Top oil and gas producers work with state of Alaska for liquid natural gas pipeline

History was made last week when the state of Alaska, along with Alaska’s top oil and gas developers, signed a commercial agreement to move forward with the development of Alaska’s natural gas. This historical move will have all of the major developers working together on a singular project for the first time.

Between 2011 and now, the Parnell Administration and Alaska’s top oil and gas producers have held a series of talks on how to cooperate in a joint effort to pursue a liquid natural gas project, or LNG.

ConocoPhillips spokeswoman Amy Burnett said the Legislative Budget and Audit Committee hired PFC Energy, an international consulting firm, last August and gave an extensive briefing to Alaska legislators during a week-long conference. PFC concluded that state involvement with the LNG project was important for Alaska.

The Alaska Department of Natural Resources hired a second consulting firm, Black and Veatch, last November and concluded that state participation “can provide key benefits to the state, including creating alignments of interest and potentially increasing state cash flow.”

Tony Palmer, TransCanada vice president of major projects and development, says the market for Alaska’s Natural Gas in Asia has brought all parties together, including the state of Alaska, for the first time to develop this resource.

Palmer says that the Parnell Administration will propose a bill to the legislature early next week for approval, which will likely lead to public hearings and debate. If approved by the Legislature, the project will move forward into the pre-FEED stage, in which the major players will conduct engineering, design and cost estimation for development.

The legislation will establish guidelines for the state’s participation in the liquid natural gas program, which includes terms for state participation and gas share, provides for confidential process, and is subject to subsequent legislative ratification to develop terms for project enabling contracts,

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Palmer says the plan tentatively calls for the production of a natural gas pipeline originating in Prudhoe Bay and ending in Nikiski, where there will be a processing plant. Once the natural gas is processed into liquid form it will be shipped and sold to countries in Asia.

The HOA says the project will be beneficial to Alaska by allowing for competitive prices of in-state gas supplies, the sale of liquid natural gas to global markets, increased opportunities for Alaska contractors, additional revenues for the state, infrastructure for development of onshore and offshore state and federal lands, and job creation in the exploration, development and transportation of natural gas fields.

“This is a significant development for Alaska’s future, and if approved by the legislature, this project will create thousands of jobs for Alaskans,” Palmer said.


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