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Alaska LNG Project Backers File for Export Authorization

Backers of a plan to pipe, liquefy and then ship Alaska North Slope natural gas to global markets have applied to the U.S. Department of Energy (DOE) for export authorization for their multi-billion-dollar project.

"This is a significant milestone for the Alaska LNG [liquefied natural gas] project and demonstrates continued progress toward developing Alaska's resources," said Steve Butt, Alaska LNG Project LLC senior project manager. "Filing of an export application is a critical step in commercializing North Slope natural gas."

The application requests authorization to export up to 20 million metric tons per year (974 Bcf or 2.7 Bcf/d)  of LNG for a period of 30 years to countries that have existing free trade agreements (FTA) with the U.S., as well as to non-FTA countries.

Project participants are the Alaska Gasline Development Corporation and affiliates of TransCanada Corp., BP plc, ConocoPhillips, and ExxonMobil Corp. The parties recently signed a commercial agreement for the project (see Daily GPIJuly 3), which is currently in the pre-front-end engineering and design phase with completion expected in 2016.

The proposed project facilities include a liquefaction plant and terminal in the Nikiski area on the Kenai Peninsula; an 800-mile, 42-inch diameter pipeline; up to eight compression stations; at least five offtake points for in-state gas delivery; and a gas treatment plant to be located on the North Slope (see Daily GPIMay 7).

“The project would be the largest integrated gas/LNG project of its kind ever designed and constructed, with an estimated cost of $45 billion to $65 billion,” the filing with DOE’s Office of Fossil Energy (FE) said. “With the granting of the authorization sought here, DOE/FE has the potential to unlock the vast natural gas resources on the North Slope. Absent granting of the requested export authorization needed to facilitate construction of the project, the ability to meet Alaska in-state gas demand will continue to be very challenging.”

Exports to FTA countries are presumed to be in the public interest and are routinely approved; non-FTA export authorizations are more difficult to obtain. DOE, which has come under criticism from some for allegedly slow-walking applications, recently proposed changes to its review process that would make FERC project approval necessary before an application could be taken up by DOE (see Daily GPIJune 4May 29). The Alaska LNG project has not yet made its filing at the Federal Energy Regulatory Commission, an ExxonMobil spokesperson told NGI.

Because Alaska’s North Slope gas is stranded and their mega-project does not have the benefit of existing gas pipeline infrastructure, the project backers said in their application that they should not have to wait in DOE’s Lower 48 project queue, nor should they be subject to the review protocol changes proposed by DOE.

“Given the unique nature of the proposed project and the geographically separate supply base, Alaska LNG Project LLC respectfully requests that this application not be subject to DOE/FE’s existing order of precedence for processing non-FTA LNG export applications,” the filing said. “Further, Alaska LNG Project LLC respectfully requests that this application not be subject to any new procedures adopted as a result of DOE/FE’s proposed procedural change for processing non-FTA export applications….

“This project stands alone as there is no other application pending before DOE/FE to export North Slope natural gas. DOE has consistently treated applications to export LNG from Alaska differently from Lower 48 applications.”

Alaska has been exporting LNG from a terminal at Kenai since 1967. The source of that gas is the Cook Inlet region in Southcentral Alaska. Terminal operator ConocoPhillips Alaska Natural Gas Corp. was recently re-authorized to export from the terminal, and its application was not subject to the Lower 48 queue (see Daily GPI, April 14).

According to a study by NERA Economic Consulting that was submitted in support of the application, the project would have "unequivocally positive" economic impacts in Alaska and the United States. The Alaska LNG project is anticipated to create up to 15,000 jobs during construction and 1,000 jobs for operation of the facilities.

Earlier this month it was announced that Enbridge Inc. has been in exclusive talks with Alaska officials to potentially construct, own and operate an in-state natural gas pipeline to serve interior and Southcentral Alaska. The 727-mile pipeline is a potential alternative to the larger pipeline and LNG terminal and is intended to meet in-state gas needs should the larger project not advance (see Daily GPIJuly 11).

Last month FERC gave its nod to Sempra Energy's Cameron LNG export project in Louisiana, making it and Cheniere Energy Inc.'s Sabine Pass the two projects to have received FERC and DOE non-FTA export approvals; however, Cameron’s is conditional, for now (see Daily GPIJune 19).

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