said. “There’s so many benefits, so many positives.”
Officials from other ports in Alaska have expressed great interest in bringing a natural gas line to their home turf. Many have huge political clout in Juneau. However, Valdez has an existing deep water ice-free port, a feature in other Alaskan ports on the road system.
So how will Valdez – and the Port Authority – educate elected officials on the benefits of a North Slope to Valdez all-Alaska gasline?
“We’re putting ourselves on the map,” Walker said, pointing to what he called the success of the recent Valdez LNG summit. “It really has been an education process for our legislature.”
He said Valdez and the Port Authority hope to take the summit template and reformat to bring to the upcoming Alaska legislature.
“I think what we did in Valdez at the LNG summit was significant,” he said.