By TOM FOWLER
A consortium of major energy companies said it is moving
forward with a $45 billion project to build an 800-mile natural
gas pipeline from Alaska's North Slope to a port on the
southern coast from which it plans to export liquefied natural
gas to Asia.
In a letter to Alaska Governor Sean Parnell, ExxonMobil,
ConocoPhillips, BP and TransCanada said this week that they
have agreed on a plan to combine what were once two competing
natural gas pipeline projects destined for the continental US
into one project aiming at overseas markets.
The export project may not be ready for a
decade or more given the scale of construction and the many technical,
legal, political and financial barriers; the companies say the
costs could top $65 billion.
But it would let the companies move billions of dollars in
gas that is now stranded on the North Slope and help
support many decades more of oil and natural gas development in
the US arctic.
Discussions about building a natural-gas pipeline from the
northernmost reaches of Alaska started soon after the
Trans-Alaska Pipeline System started moving oil to the Port of
Valdez in 1977.
Since then, most natural
gas produced along with oil on the North Slope has been
injected into the ground to help push out more oil.
In recent years, TransCanada and Exxon backed one pipeline
project while BP and ConocoPhillips
pushed another. But decade-low natural-gas prices in the US
because of the shale-gas
drilling boom made such a pipeline to Canada, where it
would connect to the lower 48 states, uneconomic.
The announcement follows a March settlement between the
State of Alaska and the companies over a long-running dispute
over leases at the Point Thomson field, located east of the
massive Prudhoe Bay field.
The companies were allowed to keep their large leases in
exchange for promises to begin first oil production from Point
Thomson by 2016 and to combine their competing projects.
The new project will include natural gas
processing facilities and a natural gas export
terminal somewhere along the south central Alaskan coast.
In order to move natural gas via tanker it must be chilled
to negative 260 degrees Fahrenheit to turn it into liquefied
natural gas, which can then be moved in specially designed
ships and turned back into a gas on delivery.
The companies said they are considering 22 different sites,
including one near the Port of Valdez, where Trans Alaska
Pipeline oil is loaded on to tankers, as well as one on the
Kenai Peninsula south of Anchorage, where ConocoPhillips owns
and operates a small, 40-year-old LNG
export terminal that serves primarily Japanese customers.
gas will face stiff competition for customers in Asian
markets, said Amy Jaffe, executive director of energy and sustainability at the University of
Several large LNG
projects are coming online in Australia in the coming years to
meet Asian energy demand, and a project to export LNG from the
Canadian province of British Columbia, where gas
production costs may be lower, is further along.
My sense is that Alaska LNG
has a lot of competition to Asia and they do not have a first
mover advantage, Ms. Jaffe said.
The Wall Street Journal (via Dow Jones