LNG News September 28, 2012

Having completed critical feasibility and benefit studies and engaging with multiple companies and utilities in various parts of Asia over the past two years, the Alaska Gasline Port Authority (AGPA) has reached an exciting milestone toward securing buyers for Alaska LNG.

ExxonMobil/TransCanada recently contacted AGPA seeking a non-binding Solicitation of Interest (SOI) for New Natural Gas Pipeline Capacity as required under AGIA.  ExxonMobil’s SOI closed on Friday, September 14th.  In response, AGPA aggregated the interest for LNG export from Valdez it had received over the past year from major Asian buyers.   The volume of gas nominated by these Asian companies plus projected instate volume exceeds the volume targeted by the AGPA for the proposed gas line to Valdez.

The target volume of gas for the gas line from Prudhoe Bay to Valdez is 2.7 billion cubic feet per day (bcf/d).  The non-binding nominations AGPA received from the Asian market for LNG off-take amounted to 2.8 bcf/d.  When combined with projected instate use of the gas (.25bcf/d -.50 bcf/d), the total volume nominated for the large diameter gas line is over 3 bcf/d.  Simply put, this is more than enough gas market participation for the gas line to be built.

Although the nominations are non-binding letters of interest, these are industry standard in engaging the market and match the nonbinding nature of ExxonMobil’s Solicitation of Interest.   Several of the companies nominating volumes included major buyers from Asia who would qualify as Free Trade Agreement countries for export under the pending export license AGPA recently filed with the U S Department of Energy in early July.  The companies include POSCO (Korea), Korea East West Power, KOGAS (Korea), GS Energy (Korea), PTT International Co. Ltd. (Thailand) and PT PGN LNG Indonesia.

The overwhelming interest expressed in the letters of interest confirms the Asian market is eager for an opportunity to buy Alaska’s LNG in large quantities.  My recent opinion piece in the Anchorage Daily News discusses how  Alaska should proceed now that the Asian market has come hungry to the State’s table.

AGPA’s SOI submission came on the heels of the Alaska LNG Summit held in Valdez September 12-14.  Interested buyers and industry leaders traveled from Indonesia, Korea, Japan, Hawaii, and throughout the Lower 48 to attend the summit where LNG experts in financing, marketing, shipping, and purchasing LNG detailed the urgency and viability of an LNG gas line from Prudhoe to Valdez.  Click here to read Alaska Business Monthly’s report on the successful summit.  Videos of the various presentations will be made available on the AGPA website in the near future.

The articles below address current market dynamics:

Bill Walker
General Counsel/Project Manager
Alaska Gasline Port Authority

Exxon Mobil Throws Its Weight Behind U.S. LNG Exports
On August 20th, Exxon applied to the DOE for an export license nearly identical to the one applied for by the Alaska Gasline Port Authority on July 3, 2012. Exxon’s application is for a very large volume of LNG from its U.S. Gulf Coast terminal. They have partnered with the country of Qatar in this export project. Exxon’s proposed export project is in direct competition with the export of Alaska’s gas to the very same market.

Port authority deserves credit for focusing on conflicting interests that harm Alaska gas pipeline economics
Long-time Fairbanks Daily Newsminer columnist, Dermot Cole, discusses the significant conflict of interest Exxon (who is partnered with TransCanada in the AGIA process) has in competing LNG projects elsewhere in the world.

Alaska Gas
The Anchorage Daily Planet acknowledges the work done by the Alaska Gasline Port Authority in bringing the Asian market to Alaska’s table. They articulate how important it is for Alaska to participate in getting Alaska’s gas to the Asian market.

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