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Oil Companies Release Proposed LNG Pipeline Plan

DNR Commissioner Dan Sullivan

Department of Natural Resources Commissioner Dan Sullivan is welcoming a plan last night for a gas pipeline from Trans Canada and the three would be producers.  But, the pipeline could cost $65 billion, and a construction date is still unknown.

The proposal is massive: 15,000 jobs, 1.7 million tons of steel, and a liquefaction plant covering 500 acres.

TransCanada, along with ExxonMobil, ConocoPhillips and BP Alaska, coordinated on the effort. It details which company will take the lead on certain aspects of harvesting and transporting natural gas in the state.

Commissioner Sullivan says getting the companies together, this far along, is a win.

“If you look at the history of Alaska, it’s kind of bedeviled our previous attempts,” Sullivan said. “Where whether the market doesn’t align, or whether the state’s efforts and producers aren’t aligned.”

By the looks, the state and producers are aligned at this early stage.

The plan offers some broad, if vague, details on how much a pipeline would cost. The companies estimate the entire project will cost between $45-65 billion. That’s quite a swing, and at the upper end, a price point that’s three times higher than TransCanada’s estimate three years ago.

Commissioner Sullivan says sticker shock should not stop movement.

“Costs and pricing are very, very important,” Sullivan said. “But there are other advantages Alaska brings to the global LNG world that a lot of potential buyers are looking for: reliability, huge, well-known resource base, proximity.”

The companies illustrate that a pipeline would be for export. And it would end somewhere at a liquefaction plant at tidewater. But that’s as far as specific go for geography. It could be anywhere in Southcentral Alaska.

A pipeline could be four feet across, the same width as the Trans Alaska Pipeline. And the companies hope to pump more than three billion cubic feet of gas per day. If all the engineering, environmental planning and permitting go as planned, construction could begin, at the earliest, in eight years.

Many Alaskans would like to see ground broken sooner than that, especially if the reported 15,000 jobs is an accurate figure. Sullivan says the state has ways to press the companies to move faster.

“Including trying to incentivize them, there’s a provision in the Point Thompson legal settlement that provides an incentive for the companies to make a final investment decision by midyear 2016,” Sullivan said.

That means a decision as to whether to actually move ahead with a project is still more than three years off.

In the meantime, the companies will decide whether the price of gas is enticing enough to foot the bill.

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