At the end of September, the major North Slope gas producers notified Gov. Sean Parnell of their new agreement toward an Alaska liquefied natural gas project. Depending whom one asks, the new agreement pertained to either hijacking the state-subsidized Alaska Gasline Inducement Act (AGIA) and using it as a lever to pry oil tax reductions out of the Alaska Legislature, or to finally building a long-discussed liquefied natural gas transportation project leading from Alaska's North Slope to tidewater somewhere in Southcentral.
Such an LNG project has been discussed for decades as a method of bringing Alaska's natural gas to market, and over the years, support for the idea has waxed and waned. But with the apparent new agreement among the producers and the governor's office now supporting the notion, it's clearly waxing gibbous in October 2012.
But is it already too late for Alaska again?
After all, the project now being talked about has a hefty price tag ("$65+ billion") and is roughly 10 years from completion even if work started today. The natural gas market worldwide is undergoing recent volatility, as well, as some interests in Asia press for a decoupling of the region's oil price and its high natural gas price, and as a booming excess of shale gas keeps North American prices rock-bottom.
Indeed, that shale gas glut is currently driving a mini-boom of LNG export projects across the Lower 48, driving companies to seek better prices for their product and to draw down bloated storage capacity. As of mid-October, 19 terminal projects in the Lower 48 have applied for permission to export domestically produced LNG.
The state-subsidised project ostensibly being pursued by AGIA licensee TransCanada Corp. and its new partners, Alaska's major gas leaseholders, will eventually need such an export permit. The hundreds of millions in reimbursements the AGIA project has qualified for have not brought it far enough along to apply for LNG export permission, but where do the 19 U.S. projects that are farther along than Alaska's stand?
Just as it used to be difficult to follow all of the different proposed Alaska gas pipelines, it gets hard to follow so many different Lower 48 export projects. According to trade magazine LNG Global's handy chart of domestic LNG project export applications, most of the terminals have obtained federal permission to export LNG to countries the U.S. has a free-trade agreement with.
For example, Exxon Mobil Corp. and its partner Qatar Petroleum are looking to spend $10 billion to convert a facility from LNG import to LNG export. That project is called "Golden Pass," and it has been approved for export to free-trade countries, but not yet for non-FTA countries.
As of Oct. 12, only one terminal -- Cheniere Energy's Sabine Pass expansion -- has permission to export to both free-trade and non-free-trade-agreement countries. The review process for export to non-FTA countries is more involved, and applications are under Department of Energy review for such permission from all but four of the other 18 projects.
For a convenient chart of export permit statuses, project capacities, and application docket numbers for all of the Lower 48 LNG projects, visit LNG Global, here.
Contact Scott Woodham at swoodham(at)alaskadispatch.com