2013 Alaska Gas Heroes and Zeros

Heroes

(1)   Great Bear Petroleum.  These guys took a fresh look at Alaska’s petroleum resources, invested in their ideas and completed their objectives.  New gas and new oil from Alaskan shale deposits will fill the oil and gas pipelines in the future.  Great job – best wishes for continued success.

(2)    Everyone working at Point Thomson.  Oil and gas from Point Thomson will fill the pipeline(s).  All the hard work at Point Thomson will pay off in the future.

(3)    ExxonMobil & The State of Alaska – Nice job on the Point Thomson settlement.

(4)   Governor Parnell – Ramped up his game in 2012, meeting with North Slope Producers CEOs - Bob Dudley of BP, Jim Mulva of ConocoPhillips and Rex Tillerson of Exxon Mobil.  The Point Thomson settlement cleared the deck and in March 2012 the producers announced that they had aligned. He also hit the road and started talking to LNG customers.

(5)    Pedro van Meurs – Keep on sticking to the math and providing reality checks.

(6)   LNG Buyers – The Alaska Gas project is a nonstarter without LNG Buyers and this year we started seeing Japanese and Korean LNG Buyers enter the picture.  With a bit of luck the buyers will become equity partners and help move the project forward.

(7)    Cheniere Energy & Sasol.  Cheniere is moving forward with a lower 48 LNG export project and Sasol is moving forward with a lower 48 gas-to-liquids (GTL) project.  These types of projects will sponge up lower 48 shale gas, and boost gas prices.  Projects like these lead the way and Alaskans should take note and understand the parameters of real world natural gas success stories (here’s a hint – fiscal certainty).
8)  Combined Cycle Power Plants.  One by one high efficiency combined cycle power plants are coming on line.  These plants will replace aging coal plants over the next decade and consume lots of lower 48 natural gas, which will help build natural gas prices back up to a reasonable level.  Anything the builds lower 48 gas price support helps the Alaska gasline project.  Congrats to TVA for bring the John Sevier Combined Cycle plant online ahead of schedule and below cost.

Zeros

(1)    Matt Damon.  Shale gas hater Damon received funding for his anti-shale gas movie from the United ArabEmirates.  The public discourse about lower 48 shale gas ultimately impacts the price of gas, jobs and the future of gas exports from Alaska.  Bad shale gas law could choke Alaskan shale gas development. The American electorate is about as uninformed, uneducated and mathematically impaired as is possible.  It’s sad to see the simpletons led astray by one of our own funded by those who will profit from our poverty. (Ask me how I really feel!).

(2)   The 2012 presidential campaign.  There was no real discussion of the economic benefits of domestic energy development – a real missed opportunity.  Good policies now could help Alaska in the future. In 2008 I looked forward to 2012, now I’m almost certain that we are in the first years of the idiocracy.

(3)    I could name some other maladroit zeros closer to home, mainly for inaction, but for the time being I’m hopeful that project alignment, real customers and forward momentum will pull them along.

 Good luck in the new year, and work safely.

Sasol GTL

Sasol has plans to pursue a Gas to Liquids (GTL) project on the Gulf Coast. (LINK).  Chesapeake has been saying GTL will sponge up the shale gas glut (LINK- see page 10).  Looks like they may be right.

Quote from the DownStream Today article:

Sasol Ltd. (SOL.JO, SSL), a chemical company long known for squeezing motor fuel out of coal, is now turning its sights on the glut of natural gas in the U.S.South Africa-based Sasol on Tuesday announced plans to build a plant, at a cost of as much as $10 billion, that would convert natural gas into diesel.

Sasol's board last week approved an 18-month feasibility study for the project, which would be constructed on land adjacent to Sasol's existing chemical facility in Louisiana.If given the final go-ahead, the plant would be the first in the U.S. to use so-called gas-to-liquids technology. Once seen as far-fetched and futuristic, the technology has gained traction in recent years as the discovery of gas supplies has outpaced that of oil.

 Anything that increases demand for lower 48 gas helps Alaska in the long run.  18 months seems like a long time for a study, but I still look forward to approval for projects like this.

GTL - News worth noting

Foster Wheeler has been awarded work on a Canadian Gas To Liquids (GTL) plant (LINK). From DownstreamToday.com:

Foster Wheeler AG announced Wednesday that a subsidiary of its Global Engineering and Construction Group has been awarded a contract by Sasol to perform the technical portion of a feasibility study for a planned gas-to-liquids facility in Canada, on behalf of the Sasol/Talisman Energy partnership. The technical portion of the feasibility study is expected to be completed during the fourth quarter of 2011.

Recent investor updates from Chesapeake have alluded to GTL plants that will sponge up cheap North American gas for conversion to liquids. This sounds like the first credible North American GLT plant.

Before reading this announcement I would have predicted that the first GTL plants would be sited on the Gulf Coast. Citing a GTL plant in Canada makes a lot of sense too. GTL plants convert gas into hydrocarbon liquids that require further processing into fuel. That processing requires capital investment. In Canada GTL liquids could be added to thick oil sand products as a diluent, thinning the oil sand product. This product would be easy to pump. The GTL cut of the blended product would be co-processed into fuels at the refineries that receive the oil sand oil. It's a great strategy the maximizes return on capital employed.

The press release says shale gas will be used for the GTL project however gas from the Alaska Gas Pipeline and / or the Mackenzie pipeline could contribute to other GTL projects or satisfy other market demand as GTL sponges up shale gas.

Press release did not mention volumes, however I assume the plant will be sized along the lines of the other Sasol GTL plants.

GTL in Canada is good news and it's worth keeping an eye on.