The oil price collapse has drawn more clouds over Alaska's plans to commercialize its North Slope natural gas via liquefied natural gas (LNG) export. On Wednesday Gov. Bill Walker said the state and producers have more work ahead to hammer out project costs, and changes are expected.
"The really good news is that all parties are motivated to monetize the gas...That still remains as the goal," Walker said during a briefing for reporters.
The pipeline and terminal project (AK LNG) has been estimated to cost $45-65 billion and has been in its preliminary front-end engineering and design (pre-FEED) phase since 2014. Project participants are the Alaska Gasline Development Corp. and affiliates of BP plc, ConocoPhillips and ExxonMobil Corp. The state recently bought out TransCanada Corp.'s stake (see Daily GPI, Nov. 5, 2015).
Walker and representatives of the three North Slope producers Wednesday emphasized that they are committed to moving the project forward -- all the way to completion if it makes economic sense. But whether it does remains to be seen.
"Given the economic headwinds the oil and gas industry is facing today, it makes sense to explore options for the AK LNG project," said ConocoPhillips Alaska President Joe Marushack. "We are working collaboratively to develop alternative approaches to commercialize North Slope gas."
ExxonMobil's Steve Butt, senior project manager, said the company has spent more than $500 million to date to assess the project and plans to spend more. "We want to understand, do we have a project that's competitive...It's going to take a little bit more time and more money to understand that information and assess the options that may come out of that..."
BP Alaska President Janet Weiss said her company "remains committed" to the effort and will work "to deliver a project with a competitive cost of supply."
Neither Walker nor the producers provided any details on what changes might be in store for the project other than to work on bringing its cost down. "We'll be looking at all options as far as what makes sense for the project," Walker said.
The governor was asked about the price of LNG in Japan, which is lower than what many believe is necessary for the project to go forward. "...[A]t today's prices that certainly would be challenging," he said, "but that's not where the project is at this point." Walker said that based on talks last year with prospective Asian customers, a window of 2024-2025 for the project to come online would mesh with the market.
Pre-FEED work on the project is expected to be completed this fall. More details on potential modifications are expected to be released in early March, the governor's office said Wednesday.
The U.S. Department of Energy in May approved non-free trade agreement country exports from the project (see Daily GPI, May 28, 2015).