After decades of trying -- and failing -- to develop a natural gas pipeline from its North Slope to Canadian and Lower 48 markets, Alaska is looking to Asia -- accessible by liquefied natural gas (LNG) tankers -- to commercialize its large gas resource.
Following a meeting last Thursday with the chiefs of BP plc, ConocoPhillips and ExxonMobil Corp., Gov. Sean Parnell emphasized the need for producer cooperation to achieve the LNG goal. The Parnell administration is targeting exports to Asia to meet increasing demand there, it said (see related story).
Parnell and BP's Bob Dudley, ConocoPhillips' Jim Mulva and ExxonMobil's Rex Tillerson met for two hours. The meeting took place at the request of Parnell after he called on the three companies -- the major leaseholders for gas reserves on the North Slope -- to work together on developing an LNG project that focuses on exporting North Slope gas to Asia (see NGI, Oct. 31, 2011).
Alaska has resolved litigation of the Point Thomson gas field leases on the North Slope with ExxonMobil (see NGI, Aug. 29, 2011), but "there's still no public word from the other working interest owners about whether they're going to join us in a settlement," Parnell said last October.
"We had a productive discussion about how to get alignment between the companies and grow Alaska's economy through oil and gas development," Parnell said of last week's meeting. "I made it clear that we want to see progress on commercializing Alaska's gas for Alaskans and markets beyond.
"For a gas project to advance, all three companies need to be aligned behind it. This meeting is an important step, but much work remains."
Corporate and state alignment was also sought in support of efforts to develop the latest iteration of the Lower 48 gasline under the state's Alaska Gasline Inducement Act, the centerpiece of former Gov. Sarah Palin's administration. TransCanada Corp. was the winner of the state concession to construct the line and was eventually joined by ExxonMobil in the effort. However, that project has failed to advance, and a competing effort by BP and ConocoPhillips -- Denali: The Alaska Gas Pipeline -- was scrapped (see NGI, May 23, 2011; April 21, 2011). Separate proposals originating in the 1980s for a large diameter pipe south and another for a line to the Alaska coast with a large liquefaction plant for exports both failed.
Alaska officials visited China last November for an energy conference. While there, Deputy State Commerce Commissioner Curtis Thayer talked up LNG from Alaska. But it wasn't the first time in recent years Alaska has reached out to Asian markets. In 2008 an Alaska delegation returned from China where its members, who included former governor Wally Hickel (see NGI, May 19, 2008) and then-House Speaker John Harris, said they heard a persuasive argument for exporting LNG to China and elsewhere.
The potential to export LNG to Asia has long been considered alongside and in the background of interstate and intrastate pipeline discussions. What's ironic is that while projects in Western Canada and the U.S. Gulf Coast are seeking first-time LNG export status in those regions, Alaska has been shipping LNG to Japan for decades.
After being slated for mothballing last year, the Kenai LNG terminal recently got a new lease on life when operator ConocoPhillips said it would continue sending LNG from the terminal this year (see NGI, Jan. 2). However, whether renewal of the terminal's export license, which expires in 2013, will be sought remains to be seen.
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