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Recently, Qatar announced its intention to increase liquefied natural gas, or LNG, production by 30 percent to gain a greater market share in Asia. This will place pressure on the U.S., Australian and Russian producers in the Asian market.
Coming on the heels of this announcement is another by Shell for the completion of the largest floating infrastructure in the world. The Prelude is a floating LNG train for Shell's northwestern Browse Basin Prelude field. The ship will be permanently anchored 125 miles off the coast and will produce LNG and light oil from the gas condensates for the next 20-25 years. It will take about a year to get the ship into production mode after it arrives. This new LNG train will increase Australia's LNG exports by about 3.6 million tons per year.
The other major LNG development project off Australia's northwest coast is Chevron's Gorgon project, a $45 billion investment that started delivering LNG in mid-2016.
Russia's Gazprom announced another pipeline into China that would begin delivering natural gas in 2019.
Norway has announced oil and gas discoveries in the Barents Sea.
[Governor touts U.S.-China deal as helping Alaska LNG, but analysts are doubtful]
How will all of this affect Alaska's Alaska Gas Development Company's plans for a natural gas pipeline to tidewater? Between the increasing fracking activity Outside, Qatar's strategy to increase LNG production to maintain market share, the increasing world supply of LNG and the depressed world economy, this news should just be more ammunition to shut AGDC's doors and return the $100 million to the state's coffers. Otherwise, if Gov. Bill Walker wants to maintain the AGDC, the state needs to refocus and change the paradigm.
The governor needs to give serious consideration to a study by the former Arco for a high-voltage direct current transmission line and North Slope natural gas power plant to bring power to Alaska's villages and to Southcentral. Eliminating the need for liquid fuels to provide heat and power in the villages would be a literal boon, were the economics still favorable.
If Alaska is going to squander $50 million this year to keep AGDC's doors open, maybe it is time to spend the money on looking at alternatives to a pipeline with maximum benefit to Alaskans.
A story originally published in the Anchorage Daily News dated Aug. 14, 2012, quoted Robert Jacobsen, an astrophysicist and a former Arco scientist who participated in the study, as stating the idea of bringing power from a North Slope natural gas power plant via a high-voltage direct current transmission lines to power Alaska's villages was economically feasible at the time of the study. The question regarding the viability of the high-voltage direct current transmission system and North Slope natural gas power plant needs to be asked again and answered, given today's natural gas market. The construction would certainly provide employment throughout Alaska.
[Governor says Alaska LNG is on world leaders' radars as he pursues partners]
Financing for such a project needs to be shared by the regional Native corporations and the organized boroughs whose villages will receive power. If the North Slope Borough can afford a $18.6 million Sikorsky S92 to play taxi to pogues and borough citizens, the borough can afford to participate financially in making the high-voltage direct current natural gas power plant and transmission project a reality.
The regional corporations are all Fortune 500 companies with considerable wealth to invest. This project would provide a direct benefit to their shareholders.
Given the rising LNG production worldwide and competition from domestic U.S. LNG, Alaska needs to change focus from a pipeline without a market and give serious consideration to alternatives beyond moving natural gas in a pipeline. There are other ways to get energy to market and for our North Slope natural gas reserves to benefit Alaskans.
Larry Wood is president of Terra Resources Ltd., a former campaign coordinator for Gov. Bill Walker and a 63-year Alaskan living in the Palmer area.
The views expressed here are the writer's and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary@alaskadispatch.com. Send submissions shorter than 200 words to letters@alaskadispatch.com.