This Week In Alaska Gas

Items of note from the past week:

Fiscal Certainty: Alaska Senator Lisa Murkowski met with North Slope producers (LINK1) (LINK2).Quotes from Oil & Gas Journal:

Alaska North Slope producers say the biggest hurdle facing construction of a natural gas pipeline across the state to a planned liquefaction and export facility on its southern coast is the state’s uncertain fiscal regime, US Sen. Lisa Murkowski (R-Alas.) said following meetings in Houston with the three largest ANS producers. 

“Alaskans have waited 4 decades to see some benefit from their [ANS] gas,” Murkowski observed. “While Lower 48 markets may be oversupplied because of the shale boom, places like Japan and South Korea are willing to pay a premium for long-term supply contracts. But that window of opportunity will not remain open indefinitely.”

Good job Lisa.  I remember Ted Stevens attempted to make the same point when he said:

The right climate for this investment in our State must exist. Originally considered a $20 billion project, recent financial analysts’ comments indicate the cost will be $40 billion. No entity will commit that kind of money – whether $20 or $40 billion – without certainty in the financial aspects of the project’s economics.

 Good luck getting the point across now that the price tag is about 50% more.

Stand Alone Pipeline (ASAP) News: The Final Environmental  Impact Statement on Alaska Stand Alone Gas Pipeline (ASAP) Released (LINK1) (LINK2).  Somehow the economic principles of economy of scale won't work for a big pipeline, but somehow we can build a much smaller one?  Where's the "alignment". In about 2 years ASAP will hit the fiscal certainty wall too.

Uncle Ted Remembered

The early reports were confirmed this afternoon, Ted Stevens lost his life in a plane crash on his way to go fishing with friends. (LINK)

I felt pretty deflated when Senator Ted Stevens was drummed out of office a couple of years back. Today I feel plumb awful. His work on behalf of the people of Alaska and the entire United States has been greatly missed. His passing marks the end of an era.

The photo above shows Senator Stevens, Senator Inouye and Major General John Holly on a visit to military construction site I worked on a few years ago. Senator Inouye is wearing a lei fashioned from whirly gig fishing lures. General Holly is explaining what we built with the tax dollars the Senators allocated to our project. I don't normally rub shoulders with the higher ups but I was very impressed to listen to questions the senators asked and the answers they received. In a world full of second rate soft headed middle managers I was glad to learn that the guys in charge were first rate thinkers and top notch leaders.

On another occasion Uncle Ted brought Thanksgiving dinner to the post with assistance of the Alaska National Guard. Outside of Alaska I don't think the ordinary guy is ever on the receiving end of a nice visit and a hot meal from a senior elected official who rides into town in a C-130. Sure all politicians press the flesh, kiss babies and want votes, but I think Ted Stevens enjoyed seeing the people of Alaska and filling the role of the favorite uncle.


A chair was set up for Uncle Ted to play the part of Santa and entertain the kids after the meal. I stood in the chow line with Uncle Ted and ask him about my favorite subject - the Alaska Gas Pipeline. I asked him if Santa Claus would bring Alaska a gas pipeline. Ted Stevens laughed and told me I was like the guy who asked Santa for sports car and awoke to find matchbox toy car in his stocking. He told me that I might find a soda straw in my stocking instead of a full sized pipeline. That was years ago and I'm still asking Santa for a pipeline and waking up to find something much less.

We'll miss you Uncle Ted.

AGIA a FLOP?

Say it ain't so! AGIA a FLOP? Ted Stevens thinks the big pipeline to Canada is a no-go. (LINK). He favors the line to Valdez and LNG for the global market. Sometimes it's tough to see how big oil get get a decent rate of return on the big line to Alberta.

“I have now changed that position and now support the bullet line, but I think it should go to Kenai and I support the construction of the line to Valdez. I asked for the privilege of speaking to you to try to explain to Alaskans why I have so drastically changed my position. I think that these lines are needed not only for the needs of Alaska but I think we need to concentrate on processing as much of our gas as possible into LNG.”

I've made the point before that big oil needs gas for Canada to fuel tar sand projects, but marketing LNG to the Asian market is not a bad "Plan B".

In terms of scale and level of project difficulty think Trans Alaska Pipeline + Exxon's Papua New Guinea LNG Project.

In terms of global finance wouldn't be nice to reverse the flood of dollars headed to China? Instead of Canadians with a hand out for taxpayer AGIA cash why not do business with end users with funds to invest?

Now that Uncle Ted has said it - will anybody listen?