Yukon Pacific Corp. has come up with a “slightly new twist tosupplement” its long-standing project to supply Asian markets withAlaskan liquefied natural gas (LNG), and in fact company executiveswere in Mexico yesterday to sound out officials there about it.

In addition to shipping LNG to Japan, Korea and Taiwan, YukonPacific is seriously eyeing the feasibility of transporting liquidgas by tanker to western Mexico to serve growing markets there, aswell as piping gas from Mexico to the California market, saidcompany CEO Jeff Lowenfels. “We think there’s a potential for up toabout 500 tons of LNG per year [in Mexico]. That’s a hefty slug ofLNG,” he told Daily GPI.

Lowenfels said Yukon Pacific met with the Mexico governmentalofficials, a mayor and potential LNG users about its plans topotentially ship to the West Coast, and received a “very positive”reaction.

“We are looking at Mexico as a supplemental market to the AsianLNG market…..We’ve already located a spot [in Mexico] where youcould put it into a pipeline, reverse the flow and bring it up intoCalifornia.”

He thinks Yukon Pacific’s gas-to-liquids project makes moresense than the proposals for new overland pipelines from Alaska tothe Lower 48 states. Many people, especially the politicians inAlaska, think natural gas prices will remain high enough to sustainan overland pipeline. “We do not buy into that. We are quitecertain that the price of gas in the Lower 48 states while it willbe high this winter, will go back to more normal levels between$2-$2.50” within the next 16 to 18 months, Lowenfels said.

Moreover, he noted Yukon Pacific’s project, which has been inthe works for 16 to 17 years, has a headstart on the pipelineprojects because it already has its permits, presidential andDepartment of Energy approvals, and most of the environmental workis completed.

The company’s project would entail construction of the 800-mile,36-inch Trans Alaska Gas System (TAGS), which would ship gas fromPrudhoe Bay to Valdez, AK, where it would be liquefied and placedon tankers for Asian markets and possibly Mexico. The project alsowould require the construction of an LNG receiving facility inwestern Mexico. Lowenfels estimates it would cost about $8.1billion for the first phase of the project, which would produceabout 9.2 million metric tons of LNG.

Right now, Yukon Pacific, a business unit of CSX Corp. ofRichmond, VA, is the sole sponsor of the project, but Lowenfelssaid he “anticipates” others joining.

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