New Calls to Dump AGIA

The Alaska Gasline Port Authority (AGPA) has a new press release (LINK) calling for an LNG plant at Valdez (LINK to Report).

In a nutshell the report claims that an LNG plant at Valdez is competitive with other LNG projects for supplying LNG to Asian buyers.

The report does a good job of quantifying the demand side without any actual indication of buyer interest in Alaskan LNG. At this point in time non binding expressions of interest would go the next step to show that buyers are actually interested and armed with baskets of cash. This is important because all Alaskan gas projects are empty promises until buyers step up.

Some other metrics from the report - The LNG plant is estimated to cost $1,200/ton and operate on 9.65% of the gas feed. The reports assumes that pipeline LNG gas plant owner operators will be satisfied with 8% ROE and that natural gas liquids will garner $80/bbl.

The all in cost of delivered LNG is estimated to equal $8.50/MMBTU priced at rates indexed to crude oil prices. This cost well below current and projected LNG cost.

Weak points - 8% ROE won't bank the deal. Think 14% - 15%. Without some indication of buyer or developer interest the report has the empty ring of the early days of project promotion.

Instead we're hearing the Tokyo Gas is looking to Atlantic LNG (LINK).

Recommendation: An Asian LNG buyer should cash in US treasuries and take a large equity position in securing Alaskan LNG. Let's face it who wouldn't rather own MMBTUs instead of USDs if the exchange rate is $8.50/MMBTU.

Arctic Gas Headlines

Mackenzie bounces back - First Oil 2018, Construction in 2013 claimed. Sounds good to me.

Mackenzie pipeline wins federal cabinet approval after years of delay

"The next step will be for the project’s backers, which also include ConocoPhillips, ExxonMobil, Shell and the Aboriginal Pipeline Group, to resume negotiations with the federal government over a fiscal framework."

Where have I heard that before?

Point Thomson Talks Continue - Important source of Alaska gas for the pipeline.

Global LNG-Japan tsunami bullish for Asia LNG spot market LNG and fuel oil to fill the gap.

Denali Alaska pipeline project to miss deadline

FERC reports to Congress on the Alaska Gas Pipeline

TC Alaska has stated that it is intensifying its efforts to finalize its project design and compile the information necessary to file a complete application with the Commission in October 2012.

Mine Wants to Build Gas Pipeline From Cook Inlet - The next pipeline project?

NovaGold says it wants to build a natural gas pipeline from Cook Inlet to provide power to its Donlin Creek Mine near the Kuskokwim River

Cook Inlet LNG Closing

When the numbers stop making sense oil and gas firms pull out. First Agrium closed the fertilizer plant, now ConocoPhillips and Marathon are closing the LNG plant. The press reports sound like the plant will be mothballed and maintained for possible storage use.

ConocoPhillips spokeswoman Natalie Lowman said the intent is mothball the plant "and preserve it for future options that might include exports for natural gas being delivered from the North Slope, imports of LNG, and just generally any reconfiguration of the plant for other natural gas supply options."

Is reconfiguration a code word for "import terminal"

LINKS of the Week

ConocoPhillips Alaska boss killed in avalanche

Chinese Seen As Potential Alaska Gas Customer (Investing in AK gas/LNG makes more sense then buying 0.01% US Govt. Bonds)

ACES has put many Alaskans out of work

South Korea to begin gas hydrate and continental shelf development in 2010 (Huh?)

Gas market goes global - Shale's impact felt around the world

Denali's January 2010 FERC report

The Development of a Global LNG Market Is it Likely? If so, When?

Weekly Links

No earth shattering news this week, but here's a few links and items worth keeping an eye on:

LNG demonstration video (LINK) Spoiler Alert: It's cold, it burns, and the dude has a Bic lighter.

LNG Presentations - Who's got it, who wants it and what they pay for it. (LINK)

An Alaska Gas Pipeline article from 1979 (LINK) The most delayed project in history?

Mackenzie Gas Project Report due 31 Dec 09 (LINK).

TransCanada Alaska Pipeline Project's Pre-Filing Monthly Activity Report November 2009. PF09-11-000. (FERC WEBSITE LINK) Yawn....

Denali November09 Status Report (FERC WEBSITE LINK) Notable quote "lack of progress on the State of Alaska’s fiscal regime for natural gas production"

A road to somewhere (with oil) (LINK)

LNG Exports to Japan Challanged

Senator wants to stop Alaskan gas exports to Japan

By Tom Doggett (Reuters): A U.S. senator has asked the Energy Department to revoke a recent order authorizing energy companies to continue exporting liquefied natural gas from Alaska to Japan and other Pacific Rim markets. (LINK)

The Anti Free Market Senator is Ron Wyden of Oregon.   Read his press release HERE.

I guess according to Senator Wyden, Alaska LNG should be sold to the Peoples Republic of Oregon at a loss.

If Wyden and the people of Oregon want Alaska LNG - Step up and make a better offer. It's called the free market systems.