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Gazprom Touts Development Prowess to Alaskans

October 20, 2008
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Executives from Russia's Gazprom visited Alaska last Monday to meet with the state's Department of Natural Resources, ConocoPhillips CEO James Mulva and representatives of Arctic Slope Regional Corp. to offer assistance with natural gas development.

Among the delegation were Gazprom CEO Alexei Miller; Valery Golubev, a former Soviet-era KGB colleague of Vladimir Putin; and Alexander Medvedev, who oversees Russia's gas exports. The group participated in a seminar titled "Advanced Experience of Large Upstream and Midstream Projects in the Extreme North Environment: Technologies, Ecology and Social Responsibility."

The meeting followed recent warnings by Alaska Gov. Sarah Palin, a U.S vice presidential aspirant, that Russia's resurgence could be a threat. Palin also has said she supports North Atlantic Treaty Organization (NATO) membership for former Soviet republics Ukraine and Georgia. "Gazprom's entire senior management goes into Sarah Palin's backyard during a contentious election. There's a message there," said Chris Weafer, chief strategist at UralSib Financial Corp. in Moscow, as reported by Bloomberg.

Gazprom said it emphasized to its Alaska audience that conditions in its traditional working areas are similar to those in Alaska. "Gazprom has gained an extensive experience in hydrocarbon field development, gas pipeline construction and operation, environmental protection and resolution of social problems in the Extreme North environment," the company said. "Gazprom's experience will be used while implementing similar projects in Alaska. The scientific and technical cooperation in this area has great prospects."

ConocoPhillips, along with BP, is a backer of the Denali gas pipeline project to commercialize Alaska's North Slope gas reserves with a project that would pipe them to Alberta and then Lower 48 markets. In June Gazprom's Miller said the company had approached the Denali backers about participating in their pipeline project (see NGI, June 16).

Gazprom also met with former Alaska Gov. Wally Hickel, who is a Palin supporter and advocate of developing additional liquefied natural gas (LNG) export capacity in order to sell Alaskan gas to Asian markets (see NGI, July 14a; May 19). Gazprom said that along with consideration of the Denali project and a competing project advocated by TransCanada, "it was necessary to consider the prospects for creating the regional LNG capacities."

While it remains to be seen whether Alaska will expand its LNG export capabilities, efforts under way to advance access to gas reserves for in-state use appear to be advancing. State lawmakers recently visited the area of the proposed route for a gas bullet line and some said last week that the state might even pony up for a share in such a pipeline, according to press reports. The state previously announced a partnership with the Alaska Natural Gas Development Authority and ENSTAR Natural Gas Co. to build the first phase of a pipeline to serve the state's south-central region (see NGI, July 14b).

Construction of the bullet line would start in the south and work north. The first phase could leave Cook Inlet and reach Fairbanks and Interior Alaska by 2013, the state said. Over the next five years the state hopes to see new discoveries of gas within the Cook Inlet basin and along the in-state pipeline's corridor. If not, the project's second phase could continue the line north to access gas supplies in the North Slope Foothills or beyond, making them available to interior and south-central Alaska by 2014. If phase two is not needed, the in-state line could be connected to the main North Slope line when it is completed, which is expected by the state to be around 2018 to 2020.

Alaska has focused on unlocking stranded North Slope gas and getting it to market. However, Cook Inlet gas is similarly stranded, with this significant resource potential stifled by the relatively small potential for market expansion in south-central Alaska. A bullet line would link Cook Inlet gas to an expanding market, creating incentives for explorers to find more gas in Cook Inlet, the state said.

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