With the oil and gas conversation in Alaska politics focusing on the upcoming referendum on HB21, the Governor’s recently passed reduction in oil taxes, there has been little news on the natural gas pipeline front since the Producers promised further "studies". The last news from the producers was that they had made a preliminary decision with respect to the port of export. They chose Nikkiski, but were again studying the situation further, meaning no decisions to actually build a pipeline until a time uncertain into the future.
The Producers’ had to know of the impending legislation in Congress that would give a right of way through Denlai National Park. S.157 and H.R. 586 were introduced in June, 2013. This legislation allowed a natural gas pipeline to be built along the 7 miles of existing highway right of way that runs through Denali National Park lands. A take-off to the park facilities through an existing utility corridor would extend from the park entrance to the park facilities to allow the Park Service access to the gas. The Secretary of Interior would be required to issue a permit for the line crossing federal park lands if it meets environmental reviews and meets ANILCA requirements. Per Eric Elam of Young’s office, the legislation passed the House and Senate and was signed into law on September 18, 2013. The bill also provided funding for the Kantishna Micro-Hydro Project, a 50kw hydro-power project to provide power to the Kantishna Roadhouse owned by Doyon RNC.
With the signing of the legislation into law, a major hurdle in the construction of any natural gas pipeline down the Parks corridor using either the Alaska Railroad right of way or the highway right of way has been eliminated. This does not mean that litigation will not ensue on the part of the anti-development forces aligned against any development of Alaska’s resources. These forces have had two major victories to date.
The Pebble Mine project is all but history with Anglo Mining pulling out. Usibelli Coal has not been able to move forward on the Jonesville Coal Mine in the Matanuska Valley for the same reason. Therefore, the likelihood that the greenies will let any natural gas pipeline construction move through Denali, even using the highway right of way, without litigation to extract blood money is unlikely. Alaska’s history is rife with opposition to major resource development by Outside groups who have no other vested interest other than using the courts and Alaska as a revenue source.
The only pipeline corridor that is free of any litigation is the TAPS corridor, which is the choice of Bill Walker in both his 2010 and current gubernatorial campaigns.
Legislatively, the way is now clear for a pipeline down the Parks or a pipeline down the Richardson highways. The choice is which way, and most importantly when?
Japan is facing a shortfall in LNG due to interruptions from some LNG suppliers, such as Nigeria. Japan will be facing higher gas prices over the winter, because of the necessity of purchasing LNG spot cargoes rather than receiving LNG as part of a long term contract supply. The situation is rife for potential for Alaska’s North Slope gas. December deliveries to Japan is $17/MMbtus. Last year, the average was $13.25/MMbtus. Qattar will not be able to supply additional LNG to Japan over the winter, with supplies contracted to other buyers. Qatter supplied gas to Japan helping to keep the price down to $13.25/MMbtus.
The Wood-MacKenzie Report demonstrated a delivery to Japan of Alaska LNG North Slope gas of approximately $8.50/MMbtus. Using a 10% inflation per annum figure since the report’s release in 2010, gives an estimated delivered cost of approximately $11.31/MMbtus today, without respect to market considerations, and depending upon whether or not one believes the government’s inflation figures or what is experienced in the rising prices of other commodities.
October Japan LNG market prices are $15.15/MMbtu. By December, the Japan LNG market prices are already contracted at $17.20/MMbtu. China is competing with Japan for LNG, causing increasing prices for existing supplies.
The specter of Alaska LNG competing with LNG from Kitimat is very real with Shell’s planned LNG terminal. Shell let a $4 billion contract to TransCanada to build a 2 bcf-2.5 bcf natural gas pipeline to 700 kilometers from B.C. shale fields Kitimat. (Yes, the TransCanada partnered with Exxon . . . ) Shell has partnered with Korea Gas, Mitsubishi and PetroChina to build its Kitimat LNG terminal.
Meanwhile, Governor Parnell waits, the oil companies study, and Alaska faces an increasingly uncertain fiscal future.
Either Governor Sean Parnell does not want to remain governor, or he is getting some bad advice with respect to his failure to move aggressively into the Japanese market.
His competition for the governor’s job will not be so hesitant. Bill Walker has been a relentless advocate of moving Alaska’s North Slope to market as LNG before the LNG market in Asia is diminished by other suppliers. Japan has been a primary focal point in his marketing of Alaska LNG. Walker and the Alaska Gas Port Authority have been tireless in their promotion of Alaska’s natural gas to Asian markets. Remember, the all-Alaska natural gas pipeline being promoted by AGPA and Bill Walker was the basis for Sarah Palin’s campaign for governor. If Governor Sean Parnell will not make a decision, Bill Walker and his Lt. Gov. candidate Chris Fleener will.
For more information:
LNG Insight: Utility buyers change buying strategy for winter
http://www.platts.com/videos/2013/october/lng-buyers?video_uuid=ngt147ob
http://www.platts.com/podcasts-detail/spotlight/2013/october/lng-prices
http://business.financialpost.com/2013/08/15/shells-kitimat-lng-project-gets-boost-from-asian-partners/?__lsa=128e-8da1
Congressman Young’s press release
http://donyoung.house.gov/news/documentsingle.aspx?DocumentID=348902
Showing posts with label all-Alaska natural gas pipeline. Show all posts
Showing posts with label all-Alaska natural gas pipeline. Show all posts
Tuesday, November 12, 2013
Saturday, April 13, 2013
HB4 is a bad idea and a slap in the voters' faces
HB4 creating the Alaska Gas Development Corporation was passed by the Alaska House on 2 April, 2013 by a vote of 30-9. This bill is the culmination of over 10 years of effort on the part of the Legislature and the Governor to end the Alaska Natural Gas Development Authority created by 138,000 votes for Proposition 3 in 2002. HB4 is now before the Alaska Senate, where it will probably pass, given the list of sponsors in the Senate: Senators Dyson, Huggins, Giessel, McGuire, and Micciche. There are only 20 members of the Alaska Senate. Senator Charlie Huggins is the Senate President. Therefore, the likelihood of this legislation failing to pass is nil.Alaska’s history of attempting to get a natural gas pipeline built to move natural gas from the North Slope to market has been convoluted. HB4 further complicates this confusing and contradictory history.
Prop 3 passed in 2002 mandated the State to create a natural gas development authority (AS 41.41) to build the all-Alaska natural gas pipeline from Prudhoe to Valdez, with a 250 mmcf spur to south central. The capacity of the all-Alaska natural gas pipeline (AANGPV) to be built was approximately 2.5-3.0 bcf/da with most of the gas converted to LNG and then shipped to market in the U.S. or to foreign markets. Proposition 3 created the Alaska Natural Gas Development Authority (ANGDA), which was to be have been the vehicle that would oversea the natural gas development potential for Alaska. From the very start, ANGDA was vehemently opposed, disrespected, and diminished by Governor Frank Murkowski, Governor Sarah Palin, Governor Sean Parnell and the Legislature from 2002 forward. With their opposition to ANGDA, the aforementioned belied any intention of respecting the peoples’ will where building a natural gas pipeline was concerned. This disrespect has been amplified in the creation of the Alaska Gas Development Corporation (AGDC) and the Alaska Stand Alone Pipeline (ASAP).
Governor Frank Murkowski rejected the will of the voters with his churlish opposition to ANGDA and the all-Alaska natural gas pipeline (AANGPV). Murkowski funded ANGDA with an initial appropriation of $50,000 and the Legislature gave more money later in 2003. ANGDA’s yearly budgets then and since barely covered the cost of the few positions created. Compare this situation with the $400 million that will be shoveled into the AGDC’s Alaska Stand Alone Pipeline (ASAP) by the Legislature under HB4 and the $214 million previously appropriated for the various iterations of the ASAP line. Today, ANGDA’s website lists four on the ANGDA Board and one employee as Executive Director. Harold Heinze, a former CEO of ARCO, was the previous Chief Executive Director until he stepped down on December 8, 2011.
ANGDA accomplished much during its colored history. ANGDA explored moving gas south by truck to Fairbanks, permitting of the 250 mmcf spur line from Glennallen to Palmer’s Enstar natural gas hub, and building a natural gas pipeline from the Kenai Penninsula north to communities along the Parks Highway, which would have provided an incentive for further exploration and development of the Cook Inlet oil and gas fields. Given the dearth of resources and the failure by the Legislature and the Governors, and their opposition to ANGDA, to provide for bonding capacity, as has been done for the AGDC through Alaska Housing Finance Corporation and the Alaska Rail Road, ANGDA’s accomplishments were not insignificant. Under Harold Heinze and Scott Heyworth, ANGDA moved to meet its statutory mandate as was allowed by hostile administrations and an indifferent and, since the 2009, an increasingly hostile Legislature.
During his term, Governor Frank Murkowski had promised a natural gas pipeline and worked diligently on a 4.0 bcf/da pipeline proposal to make his promise reality. His efforts allegedly culminated in a contract with Exxon, Conoco and British Petroleum Alaska to build his pipe dream. The Palin campaign was able to successfully promote the all-Alaska natural gas pipeline in opposition to Murkowski’s efforts. It was revealed that what Murkowski called a contract was nothing more than an intent on the part of the oil companies to study the viability of building a 4.0 bcf natural gas pipeline to Alberta.
The size of any pipeline has also been an interesting side issue, and one often overlooked in any debate. The natural gas pipeline strategy effected under Murkowski, Palin and Parnell has been for a 4.0 bcf/day natural gas pipeline from the North Slope to Alberta. The theory being that there must be sufficient volume to replace declining revenues produced by the North Slope’s declining oil production. The all-Alaska natural gas pipeline proposed in 2002 was to be a 2.5 bcf with Bill Walker expanding that to 3.0 bcf under his campaign proposal. The AANGPV would terminate at an LNG train to convert the methane to Liquid Natural Gas (LNG).
Bill Walker’s AANGPV proposal would have provided for use of the gas liquids in-state to grow Alaska’s private sector, whereas Palin/Parnell’s AGIA, both the Canadian route and the LNG proposal under consideration to Valdez, and Murkowski’s proposal intended that the gas and gas liquids be shipped out of state for consumption and use elsewhere with little benefit to Alaskans beyond the in-state pipeline and LNG train construction and a direct infusion of cash at the State level.
The Alaska Oil Gas Conservation Commission (AOGCC) has set a limit on the amount of natural gas that is available for sale in order to maintain sufficient pressure on North Slope legacy fields to allow production of remaining oil reserves. AOGCC has set a limit of 2.5-3.0 bcf available per day to deliver to a pipeline. Over 8 bcf per day is now reinjected back into the oil fields on the North Slope in order to maintain pressurization of the fields to make oil production feasible. AOGCC has been pretty consistent in its requirement that at least 5 bcf of the 8 bcf of gas produced per day be reinjected. The priority is in maintaining the State’s oil revenues.
During her 2006 campaign, Sarah Palin supported the mandate imposed by Proposition 3 and the construction of the AANGPV. Upon taking her oath of office, then Governor Sarah Palin turned her back on her support for that mandate and project, and moved forward with her Alaska Gas Inducement Act, which, to date, has produced nothing. AGIA was almost a mirror of Murkowski’s proposed pipeline plan. Instead of relying upon the Producers (Exxon, BP and Conoco), AGIA granted an exclusive to the winner of the competition promoted by the Palin Administration. Unfortunately, there was only one competitor, and that was TransCanada. Her successor, Governor Sean Parnell has not been able to move the proverbial natural gas pipeline football forward one inch towards a commitment for construction, a timeline to do anything, or even claim a successful open season.
During the 2010 campaign for governor in the Republican Primary, Bill Walker championed the AANGPV in his bid for the Republican nomination for Governor. Walker added a new dimension to the pipeline conversation that has been ignored since Parnell’s victory in the Republican Primary. That new dimension was the idea of value added resource development in the use of some of the gas to provide cheaper energy for the agriculture, timber, and mineral industries. Walker’s proposal would have seen take offs to communities down the Richardson Highway and at Glennallen. There was discussion regarding another spur across the Denali Highway to Cantwell. Fairbanks would have benefitted from the pipeline as the pipeline would have gone through with the gas liquids stripped at Fairbanks. The propane and butane would have been used as alternative fuels, with the ethane, hexane and other components being used to provide the building blocks for a plastics and petrochemical industry, giving a benefit to Alaska’s economy well beyond just the construction of the AANGPV. Walker’s proposal was the only proposal for a natural gas pipeline that went beyond just exporting Alaska’s gas to a foreign or domestic market.
The ASAP proposal was previously known as Harry Noah’s pipeline under Sarah Palin/Sean Parnell. The economics were never viable, but $14 million in State funding was appropriated to Noah’s pipeline study group for what was then known as the Bullet Line. Rep. Mike Hawker and Rep. Mike Chennault brokered deals to create the Alaska Gas Development Corporation by creating a frankenmonster of an entity to end the public’s mandate represented by ANGDA, but doing what the Legislature never did for ANGDA: providing for the ability to bond to finance any gasline projects using the resources of the Alaska Rail Road and the Alaska Housing Finance Corporation.
The Republican Primary in 2010 saw three competing natural gas pipeline projects: former Rep. Ralph Samuels promoted the ‘Bullet Line’ (ASAP), Governor Sean Parnell promoted AGIA, and former Mayor of Valdez Bill Walker promoted the AANGPV.
For some reason, it was fine by the Republican legislative majority and voters to support the Bullet Line, even though it was to be 100% state financed, and limited to a maximum volume of 500 mmcf/da under AGIA, but having the State of Alaska buy into the AANGPV for a 20% interest in order to control the timeline for construction was ‘socialist’ and a subject of great controversy. The estimated cost of the Bullet Line was $4B-$7B at that time, and the estimated cost of the AANGPV was $20B-$24B. Since, the ‘Bullet Line’ cost estimates have grown to almost $8B, but the AGIA version of the AANGPV costs have increased from the 2010 AANGPV estimates to $45B-$65B according to the October 1, 2012 letter to Governor Sean Parnell from Exxon, BP and Conoco.
Note the disparity in cost increases between the two pipelines. Does it make sense that the estimated costs of the AANGPV should increase by three times over the cost factors of the ‘Bullet Line’/ASAP pipeline? Is this a case of TransCanada/Exxon, BP and Conoco inflating the AANGPV to reinforce their reluctance towards moving North Slope natural gas to market?
The upswing in shale gas production has eliminated the domestic U.S. natural gas. A projected 200 trillion cubic feet of natural gas reserves in continental U.S. shale deposits made the idea of shipping Alaska natural gas to a U.S. market moot. Now, Alaska natural gas will have to compete with domestically produced U.S. shale gas on the world market, given the export permits applied for to move shale gas as LNG to Asian markets.
One of the greatest errors on the part of the Parnell Administration was ignoring the needs of Japan after the 2011 earth quake. A delegation came to Alaska seeking an audience with our governor. They did not meet with him. Another delegation came last year in June and met with DNR Commissioner Dan Sullivan. After leaving Alaska, the delegation comprising four Japanese companies, including Mitsubishi, travelled to British Columbia and Louisiana where they invested almost $4 billion between Cheniere Energy’s Sabine Pass LNG export expansion project and in Shell’s LNG export facility at Kitimat, B.C.
Alaska has a long term (43 years) relationship with Japan with respect to LNG exports. Conoco’s LNG train at Nikiski has been producing LNG for export to Japan since before the completion of the TAPS.
It certainly appears that AGIA has cost Alaska in lost business opportunities.
The ASAP’s primary purpose is no longer just the idea of supplementing Cook Inlet/Kenai gas production until storage and new exploration and development activities eliminate the specter of natural gas shortages that saw the closure of the Agrium ammonium nitrate fertilizer plant in Nikiski several years ago with the loss of 65 jobs. The ASAP will provide natural gas for Conoco’s LNG train at Nikiski for export to Asia. Given that the ASAP will be constructed at State of Alaska expense and its operation subsidized by the State, that is a very good deal for Conoco. At lease some of Alaska’s natural gas will make it Asia’s LNG market.
Cook Inlet has approximately 19 trillion cubic feet of estimated reserves remaining to be discovered. Exploration and development has picked up over the last two years, with more drilling planned this year. Unfortunately, there needs to be an upgrade in transportation infrastructure and storage to get the natural gas from the producing field to sufficient storage to carry south central’s demand through increasingly colder winters. It is not a declining production that is the issue, it is the lack of a suitable intra-field pipeline system to get the gas to the storage facility. As a result, Alaska may see the first importation of natural gas from Russia later this Spring.
With the 2014 gubernatorial elections looming, Governor Sean Parnell is in much the same situation as former Governor Frank Murkowski was at the time of his reelection bid against Sarah Palin. Under Parnell, the AGIA 4.0 bcf pipeline option to Canada is dead. The only viable option is the AGIA LNG option similar in size and scope to the AANGPV, excepting for no spur to Palmer and no in-state use of the gas liquids. Given the conflicts of interest on the part of Exxon, BP, Conoco and TransCanada, LNG from Alaska is unwelcome in the Asian market, because of competing developments on the part of the aforementioned.
Given that his administration cannot state any firm date for the construction of a pipeline, could it be that Governor Sean Parnell is exploring the possibility of running against Senator Mark Begich with the intent of bailing from the Governor’s office before the house of cards that is AGIA falls in on itself?
Such could be inferred from the remarks made by Lt. Gov. Mead Treadwell today. Treadwell commented on the recent upheavals in the Alaska Republican Party and its ability to promote and support the campaign against Democrate Senator Mark Begich. Treadwell stated that it may not be him running against Begich, but possibly Governor Sean Parnell. Treadwell had previously announced his intent to explore a run against Senator Mark Begich on November 30, 2012. If so, Treadwell will certainly run for governor in Parnell’s stead.
Bill Walker may have another shot at the Governor’s mansion if Parnell runs for the U.S. Senate. Under Parnell, Treadwell has not been terribly prominent in the public eye.
It should be noted that Governor Sean Parnell has not opposed theAGDC/ASAP proposal of Rep. Mike Hawker and Rep. Mike Chennault as demonstrated by HB4, nor did he oppose the previous iteration of that project proposed by Harry Noah under then Governor Sarah Palin. This lack of opposition leaves him in a position of being able to claim some degree of success with respect to moving Alaska’s North Slope natural gas to market. Ignoring of course, the fact that the ASAP project is limited to 500mmcf under AGIA, meaning the cost of transport to market will have to be subsidized by the State for the life of the pipeline. The cost of constructing the pipeline would also be borne by the State of Alaska.
Bill Walker’s AANGPV was the best option to date, as his plan provided for instate use of the gas liquids and natural gas to provide for cheap energy for agriculture and industry, alternative fuels for the Bush, and a petrochemical industry for Alaska. TransCanada and Exxon will send the gas and the gas liquids to Asia, if they bother to build a pipeline at all. Further, the AANGPV provided for a 250 mmcf/da spur into the Enstar Hub at Palmer to help mitigate the anticipated storage shortfalls from Cook Inlet natural gas production. A spur from Paxon west to Cantwell was also anticipated providing for a spur feeding to Nenana and connecting to any ANGDA pipeline from Nikiski north to Cantwell.
Competing with any potential Alaska LNG exports, Exxon has several large scale natural gas development LNG projects in the Pacific (Australia, Indonesia, New Guinea), and also needs a market for its portion of Qatar gas with the loss of the U.S. domestic natural gas market to domestically produced shale gas.
TransCanada is part of the Foothills Pipeline Company, which is involved in the Kitimat LNG port project. TransCanada was recently awarded a contract by Shell for a 2.4bcf pipeline to Kitimat, B.C.
Conoco has its portion of Qatar natural gas to move to market, now in Asia, because of the loss of the domestic U.S. market to shale gas. Conoco also has two Australia LNG projects that will compete with Alaska LNG for the Asian market.
Given the conflicts of interest on the part of Exxon Mobil, Conoco Phillips and TransCanada, is it any wonder why there has been no forward movement on AGIA?
Given the conflicts of interest on the part of Exxon and TransCanada, Governor Parnell has to be either totally brain dead, or simply ignoring reality, given his insistence on pursuing AGIA in the face of competing projects on the part of the TransCanada, Exxon, Conoco and BP. There is no provision under AGIA to declare breach of contract based upon a conflict of interest.
Given the increasing availability of natural gas in the world market, it may be better for the State to pay $500 million to $1.5 billion in penalties get out of AGIA. The lost opportunities will cost the state several orders of magnitude of any penalty under AGIA.
What are the differences between the ASAP natural gas pipeline and the all-Alaska natural gas pipeline option to Valdez?
Cost of construction is borne by the State: ASAP–100%; AANGPV–20% State ownership interest
Capacity: ASAP–500 mmcf/da; AANGPV–2.5-3.0 bcf/da
Benefits: ASAP will increase south central consumer gas costs by up to 13%; AANGVP will reduce or maintain present consumer costs, provide for growth in the private sector, because of in-state use of gas liquids, benefit beyond Alaska for growth in Asian customer’s economies
Cost of construction: ASAP–$8B; AANGPV–up to $45B-$65B (oil companies’ estimate) with LNG train and harbor improvements
Route: ASAP–North Slope to Nikiski across several salmon streams, Denali National Park and Denali State Park, but will not go through Fairbanks with no spur for consumers down the Richardson Highway south to Valdez; AANGVP–TAPS corridor from Prudhoe to Valdez covering all communities along the route through Fairbanks, with a 250 mmcf/da spur from Glennallen to Palmer and passing through Fairbanks down the Richardson Highway with a potential spur across the Denali Highway, LNG route--Valdez to Asia
Permitting status: ASAP–no permits issued; AANGVP–existing permits from Yukon Pacific Corp.
Estimated completion: ASAP–2019; AANGVP–two-three years from funding
Cost of gas to delivery per million cubic feet: ASAP–$9-$11.25/mmcf for Anchorage consumers (p13 of ASAP Project Plan); AANGVP–<$10/mmcf from the North Slope to Japan, including TAPS, LNG conversion costs, and LNG tanker costs (p15 of Wood-Mac study)
Gas liquids: ASAP–stripped at North Slope and reinjected; AANGVP–stripped at Fairbanks for use in Alaska
Testimony on HB4 was heard before the Senate Finance Committee today. HB4 is expected to pass out of the committee.
For more information:
ASAP Project Plan, Dec. 20, 2011–Joint In-state Gas Caucus
http://housemajority.org/neuman/pdfs/27/Gas_Caucus_New_Scenario_20121220.pdf
Wood MacKenzie Alaskan LNG Exports Competitiveness Study
http://www.arcticgas.gov/sites/default/files/documents/11-07-alaska-lng-competitiveness-study.pdf
Exxon Mobil LNG:
http://www.exxonmobil.com/Corporate/energy_production_lng.aspx
Conoco Phillips LNG:
http://lnglicensing.conocophillips.com/EN/lngprojects/Pages/index.aspx
British Petroleum LNG:
http://www.bp.com/sectiongenericarticle.do?categoryId=9015376&contentId=7028020
http://www.bp.com/sectiongenericarticle.do?categoryId=9015513&contentId=7043288
TransCanada:
http://www.transcanada.com/coastal-gaslink.html
Other related articles:
http://www.examiner.com/article/agia-transcanada-s-conflict-of-interest
http://www.examiner.com/article/agia-exxon-s-conflict-of-interest
http://www.examiner.com/article/senator-lisa-murkowski-is-selling-lng-to-japan-when-parnell-will-not
http://www.examiner.com/article/support-for-the-all-alaska-natural-gas-pipeline-appears-local-campaigns
http://www.examiner.com/article/the-legislature-and-the-governor-neither-of-whom-can-make-a-decision
http://www.examiner.com/article/denali-is-dead-now-what
Thursday, November 10, 2011
Nothing like the obvious biting one in the butt . . .
The recent announcement by Governor Sean Parnell of his new found support for the LNG natural gas pipeline option was not a surprise. This is a guy who has been politically urinating into the wind for at least the last two years. He has stayed true to Palin’s AGIA in the face of industry trends that dictated an end to the big pipe south before AGIA was even enacted. Governor Parnell could not ignore LNG market trends and the impact of domestic U.S. and Canadian shale gas production any longer without looking like the proverbial village idiot.
Even the pols in the Legislature are getting on the LNG train.
You know something has become so obvious that it cannot be ignored when our legislators begin to mouth platitudes about something that they have ignored since, what, about 1984?
The proverbial handwriting was on the wall for all to see, but those in elected office.
Just before Conoco announced the end of the charade that was the Denali natural gas pipeline project, the president of Conoco in Alaska stated that the intent of Conoco all along was to warehouse North Slope natural gas into the foreseeable future. Why would Conoco conceal its intent to do nothing with its North Slope gas? Conoco and Exxon have a 25 year commitment to move LNG from Qatar to the U.S., where there is no longer a market. Asia is now that market.
Qatar represents a $22B USD investment on the part of Exxon and Conoco to upgrade the northern and southern LNG gas trains and production facilities to meet export obligations. The first LNG tanker with Qatar LNG docked at a U.S. LNG import terminal earlier this summer, where the gas was off loaded and then reloaded back onto a LNG tanker, and shipped to a foreign market. The gas was not used in the U.S.
The Wood-Mac Report on the Alaska Gasline Port Authority’s website supports the viability of exporting Alaska natural gas from Valdez. The estimated cost of delivery to an Asian market for Alaska LNG is $10 per million BTUs (mmbtu equals one thousand cubic feet). Cost of natural gas and shipping from the North Slope to Japan via the all-Alaska natural gas pipeline to Valdez is estimated in the Wood-Mac report at $8.50/mmbtu total, delivered. Pipeline transport is estimated at $1.70/mmbtu, with shipping to Asia by LNG tanker estimated at $.59/mmbtu.
The All-Alaska Natural Gas Pipeline project would have a total volume of 2.7 billion cubic feet per with 250 million cubic feet going to south central via a spur line from Glenallen. It is the volume of gas shipped to Valdez that keeps the price of the 250mcf/day to south central low enough that our natural gas prices would not increase. Further, the gas liquids would be kept for use in-state to provide the resources for a new petrochemical industry in the Fairbanks area.
In 2010, the Japanese were paying up to $12/mmbtus for LNG. The highest price paid this year by Japanese LNG customers has been almost $17/mmbtu.
BG Group PLC of Great Britain has made a significant commitment with Cheniere Energy Partners, Sabine Pass, LA, to export shale gas as LNG to Asia. BG expects a sale price for the LNG at 115% of the Henry Hub price plus a $2.25/mmbtu premium.
Wood-Mac’s projections for a delivered price from Sabine Pass is $10.50/mmbtu, or $2/mmbtu more than delivered Alaska gas. LNG shipping costs to Asia from LA are about four times higher than from Alaska. BG is so bullish on LNG that BG has another LNG export project of its own underway at Lake Charles, LA.
Election year is coming up, and the pols up for election have to fool those idiots that vote once again into believing that they are really gonna do something about Alaska’s economic situation . . . this time, if only they are reelected! We are supposed to ignore bad decisions and the lack of initiative and indecision since about 1994.
Only the State of Alaska’s leadership seems to be incapable of grasping industry trends. Natural gas export by LNG is viable from the U.S. and is being aggressively pursued by all, but Alaska.
Alaska needs real leadership, not more of the same.
Even the pols in the Legislature are getting on the LNG train.
You know something has become so obvious that it cannot be ignored when our legislators begin to mouth platitudes about something that they have ignored since, what, about 1984?
The proverbial handwriting was on the wall for all to see, but those in elected office.
Just before Conoco announced the end of the charade that was the Denali natural gas pipeline project, the president of Conoco in Alaska stated that the intent of Conoco all along was to warehouse North Slope natural gas into the foreseeable future. Why would Conoco conceal its intent to do nothing with its North Slope gas? Conoco and Exxon have a 25 year commitment to move LNG from Qatar to the U.S., where there is no longer a market. Asia is now that market.
Qatar represents a $22B USD investment on the part of Exxon and Conoco to upgrade the northern and southern LNG gas trains and production facilities to meet export obligations. The first LNG tanker with Qatar LNG docked at a U.S. LNG import terminal earlier this summer, where the gas was off loaded and then reloaded back onto a LNG tanker, and shipped to a foreign market. The gas was not used in the U.S.
The Wood-Mac Report on the Alaska Gasline Port Authority’s website supports the viability of exporting Alaska natural gas from Valdez. The estimated cost of delivery to an Asian market for Alaska LNG is $10 per million BTUs (mmbtu equals one thousand cubic feet). Cost of natural gas and shipping from the North Slope to Japan via the all-Alaska natural gas pipeline to Valdez is estimated in the Wood-Mac report at $8.50/mmbtu total, delivered. Pipeline transport is estimated at $1.70/mmbtu, with shipping to Asia by LNG tanker estimated at $.59/mmbtu.
The All-Alaska Natural Gas Pipeline project would have a total volume of 2.7 billion cubic feet per with 250 million cubic feet going to south central via a spur line from Glenallen. It is the volume of gas shipped to Valdez that keeps the price of the 250mcf/day to south central low enough that our natural gas prices would not increase. Further, the gas liquids would be kept for use in-state to provide the resources for a new petrochemical industry in the Fairbanks area.
In 2010, the Japanese were paying up to $12/mmbtus for LNG. The highest price paid this year by Japanese LNG customers has been almost $17/mmbtu.
BG Group PLC of Great Britain has made a significant commitment with Cheniere Energy Partners, Sabine Pass, LA, to export shale gas as LNG to Asia. BG expects a sale price for the LNG at 115% of the Henry Hub price plus a $2.25/mmbtu premium.
Wood-Mac’s projections for a delivered price from Sabine Pass is $10.50/mmbtu, or $2/mmbtu more than delivered Alaska gas. LNG shipping costs to Asia from LA are about four times higher than from Alaska. BG is so bullish on LNG that BG has another LNG export project of its own underway at Lake Charles, LA.
Election year is coming up, and the pols up for election have to fool those idiots that vote once again into believing that they are really gonna do something about Alaska’s economic situation . . . this time, if only they are reelected! We are supposed to ignore bad decisions and the lack of initiative and indecision since about 1994.
Only the State of Alaska’s leadership seems to be incapable of grasping industry trends. Natural gas export by LNG is viable from the U.S. and is being aggressively pursued by all, but Alaska.
Alaska needs real leadership, not more of the same.
Sunday, June 6, 2010
FERC Misinformation
A recent decision by the Federal Energy Regulatory Commission (FERC) has provided the grist for the political mill of those opposing the all-Alaska natural gas pipeline and Bill Walker’s candidacy for governor. However, this is a case of the disinformationistas being aided by the silence of the lamb (Parnell), rather than it being the death knell to anyone’s campaign.
FERC recently declined to renew an application by Yukon Pacific Corporation for an LNG export train at Anderson Bay. This decision has been declared a death knell to Walker’s campaign by Walker’s detractors. Walker’s pipeline advocacy is in support of the all-Alaska natural gas pipeline to Valdez. The decision has been heralded as barring any export of Alaska gas, thereby ending both Walker’s candidacy and the Valdez pipeline option. Nothing could be farther from the truth.
The silence being on the part of the Parnell Administration in keeping quiet an inquiry of Jan. 28, 2010 from Pipeline Coodinator Bob Swenson made to FERC as reported in the Oil and Gas Journal in an editorial dated March 22, 2010.
Cheniere, Inc. is converting its Sabine Pass, TX LNG import facility to receive foreign LNG and to loop it back for export to Asian markets. Cheniere cites a 42% drop in LNG imports between 2007 and 2008 into the U.S. because of increased domestic supplies. This market trend results from increased supplies of natural gas in the domestic U.S. market from shale gas and other unconventional sources.
Cheniere has also applied for permits to export U.S. domestic produced natural gas to global markets. This would be only the second facility in the U.S. built to export domestically produced LNG to foreign markets. The first such facility was built at Nikkiski, Alaska and has been exporting LNG to Japan since 1969.
In his Jan. 28, 2010 inquiry to FERC, Gov. Sean Parnell’s pipeline coordinator Bob Swenson described 3 scenarios and requested to know if FERC would have regulatory oversight.
Scenario 1 was an in-state pipeline with North Slope gas being used in-state only. FERC’s response was that FERC would have no regulatory oversight authority for such use.
Scenario 2 was an in-state pipeline with North Slope gas being used in-state with some of the gas being exported to domestic U.S. markets. FERC”s response was that FERC would regulatory authority over domestic export to the U.S. market.
Scenario 3 was an in-state pipeline with North Slope gas being used in-state with some of the gas being exported to foreign markets. FERC’s response was that FERC would not have regulatory authority over North Slope gas exported to a foreign market.
FERC does not have regulatory oversight over North Slope natural gas exported to foreign markets. Therefore, the issue of FERC’s denial of Yukon Pacific’s permit to export North Slope gas from Valdez to the U.S. domestic market has no bearing whatsoever on Walker’s Valdez pipeline project.
Parnell knows that Walker’s Valdez pipeline plan is viable and economically sound. Cheniere, Inc.’s filing for an export permit to export domestically produced LNG to global markets further supports Walker’s contention that Alaska should export its natural gas to a global market rather than to an oversupplied U.S. market.
Rival Ralph Samuels has also lauded the FERC decision regarding the YPC permit as supporting his position that Walker’s plan is not viable. Obviously, in light of the response by FERC to the Parnell Administration’s inquiry, Samuels is wrong in his position. Samuels knows full well that FERC has domestic market oversight, not foreign, and that Walker’s plan is to export natural gas to Asia.
On the one hand, Parnell acts to withhold information, on the other, Samuels acts, as have others, to promote half truths.
The positions of the various candidates on the issues regarding the pipelines and the looming economic disaster facing the State would be illuminated at public forums where they would debate on the issues. Unfortunately, Gov. Sean Parnell has decided that he does not want to participate in any more debates until just before the Primary Election in August. He was put on the spot by Walker at the Kodiak Crab Festival on May 29th.
Walker asked Parnell about the $20,000,000,000 give-a-way that his refusal to sign SB 305 separating natural gas taxes from oil taxes will cost the State. This give-a-way amounts to a State subsidy for the Canadian route construction of AGIA or Denali. Both benefit from Parnell’s action. Apparently, Parnell chose to waffle and make polite noises rather than answer a direct question.
It appears that Walker’s growing support is making Parnell and Samuels a bit nervous in the service as it were.
FERC recently declined to renew an application by Yukon Pacific Corporation for an LNG export train at Anderson Bay. This decision has been declared a death knell to Walker’s campaign by Walker’s detractors. Walker’s pipeline advocacy is in support of the all-Alaska natural gas pipeline to Valdez. The decision has been heralded as barring any export of Alaska gas, thereby ending both Walker’s candidacy and the Valdez pipeline option. Nothing could be farther from the truth.
The silence being on the part of the Parnell Administration in keeping quiet an inquiry of Jan. 28, 2010 from Pipeline Coodinator Bob Swenson made to FERC as reported in the Oil and Gas Journal in an editorial dated March 22, 2010.
Cheniere, Inc. is converting its Sabine Pass, TX LNG import facility to receive foreign LNG and to loop it back for export to Asian markets. Cheniere cites a 42% drop in LNG imports between 2007 and 2008 into the U.S. because of increased domestic supplies. This market trend results from increased supplies of natural gas in the domestic U.S. market from shale gas and other unconventional sources.
Cheniere has also applied for permits to export U.S. domestic produced natural gas to global markets. This would be only the second facility in the U.S. built to export domestically produced LNG to foreign markets. The first such facility was built at Nikkiski, Alaska and has been exporting LNG to Japan since 1969.
In his Jan. 28, 2010 inquiry to FERC, Gov. Sean Parnell’s pipeline coordinator Bob Swenson described 3 scenarios and requested to know if FERC would have regulatory oversight.
Scenario 1 was an in-state pipeline with North Slope gas being used in-state only. FERC’s response was that FERC would have no regulatory oversight authority for such use.
Scenario 2 was an in-state pipeline with North Slope gas being used in-state with some of the gas being exported to domestic U.S. markets. FERC”s response was that FERC would regulatory authority over domestic export to the U.S. market.
Scenario 3 was an in-state pipeline with North Slope gas being used in-state with some of the gas being exported to foreign markets. FERC’s response was that FERC would not have regulatory authority over North Slope gas exported to a foreign market.
FERC does not have regulatory oversight over North Slope natural gas exported to foreign markets. Therefore, the issue of FERC’s denial of Yukon Pacific’s permit to export North Slope gas from Valdez to the U.S. domestic market has no bearing whatsoever on Walker’s Valdez pipeline project.
Parnell knows that Walker’s Valdez pipeline plan is viable and economically sound. Cheniere, Inc.’s filing for an export permit to export domestically produced LNG to global markets further supports Walker’s contention that Alaska should export its natural gas to a global market rather than to an oversupplied U.S. market.
Rival Ralph Samuels has also lauded the FERC decision regarding the YPC permit as supporting his position that Walker’s plan is not viable. Obviously, in light of the response by FERC to the Parnell Administration’s inquiry, Samuels is wrong in his position. Samuels knows full well that FERC has domestic market oversight, not foreign, and that Walker’s plan is to export natural gas to Asia.
On the one hand, Parnell acts to withhold information, on the other, Samuels acts, as have others, to promote half truths.
The positions of the various candidates on the issues regarding the pipelines and the looming economic disaster facing the State would be illuminated at public forums where they would debate on the issues. Unfortunately, Gov. Sean Parnell has decided that he does not want to participate in any more debates until just before the Primary Election in August. He was put on the spot by Walker at the Kodiak Crab Festival on May 29th.
Walker asked Parnell about the $20,000,000,000 give-a-way that his refusal to sign SB 305 separating natural gas taxes from oil taxes will cost the State. This give-a-way amounts to a State subsidy for the Canadian route construction of AGIA or Denali. Both benefit from Parnell’s action. Apparently, Parnell chose to waffle and make polite noises rather than answer a direct question.
It appears that Walker’s growing support is making Parnell and Samuels a bit nervous in the service as it were.
Thursday, April 1, 2010
Ralph Samuels steps in "it" . . .
In an interview with the Frontiersman, gubernatorial candidate Ralph Samuels pretty much damaged his hopes for a successful run against incumbent Sean Parnell or fellow Republican Bill Walker.
In what has to be one of the weirdest statements of any candidate to date on resource development issues Samuels opined:
“A larger diameter in-state gas line running from the North Slope to Valdez presents problems and not enough room for future growth to make it worth the $20 billion investment. First, there is no LNG plant in Valdez, and the plant in Nikiski already has the permit to export the commodity.
Second, and more disturbingly the known reserves in Prudhoe Bay are large enough to supply the pipeline to Valdez with gas for 70 years. This means future gas development is no longer necessary to make the line to Valdez pay off. Why would you go explore for more? You don’t want the (Valdez pipeline) because that’s all you get.” –Ralph Samuels 3/30/2010
I characterize this statement as weird, as this is the first time that any candidate has stated that too much gas is a problem. This is also the first time that any candidate has stated that having enough gas for a 70 year supply of gas to tidewater at 3 billion cubic feet per day is a bad thing.
Samuels’ statement means that his estimate of 70 years of jobs, industry from keeping our gas liquids in-state, and keeping the money and infrastructure in Alaska while exporting a reasonable volume of gas from the North Slope would be bad for an economy that is cooling with the continuing reduction in oil flowing through the Trans Alaska Pipeline.
How is this “long term thinking” on his part, much less demonstrating any business acumen?
It is obvious that Samuels ultimately favors sending most of the North Slope gas to Canada. He states:
“The gas supply on the North Slope is big enough to keep a bullet line operating without harming the prospects of a larger, out-of-state gas line.”
Looking at his list of contributors to his campaign is a list of whose who at Conoco-Phillips and Enstar.
Samuels is another of the give it all to the Canucks and to heck with Alaska and Alaskans. He intends to give Alaska’s resources away without demanding anything in return.
It is common knowledge that Conoco-Phillips/BP’s Denali project intends to supply gas to free Alberta tar sands oil at the cheapest cost possible, with Alaska’s gas liquids—propane, ethane, hexane, butane—going to Alberta’s petrochemical industry. Alaska would get the lowest price for its gas were Denali to happen.
The Valdez line option championed by Republican Bill Walker and mandated by Alaska’s voters in 2002 has all permits in place and the Environmental Impact Statements up to date for the LNG train and the impact of LNG tanker traffic in and out of Valdez and Prince William Sound. This is the only pipeline option for export of our gas to market that keeps the jobs for Alaskans, the infrastructure in Alaska, and our gas liquids for use in-state to build a petrochemical industry. AGIA and Denali, the other two export options benefit Canada, not Alaska.
Samuels’ record is as a 6 year legislator with 2 years as House Majority Leader. Samuel’s was a legislator who voted for the greatest increase in state budgets and a significant increase in the growth of State government. He lacks the credentials to qualify him as a fiscal conservative.
The problem with the bullet line from the North Slope to Port McKenzie in the Mat-Su Valley, is that 1. the route is not finalized, 2. any route being considered crosses 2 wildlife refuges, a federal national park, a state park, and 12 fish streams.
It took 8 ½ years for the Valdez line Environmental Impact Statement to be approved by the federal government. I guess Samuels figures he will just declare such done and that is all there is to the process?
The bullet line sounds like a great idea. Except, the cost of transporting the gas is figured on a volume basis. Further, the impact upon future development and exploration in Cook Inlet by 500mcf/da was unstated by candidate Samuels. In fact, he missed the boat regarding the ability to resolve the real problem with Cook Inlet gas supply.
The problem is the 10 years it takes to get a permit approved to do anything, and then the impact of further delays from specious litigation on the part of the environmental, no growth groups. The Alaska Regulatory Commission is a major impediment with respect to the time it takes to get any permits for exploration, development and improvements where Cook Inlet oil and gas are concerned.
Samuels is a walking statement for why it is necessary to reject the incumbents and prior and serving legislators this coming election. They are the problem, not any answer.
Alaska is in a very serious predicament financially and economically. Without a viable economy, which Alaska’s runs on oil and gas, there is no hope for our sons and daughters staying here. There will not be any jobs here for them, given Samuel’s lack of foresight and logic.
Look at Samuels’ website at http://www.samuelsforgovernor.com/ . Please, if you can find one statement about any position, let me know! This guy evidently stands for . . . leadership? That’s all he says. He says nothing on the website about his positions for anything. And, he wants to be governor of Alaska?
Please be informed this election.
For more information:
http://frontiersman.com/articles/2010/03/31/local_news/doc4bb161049c270431896290.txt
In what has to be one of the weirdest statements of any candidate to date on resource development issues Samuels opined:
“A larger diameter in-state gas line running from the North Slope to Valdez presents problems and not enough room for future growth to make it worth the $20 billion investment. First, there is no LNG plant in Valdez, and the plant in Nikiski already has the permit to export the commodity.
Second, and more disturbingly the known reserves in Prudhoe Bay are large enough to supply the pipeline to Valdez with gas for 70 years. This means future gas development is no longer necessary to make the line to Valdez pay off. Why would you go explore for more? You don’t want the (Valdez pipeline) because that’s all you get.” –Ralph Samuels 3/30/2010
I characterize this statement as weird, as this is the first time that any candidate has stated that too much gas is a problem. This is also the first time that any candidate has stated that having enough gas for a 70 year supply of gas to tidewater at 3 billion cubic feet per day is a bad thing.
Samuels’ statement means that his estimate of 70 years of jobs, industry from keeping our gas liquids in-state, and keeping the money and infrastructure in Alaska while exporting a reasonable volume of gas from the North Slope would be bad for an economy that is cooling with the continuing reduction in oil flowing through the Trans Alaska Pipeline.
How is this “long term thinking” on his part, much less demonstrating any business acumen?
It is obvious that Samuels ultimately favors sending most of the North Slope gas to Canada. He states:
“The gas supply on the North Slope is big enough to keep a bullet line operating without harming the prospects of a larger, out-of-state gas line.”
Looking at his list of contributors to his campaign is a list of whose who at Conoco-Phillips and Enstar.
Samuels is another of the give it all to the Canucks and to heck with Alaska and Alaskans. He intends to give Alaska’s resources away without demanding anything in return.
It is common knowledge that Conoco-Phillips/BP’s Denali project intends to supply gas to free Alberta tar sands oil at the cheapest cost possible, with Alaska’s gas liquids—propane, ethane, hexane, butane—going to Alberta’s petrochemical industry. Alaska would get the lowest price for its gas were Denali to happen.
The Valdez line option championed by Republican Bill Walker and mandated by Alaska’s voters in 2002 has all permits in place and the Environmental Impact Statements up to date for the LNG train and the impact of LNG tanker traffic in and out of Valdez and Prince William Sound. This is the only pipeline option for export of our gas to market that keeps the jobs for Alaskans, the infrastructure in Alaska, and our gas liquids for use in-state to build a petrochemical industry. AGIA and Denali, the other two export options benefit Canada, not Alaska.
Samuels’ record is as a 6 year legislator with 2 years as House Majority Leader. Samuel’s was a legislator who voted for the greatest increase in state budgets and a significant increase in the growth of State government. He lacks the credentials to qualify him as a fiscal conservative.
The problem with the bullet line from the North Slope to Port McKenzie in the Mat-Su Valley, is that 1. the route is not finalized, 2. any route being considered crosses 2 wildlife refuges, a federal national park, a state park, and 12 fish streams.
It took 8 ½ years for the Valdez line Environmental Impact Statement to be approved by the federal government. I guess Samuels figures he will just declare such done and that is all there is to the process?
The bullet line sounds like a great idea. Except, the cost of transporting the gas is figured on a volume basis. Further, the impact upon future development and exploration in Cook Inlet by 500mcf/da was unstated by candidate Samuels. In fact, he missed the boat regarding the ability to resolve the real problem with Cook Inlet gas supply.
The problem is the 10 years it takes to get a permit approved to do anything, and then the impact of further delays from specious litigation on the part of the environmental, no growth groups. The Alaska Regulatory Commission is a major impediment with respect to the time it takes to get any permits for exploration, development and improvements where Cook Inlet oil and gas are concerned.
Samuels is a walking statement for why it is necessary to reject the incumbents and prior and serving legislators this coming election. They are the problem, not any answer.
Alaska is in a very serious predicament financially and economically. Without a viable economy, which Alaska’s runs on oil and gas, there is no hope for our sons and daughters staying here. There will not be any jobs here for them, given Samuel’s lack of foresight and logic.
Look at Samuels’ website at http://www.samuelsforgovernor.com/ . Please, if you can find one statement about any position, let me know! This guy evidently stands for . . . leadership? That’s all he says. He says nothing on the website about his positions for anything. And, he wants to be governor of Alaska?
Please be informed this election.
For more information:
http://frontiersman.com/articles/2010/03/31/local_news/doc4bb161049c270431896290.txt
Sunday, January 31, 2010
AGIA IS A SCREW OVER IF THE PIPELINE GOES TO CANADA!
“TransCanada's inclusion of an LNG option throws a curve into Alberta's hopes to expand its petrochemical industry, which is relying on Alaska gas volumes, especially the liquids contained in the gas stream, for feedstock. According to the Industry Canada website, there are currently insufficient volumes of feedstock to support big new investments in Alberta's petrochemical sector”.—Shaun Polczer, Calgary Herald 1/30/2010
http://www.calgaryherald.com/Alaska+could+bypass+Alberta/2502872/story.html
There it is in black and white from a Canadian source for those of you who still feel that there is any upside to allowing our gas to be transported to Canada.
What does Alaska get out of AGIA to Canada or Denali? SCREWED, THAT’S WHAT!!!!!!!
Any Alaska politician who supports either of the Canadian options should be voted out of office, if not outright impeached!
There is it is, Governor Sean Parnell.
http://www.calgaryherald.com/Alaska+could+bypass+Alberta/2502872/story.html
There it is in black and white from a Canadian source for those of you who still feel that there is any upside to allowing our gas to be transported to Canada.
What does Alaska get out of AGIA to Canada or Denali? SCREWED, THAT’S WHAT!!!!!!!
Any Alaska politician who supports either of the Canadian options should be voted out of office, if not outright impeached!
There is it is, Governor Sean Parnell.
Saturday, January 30, 2010
AGIA is dead but for the politics
Obviously, AGIA is not dead. However, the announcement Friday of a cost increase of an estimated $41B is not conducive to supporting a belief that either AGIA or Denali can be feasible economically. Especially, since the completion date is estimated to be at least 2020.
Given that costs of operations on the North Slope have risen 68% from 2001 to 2009, one can reasonably figure that AGIA’s costs will increase between now and any anticipated start date, say 2015. Since AGIA’s estimated cost was about $15B-$25B, depending upon the source during the Palin v. Murkowski campaign, one can estimate that the completed cost will be somewhere between $75B and $100B by estimated shipment of the first gas in 2020.
Shell announced that it is cutting back its expansion of production of oil from Alberta’s tar sands from a target of 700,000bpd to 225,000bpd for the foreseeable future. Shell will be shifting its emphasis to offshore and onshore exploration, something the company had not emphasized until a recent change in management. Increased cost in the reduction in the expansion of the tar sands recovery was cited as the reason.
It is my belief that AGIA is dead, given the shale gas production Outside and in Canada. Exxon spent $41B buying the company with the largest shale gas holdings in the U.S. One also has to remember that Exxon is committed to a 25 year commitment with Qattar to bring gas to the U.S. The expansion of LNG terminals in the U.S. to 4.5bcf is an interesting number, as that was the planned capacity of big diameter pipelines from Alaska to Canada to the U.S. Any introduction of Alaska gas at that rate would have a depressing effect on the price of natural gas in the region in which it is introduced.
There are those who believe that the President will not allow Alaska to export LNG. That given this belief, the all-Alaska pipeline would not be feasible as Alaska’s gas could not then be exported. This position is belied by the fact that Alaska has been shipping gas from Nikkiski to Japan for the last 40 years. Given this fact, the all-Alaska pipeline would have a market in Asia, primarily in Japan.
The big question now, is what will be the outcome of the AGIA Open Season? Will the producers step up to send gas to Canada? Not likely, for the reasons stated above. However, AGIA was flexible, with a 2.0bcf pipeline to Valdez as the LNG option. That option may see interest, as Asia offers higher prices to Outside markets now uncertain because of shale gas development.
The outcome of the AGIA Open Season will not be known until NOVEMBER, after the general election is over. This plays in the favor of Gov. Sean Parnell. However, if the arguments on the part of Bill Walker regarding the viability and benefits of the all-Alaska pipeline option continue to find favor with Alaskans, Gov. Parnell will need something substantive to show the people that AGIA will produce results before the August Primary.
It is obvious, with the filing of HB312, that Rep. Jay Ramras, Rep. Mike Chennault, Rep. Mark Neumann, Rep. Bill Stoltze, Sen. Lesil McGuire, Sen. Charlie Huggins are hoping to confuse the idea of the Noah Parks Highway 500mcf pipeline sufficiently to get the people to forget that we voted for the all-Alaska route back in 2002 and again in 2006 with the election of Palin/Parnell. These legislators forget that they have ignored the will of the people as egregiously as did governors Murkowski, Palin and Parnell.
The reality here is that although there was no announcement, AGIA’s viability is suspect, due to the doubling of the price tag over less than 4 years. That fact cannot be attractive to potential investors.
The only sure thing is the all-Alaska natural gas pipeline proposed by Bill Walker, and voted upon by Alaskans in two separate elections. That pipeline is permitted, and ready to begin construction. All it needs is a governor to lead the way.
Given that costs of operations on the North Slope have risen 68% from 2001 to 2009, one can reasonably figure that AGIA’s costs will increase between now and any anticipated start date, say 2015. Since AGIA’s estimated cost was about $15B-$25B, depending upon the source during the Palin v. Murkowski campaign, one can estimate that the completed cost will be somewhere between $75B and $100B by estimated shipment of the first gas in 2020.
Shell announced that it is cutting back its expansion of production of oil from Alberta’s tar sands from a target of 700,000bpd to 225,000bpd for the foreseeable future. Shell will be shifting its emphasis to offshore and onshore exploration, something the company had not emphasized until a recent change in management. Increased cost in the reduction in the expansion of the tar sands recovery was cited as the reason.
It is my belief that AGIA is dead, given the shale gas production Outside and in Canada. Exxon spent $41B buying the company with the largest shale gas holdings in the U.S. One also has to remember that Exxon is committed to a 25 year commitment with Qattar to bring gas to the U.S. The expansion of LNG terminals in the U.S. to 4.5bcf is an interesting number, as that was the planned capacity of big diameter pipelines from Alaska to Canada to the U.S. Any introduction of Alaska gas at that rate would have a depressing effect on the price of natural gas in the region in which it is introduced.
There are those who believe that the President will not allow Alaska to export LNG. That given this belief, the all-Alaska pipeline would not be feasible as Alaska’s gas could not then be exported. This position is belied by the fact that Alaska has been shipping gas from Nikkiski to Japan for the last 40 years. Given this fact, the all-Alaska pipeline would have a market in Asia, primarily in Japan.
The big question now, is what will be the outcome of the AGIA Open Season? Will the producers step up to send gas to Canada? Not likely, for the reasons stated above. However, AGIA was flexible, with a 2.0bcf pipeline to Valdez as the LNG option. That option may see interest, as Asia offers higher prices to Outside markets now uncertain because of shale gas development.
The outcome of the AGIA Open Season will not be known until NOVEMBER, after the general election is over. This plays in the favor of Gov. Sean Parnell. However, if the arguments on the part of Bill Walker regarding the viability and benefits of the all-Alaska pipeline option continue to find favor with Alaskans, Gov. Parnell will need something substantive to show the people that AGIA will produce results before the August Primary.
It is obvious, with the filing of HB312, that Rep. Jay Ramras, Rep. Mike Chennault, Rep. Mark Neumann, Rep. Bill Stoltze, Sen. Lesil McGuire, Sen. Charlie Huggins are hoping to confuse the idea of the Noah Parks Highway 500mcf pipeline sufficiently to get the people to forget that we voted for the all-Alaska route back in 2002 and again in 2006 with the election of Palin/Parnell. These legislators forget that they have ignored the will of the people as egregiously as did governors Murkowski, Palin and Parnell.
The reality here is that although there was no announcement, AGIA’s viability is suspect, due to the doubling of the price tag over less than 4 years. That fact cannot be attractive to potential investors.
The only sure thing is the all-Alaska natural gas pipeline proposed by Bill Walker, and voted upon by Alaskans in two separate elections. That pipeline is permitted, and ready to begin construction. All it needs is a governor to lead the way.
Friday, January 29, 2010
Is ACES the problem?
I think something is being overlooked in this discussion. It is easy to blame taxes. And, one has to give a minor kudos to Parnell who alluded to a potential decrease in the State's royalty taxes. However, there is more here than just taxes.
One of the primary issues is the state of the national economy. There has to be a market to sustain the exploration and development. That the market is in decline due to Obama/Pelosi/Reid's disasterous attempt to rewrite the national economy paradigm. Yeah, GWB had his part in the making of this mess.
That situation definitely has an impact on what happens where with any industry, much less oil and gas.An indicator of the impact of the national economy is Shell's pulling back from oil tar sands recovery expansion from a planned 700,000bpd to 225,000bpd, including putting on hold a potential technology pilot project for insitu recovery. Cost of production is up--and it is here also, a 68% increase in operations costs on the NS from 2001. Therefore, it stands to reason that the oil companies are shifting their focus to portions of world that do not have the regulatory baggage--read nimby/greenie lawsuit--where it is cheaper to operate, even if the return is lower. Exxon and others bid on Iraqi concessions for around $1.40pb.
Shell is going forward with its offshore exploration, something the Parnell Administration seems to be hyping as the new oil rush. State gov't does not get as much directly out that development, but will gain from the jobs and infrastructure in the communities where support bases will be established. Unfortunately, the State is used to a "trickle down" economy where the revenue goes to the State directly and is then distributed to the smaller communities. This type of development, as well as mining will start to put the State back in its place and give new economic power to the communities impacted by the resource development--as it should be instead of this socialist state and colonial economy that is Alaska.
Given the reduction in the tar sands expansion on the part of Shell, it appears that AGIA and Denali may have lost a great deal of their appeal to the Canucks. I doubt those big pipe projects will survive.
This means that ACES is important to maintaining a bloated State gov't, which also feeds bloated local gov'ts. Reducing ACES is going to be a fight, given declining production on the NS.Should ACES be reduced?
Ireland reduced their taxes and boomed economically. Alberta and Saskatchewan played tug of war with the oil industry when Alberta increased its production royalties, and the oil companies bailed for Saskatchewan. Alberta figured the situation out quickly, and made up for lost drilling by lowering the royalty tax. Lowering taxes and royalties cannot be understated in terms of demonstrated positive impact.
Yet, when Parnell in his State of the State suggested that the State's royalty tax may be reduced, a good conservative pundit howled like a striped ape. Why, we just cannot do that!
The reality is that taxes are only one part of the problem in attracting the oil industry back to the State.
Taxes alone will not bring attention back to Alaska, a redress of regulatory impediments must also happen. Marathon Oil did not complain to the Anchorage Chamber of Commerce about taxes, they complained about the regulatory burden in aquiring the permits to drill new exploratory wells.
Calling for a reduction of ACES is only one aspect of what is needed to create a favorable environment for the oil/gas industry to reinvest in Alaska. A reduction in the royalty tax should also be looked at and weighed. However, the primary focus should be on the regulatory impediments. That's where the delays and the real money is lost to the oil companies and any resource development business trying to do business in Alaska.
In the mean time, we need to elect a governor who can move the State forward in the face of declining oil revenues and that candidate is Bill Walker. The all-Alaska pipeline will provide revenue, jobs and infrastructure that would allow the State to reconsider its policies regarding oil and gas development from a position of not having to knee jerk to demands that may be well intended, but might not have the end result desired.
One of the primary issues is the state of the national economy. There has to be a market to sustain the exploration and development. That the market is in decline due to Obama/Pelosi/Reid's disasterous attempt to rewrite the national economy paradigm. Yeah, GWB had his part in the making of this mess.
That situation definitely has an impact on what happens where with any industry, much less oil and gas.An indicator of the impact of the national economy is Shell's pulling back from oil tar sands recovery expansion from a planned 700,000bpd to 225,000bpd, including putting on hold a potential technology pilot project for insitu recovery. Cost of production is up--and it is here also, a 68% increase in operations costs on the NS from 2001. Therefore, it stands to reason that the oil companies are shifting their focus to portions of world that do not have the regulatory baggage--read nimby/greenie lawsuit--where it is cheaper to operate, even if the return is lower. Exxon and others bid on Iraqi concessions for around $1.40pb.
Shell is going forward with its offshore exploration, something the Parnell Administration seems to be hyping as the new oil rush. State gov't does not get as much directly out that development, but will gain from the jobs and infrastructure in the communities where support bases will be established. Unfortunately, the State is used to a "trickle down" economy where the revenue goes to the State directly and is then distributed to the smaller communities. This type of development, as well as mining will start to put the State back in its place and give new economic power to the communities impacted by the resource development--as it should be instead of this socialist state and colonial economy that is Alaska.
Given the reduction in the tar sands expansion on the part of Shell, it appears that AGIA and Denali may have lost a great deal of their appeal to the Canucks. I doubt those big pipe projects will survive.
This means that ACES is important to maintaining a bloated State gov't, which also feeds bloated local gov'ts. Reducing ACES is going to be a fight, given declining production on the NS.Should ACES be reduced?
Ireland reduced their taxes and boomed economically. Alberta and Saskatchewan played tug of war with the oil industry when Alberta increased its production royalties, and the oil companies bailed for Saskatchewan. Alberta figured the situation out quickly, and made up for lost drilling by lowering the royalty tax. Lowering taxes and royalties cannot be understated in terms of demonstrated positive impact.
Yet, when Parnell in his State of the State suggested that the State's royalty tax may be reduced, a good conservative pundit howled like a striped ape. Why, we just cannot do that!
The reality is that taxes are only one part of the problem in attracting the oil industry back to the State.
Taxes alone will not bring attention back to Alaska, a redress of regulatory impediments must also happen. Marathon Oil did not complain to the Anchorage Chamber of Commerce about taxes, they complained about the regulatory burden in aquiring the permits to drill new exploratory wells.
Calling for a reduction of ACES is only one aspect of what is needed to create a favorable environment for the oil/gas industry to reinvest in Alaska. A reduction in the royalty tax should also be looked at and weighed. However, the primary focus should be on the regulatory impediments. That's where the delays and the real money is lost to the oil companies and any resource development business trying to do business in Alaska.
In the mean time, we need to elect a governor who can move the State forward in the face of declining oil revenues and that candidate is Bill Walker. The all-Alaska pipeline will provide revenue, jobs and infrastructure that would allow the State to reconsider its policies regarding oil and gas development from a position of not having to knee jerk to demands that may be well intended, but might not have the end result desired.
Monday, January 25, 2010
Parnell's gotta go . . .
Governor Parnell’s new budget sticker price is a shocker. $10.5B. That’s billion with an explosive “B”. The size of this figure should give rise to fear and trepidation into the hearts of every conservative Alaskan out there, and the rest, also. Out of $10.5B, less than point 5 percent builds anything. The rest goes to State government to maintain the social State that Alaska has become while drunk on oil revenues.
When has there been any desire to build anything since Bill Eagan’s second term in the early 1970s? All State government does now is grow, and make excuses for why we cannot do anything anymore.
Worse, why has the State government grown with the Palin/Parnell Administration? As it turns out, Sarah was no conservative. She sold us a load of bilge on that promise, and Parnell has yet to pump out the bilge water that is the growth in State government since Palin/Parnell came to power. The current increase of 8.6% over Palin’s last budget shows that Parnell is no fiscal conservative.
An example of the expansion of State government is Palin/Parnell’s Climate Change Sub-Cabinet. A State executive cabinet that is managed by a federal EPA employee. This management is contrary to the Palin/Parnell stance and rhetoric in Sean’s State of the State address about maintaining and protecting the State’s sovereignty. This cabinet is no longer needed with the admission of climate change being manufactured science to a political end. This sub-cabinet is also an expansion of government whose function was already covered by DEC, DNR, DMVA on the emergency response side, and other State agencies. Worse, it is administered by Climate Change Strategies, an NGO that promotes the false science of man-made global warming.
Another duplication of effort and money, to the tune of $7 million this year, was the creation of the Pipeline Czar position under Palin and continued by Parnell. We created ANGDA in 2002 by an overwhelming majority to do exactly what Noah and now Bob Swenson were appointed to do. Why is this bureaucracy and expense necessary? What does it do that ANGDA could not do, especially in the face of former Sen. Gene Therriault’s appointment as the governor’s oil and gas advisor. Seems to me that between Therriault and ANGDA, the situation regarding gas pipelines was covered.
DMVA continues an interesting structure that is contrary to our republican tradition in government. The military always has a civilian head. In Alaska, under former Gov. Frank Murkowski, an experiment was tried. The Commissioner DMVA and the position of the Adjutant General were combined. The purpose was to put the two top jobs, military and civilian under one hat. While good in theory, it put the military in control of DMVA, or more particularly, the National Guard Bureau (NGB). The reorganization also resulted in the two top positions being out of State at the same time. With then MG Craig Campbell’s numerous trips to Mongolia, Iraq, and Afghanistan as TAG, DMVA’s remaining leadership was incapable of making any decisions while the Commissioner/TAG was out of town. The Commissioner DMVA should be a civilian, and the TAG should be military, as two separate positions. NGB fuels DMVA. The combination of TAG and Commissioner under one hat gives the feds too much influence. Parnell, as a long time legislator, should have had the moxy to correct this situation. The military should always have civilian leadership. Even the Russians know better.
Under Parnell, we have bigger not better government. We have more money spent with less to show for it. We are in a recession, not a period of growth. There is no pipeline or other major construction on the Parnell plate with an anticipated start date planned. It is time to wipe the slate clean of Palin/Parnell and elect a new governor.
Check out the Div. of Elections website to see who is running. Then, go the candidates’ websites and read up on them.
We cannot afford another round of Palin/Parnell.
When has there been any desire to build anything since Bill Eagan’s second term in the early 1970s? All State government does now is grow, and make excuses for why we cannot do anything anymore.
Worse, why has the State government grown with the Palin/Parnell Administration? As it turns out, Sarah was no conservative. She sold us a load of bilge on that promise, and Parnell has yet to pump out the bilge water that is the growth in State government since Palin/Parnell came to power. The current increase of 8.6% over Palin’s last budget shows that Parnell is no fiscal conservative.
An example of the expansion of State government is Palin/Parnell’s Climate Change Sub-Cabinet. A State executive cabinet that is managed by a federal EPA employee. This management is contrary to the Palin/Parnell stance and rhetoric in Sean’s State of the State address about maintaining and protecting the State’s sovereignty. This cabinet is no longer needed with the admission of climate change being manufactured science to a political end. This sub-cabinet is also an expansion of government whose function was already covered by DEC, DNR, DMVA on the emergency response side, and other State agencies. Worse, it is administered by Climate Change Strategies, an NGO that promotes the false science of man-made global warming.
Another duplication of effort and money, to the tune of $7 million this year, was the creation of the Pipeline Czar position under Palin and continued by Parnell. We created ANGDA in 2002 by an overwhelming majority to do exactly what Noah and now Bob Swenson were appointed to do. Why is this bureaucracy and expense necessary? What does it do that ANGDA could not do, especially in the face of former Sen. Gene Therriault’s appointment as the governor’s oil and gas advisor. Seems to me that between Therriault and ANGDA, the situation regarding gas pipelines was covered.
DMVA continues an interesting structure that is contrary to our republican tradition in government. The military always has a civilian head. In Alaska, under former Gov. Frank Murkowski, an experiment was tried. The Commissioner DMVA and the position of the Adjutant General were combined. The purpose was to put the two top jobs, military and civilian under one hat. While good in theory, it put the military in control of DMVA, or more particularly, the National Guard Bureau (NGB). The reorganization also resulted in the two top positions being out of State at the same time. With then MG Craig Campbell’s numerous trips to Mongolia, Iraq, and Afghanistan as TAG, DMVA’s remaining leadership was incapable of making any decisions while the Commissioner/TAG was out of town. The Commissioner DMVA should be a civilian, and the TAG should be military, as two separate positions. NGB fuels DMVA. The combination of TAG and Commissioner under one hat gives the feds too much influence. Parnell, as a long time legislator, should have had the moxy to correct this situation. The military should always have civilian leadership. Even the Russians know better.
Under Parnell, we have bigger not better government. We have more money spent with less to show for it. We are in a recession, not a period of growth. There is no pipeline or other major construction on the Parnell plate with an anticipated start date planned. It is time to wipe the slate clean of Palin/Parnell and elect a new governor.
Check out the Div. of Elections website to see who is running. Then, go the candidates’ websites and read up on them.
We cannot afford another round of Palin/Parnell.
Thursday, January 21, 2010
Walker Responds to Parnell's State of State Address
Follows is Bill Walker, Republican Candidat for governor's response to the Gov's State of the State address. Parnell's address can be viewed at :
http://www.examiner.com/x-2968-Alaska-Gubernatorial-Examiner~y2010m1d21-Gov-Parnells-State-of-the-Union-Address
FOR IMMEDIATE RELEASE
BILL WALKER RESPONDS TO STATE OF THE STATE ADDRESS
January 20, 2010
Today Bill Walker released the following statement regarding Governor Parnell’s state of the state address.
“With his support of AGIA, Governor Parnell continues to ignore the economic realities of a changing world. While he recognizes that bringing Alaska gas to market is the biggest opportunity ahead of Alaska, he has committed to stay the course in a process that everyone knows will fail.
As an Alaskan, I am deeply troubled by the Governor’s willingness to place our fragile future in the hands of outside interests and foreign governments. If the State does not take control of the process and construct an all-Alaska pipeline to Valdez there will not be a gas pipeline.
The Governor’s “permit and they will come approach” has repeatedly failed to secure an Alaska natural gas pipeline. Both TransCanada predecessors in the 1980’s for a line through Canada, and the Yukon Pacific Corporation in the 1990’s for an All-Alaska project, expended hundred of millions of dollars securing final regulatory approvals hoping to attract producer participation with that strategy. It failed then and will fail now.
Further, since AGIA passed, the U. S. Department of Energy has estimated that the United States has sufficient gas for the next 100 plus years due to recent proven shale gas reserves. Yet the Governor continues to tell the people of Alaska that there is demand for our gas in the lower-48, even going as far as to suggest we will soon become American’s next great ‘gas province.’ Let me be clear – his misrepresentation of the facts about shale gas is beyond out of touch, it is out of line.
Planned gas import terminals in western Canada have reversed course and are now being developed as gas export terminals (Kitimat, B.C.). Billions are being spent to ramp up production all across North America in the newest energy gold rush, and Exxon Mobil has even acquired the second largest shale gas company for $41 billion. Companies, states and countries have reacted around the globe, yet we continue to pursue the AGIA process knowing it charts a course into Canada that leads nowhere.
As governor I will keep Alaska’s jobs, gas and future within Alaska, develop a pipeline on our timeline and under our control, and will sell Alaska gas to world markets. Our Gas, Our jobs, Our Future.”
http://www.examiner.com/x-2968-Alaska-Gubernatorial-Examiner~y2010m1d21-Gov-Parnells-State-of-the-Union-Address
FOR IMMEDIATE RELEASE
BILL WALKER RESPONDS TO STATE OF THE STATE ADDRESS
January 20, 2010
Today Bill Walker released the following statement regarding Governor Parnell’s state of the state address.
“With his support of AGIA, Governor Parnell continues to ignore the economic realities of a changing world. While he recognizes that bringing Alaska gas to market is the biggest opportunity ahead of Alaska, he has committed to stay the course in a process that everyone knows will fail.
As an Alaskan, I am deeply troubled by the Governor’s willingness to place our fragile future in the hands of outside interests and foreign governments. If the State does not take control of the process and construct an all-Alaska pipeline to Valdez there will not be a gas pipeline.
The Governor’s “permit and they will come approach” has repeatedly failed to secure an Alaska natural gas pipeline. Both TransCanada predecessors in the 1980’s for a line through Canada, and the Yukon Pacific Corporation in the 1990’s for an All-Alaska project, expended hundred of millions of dollars securing final regulatory approvals hoping to attract producer participation with that strategy. It failed then and will fail now.
Further, since AGIA passed, the U. S. Department of Energy has estimated that the United States has sufficient gas for the next 100 plus years due to recent proven shale gas reserves. Yet the Governor continues to tell the people of Alaska that there is demand for our gas in the lower-48, even going as far as to suggest we will soon become American’s next great ‘gas province.’ Let me be clear – his misrepresentation of the facts about shale gas is beyond out of touch, it is out of line.
Planned gas import terminals in western Canada have reversed course and are now being developed as gas export terminals (Kitimat, B.C.). Billions are being spent to ramp up production all across North America in the newest energy gold rush, and Exxon Mobil has even acquired the second largest shale gas company for $41 billion. Companies, states and countries have reacted around the globe, yet we continue to pursue the AGIA process knowing it charts a course into Canada that leads nowhere.
As governor I will keep Alaska’s jobs, gas and future within Alaska, develop a pipeline on our timeline and under our control, and will sell Alaska gas to world markets. Our Gas, Our jobs, Our Future.”
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