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Exxon, Qatar Petroleum apply for Texas LNG export permit

Alaska Dispatch

As Alaska continues to subsidize TransCanada Corp. and Exxon Mobil Corp. to jump-start work on a long-sought natural gas pipeline project, Exxon is seeking permission to export Lower 48 gas from Texas to other nations.

The Wall Street Journal reports that Exxon and partner Qatar Petroleum are looking to spend $10 billion to transform a terminal that designed to import liquefied natural gas (LNG) to the United States into an LNG export facility -- another sign of just how much the shale gas boom in the Lower 48 has changed the ballgame for a proposed Alaska gas pipeline.

It doesn't appear the Lower 48 needs to tap Alaska's vast conventional natural gas reserves when Exxon is willing to revamp a recently completed import terminal into an export operation. The Wall Street Journal spells out the dilemma that's killed demand for Alaska natural gas: "After years of fretting about natural gas scarcity and spending billions constructing import terminals to bring the fuel from places as far as Qatar and West Africa, energy companies now seek to turn the U.S. into a major energy exporter."

Alaska Gov. Sean Parnell has recognized the shift in gas demand. He's now hoping that TransCanada and Exxon will pursue a LNG export project for Alaska's gas, perhaps shipping it to Asian markets. But despite the state so far paying some $180 million in subsidies to TransCanada (we don't know how much of that has or will go to Exxon), the pipeline remains a pipe-dream, just as it has for nearly four decades now.

It's an ironic chapter in Alaska history. There were those, such as the late Gov. Wally Hickel, who for years advocated that the state export liquefied natural gas. But the big oil companies that held leases to develop gas on state land (the largest proven, conventional reserves in North America) dismissed the idea until recently, as did many state leaders. They believed a pipeline from Arctic Alaska to the Lower 48 via Canada was the best option for bringing Alaska's gas to markets.

But as Alaska pursued that option under former Gov. Sarah Palin (it was her administration that came up with idea of offering up to $500 million in state subsidies to TransCanada as an incentive to get the project rolling), shale gas exploded in the Lower 48. Suddenly, the rest of the nation didn't need Alaska's gas.

Now, as illustrated by the news of Exxon looking to export American natural gas, Alaska could face competition in the race to sell its Arctic gas to other nations.

Read more about Exxon and other companies' plans to export Lower 48 natural gas. Also, check out the latest on TransCanada's push to gauge interest among Alaska's gas leaseholders to build a pipeline.