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Governor and team headed to Singapore, South Korea in effort to market Alaska LNG

  • Author: Alex DeMarban
  • Updated: September 9, 2016
  • Published September 9, 2016

With the state preparing to take over the $55 billion Alaska LNG project, Gov. Bill Walker and other state officials are planning trips to Asia to promote the project to potential natural gas buyers.

The trips follow recent statements by the governor that he'll test market interest over the next year to determine if Alaska should press ahead with the project.

The first trip will come later this month when Walker and a delegation that includes six other state officials visit Singapore, where the governor will be a keynote speaker at an LNG summit that attracts buyers and sellers of liquefied natural gas.

The second stage of the 10-day trip will include a stop in South Korea, where the delegation will meet with companies that in 2012 expressed interest in buying North Slope natural gas, including KOGAS, the Korean gas corporation and world's largest LNG buyer, Walker said.

Walker also plans to be in Asia in November on Thanksgiving Day. He said he will speak in Tokyo Nov. 24 at the Fifth annual LNG Producer-Consumer Conference, another event attracting the LNG market.

Walker spoke at last year's conference during a marketing trip to Japan that included stops in Tokyo and Kyoto.

Additional details about the governor's upcoming trip to Japan in November were not available on Friday.

The trade trips come as major oil companies working with the state on the $55 billion Alaska LNG project — lead partner ExxonMobil, BP and ConocoPhillips —are expected to back out of the project as it's currently structured, following a new report raising doubts about its viability in a competitive global market for liquefied natural gas.

The state plans to take over the project by year's end.

Walker has called the producers' reluctance an unprecedented opportunity for Alaska, in part because the companies have committed to selling their natural gas to the state — under "commercially reasonable" terms.

The governor is optimistic that a state-led project can win tax relief from the federal government, lowering costs and making it more competitive while returning $1 billion to $2 billion a year to Alaska.

The producers' backward step also opens the door for Walker to pursue new investors in the project, something he said he was not doing during last year's trade trip to Japan because of the oil companies' involvement.

Asked if he would pursue investors this time, Walker said he's focused on meeting with potential gas buyers, such as Asian utilities. But he will speak about other roles companies can play if they are interested.

Walker believes contracts with buyers could provide the financial underpinning that then attracts new investors.

"The most critical piece of a successful project is to have market participants," Walker said in an interview on Friday.

Alaska officials have said while numerous LNG projects are underway around the world, a window for gas sales to Asian countries opens in 2023 and 2024, when key LNG supply contracts come to an end and could be replaced by Alaska gas.

The conferences will offer state officials a chance to network with a large number of potential LNG buyers from across the Asian continent, Walker said. The goal will be making sure the "market is aware of the opportunity in Alaska."

The Alaska LNG partners, in a phase known as pre-FEED — front-end engineering design — have spent more than $500 million studying the massive project that would be one of the world's costliest LNG developments if it's ever built, sometime around 2024.

Key facilities include an 800-mile pipeline to ship the gas from the North Slope and two large processing plants, including one in Nikiski that would superchill the gas into a liquid so it can be shipped in tankers to overseas utilities.

The next phase of the project would cost up to $2 billion to refine earlier studies and provide more details about the pipeline and facilities. The producers are not expected to participate in the next phase.

In Singapore, Walker is on the agenda at the World LNG and Gas Series: Eighth Asia Pacific Summit that will take place from Sept. 20 to 23. Walker is scheduled to speak Sept. 21, just before the keynote speaker and following Papua New Guinea's minister of petroleum and energy.

Papua New Guinea is the site of an LNG facility operated by ExxonMobil. Officials with the company have said an expansion project there is a top priority among ExxonMobil LNG projects globally.

The Korean portion of the trip will be hosted by the Korean Ministry of Foreign Affairs. The ministry will pay the travel and lodging expenses associated with the Korean portion of the trip for the governor, the first lady and one state official, said Katie Marquette, the governor's press secretary.

The effort falls under a Korean program that invites U.S. governors to meet with government officials and private companies, the governor's office said.

Walker said the Korean government initiated the trip.

Walker's wife Donna Walker will not travel at the state's expense, Walker said.

Also planning to travel to those two countries are: Keith Meyer, president of the state-owned Alaska Gasline Development Corp.; John Hendrix, the governor's chief oil and gas adviser; Andy Mack, Alaska Department of Natural Resources commissioner; Shelley James, associate director of international trade in the governor's office; Grace Jang, the governor's communications director; and Brice Habeger, digital media manager.

Marquette said on Friday the costs of the trip would not be known until it is complete.

Last September, during the weeklong visit to Japan, Alaska spent about $40,000 on expenses for Walker, his wife, and four other state officials, reports show. Walker's wife paid a portion of her expenses but not all — she accepted an invitation to speak at a women's chamber of commerce event there, Walker said.

The state faces multibillion-dollar deficits for years to come, prompting some Alaskans to question whether Walker should plow ahead with a project that may not be competitive.

Rep. Geran Tarr, D-Anchorage, said Walker's conversations with the market may be "premature."

 

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