AGPA Annual Report – 2012

Pursuant to Alaska Gasline Port Authority (Port Authority) Bylaws, Article 5 (V) and AS 29.35.700, the Port Authority Board of Directors hereby submits this annual report to the Mayor and Assembly / City Council of each participating municipality in the Port Authority (Fairbanks North Star Borough and the City of Valdez).  This annual report covers the period dating January 1, 2012, through December 31, 2012. This past year has been a very busy year consisting largely of the Port Authority interacting with the LNG Asian market participants.  Additionally,  this year AGPA has engaged the services of  several companies to perform various studies regarding the AGPA proposed large volume gasline to Valdez. Those studies included:

PDC Harris Group. This analysis concluded that the APGA project would reduce the cost of energy in Fairbanks by up to 80%. They also analyzed the reduction of energy cost in another community, Bethel as a result of the AGPA Project.  They concluded that the energy cost in Bethel would be reduced by up to 65%.

The McDowell Group.  This report compared the difference of benefits to Alaska from the bullet line, the line through Canada and the AGPA Project.   This report concluded the benefits to Alaska were magnitudes better from the AGPA gasline to Valdez.

Safeguard Marine, LLC.  This report compared an LNG terminal located in Port Valdez vs. Cook Inlet from a shipping safety risk analysis.  This report was performed by the pilots that collectively have over 400 years of experience in navigating deep draft vessels in both Cook Inlet and Port Valdez.  Their unanimous conclusion was that Port Valdez was by far the best option for a world class LNG terminal to load the world’s largest LNG tankers.

The following is an outline of the Port Authority monthly highlights of some of the activities throughout this past year:

January, 2012

  • Provide briefing to Byron Mallot regarding the benefits of the All Alaska Gasline gasline/export project. There was a good discussion regarding the benefits to Alaska Native Regional Corporations/shareholders from participation in the Project.
  • Provided a briefing to the Administrator of State of Hawaii’s Energy Department, Mark Glick and discussed Governor Abercrombie’s interest in LNG to Hawaii.

February, 2012

  • Receive a “Letter of Interest” from GS Energy in Korea expressing their strong interest in working with the Port Authority and in receiving LNG from Alaska and purchasing natural gas at the well head.
  • Presented a project briefing at the Annual Southwest Alaska Municipal Conference (SWAMC) held in Anchorage.
  • Distributed to all legislators and Governor Parnell a copy of the PDC Harris Group report which verified that the cost savings to Fairbanks consumers from a large volume gasline to Valdez would be up to 80% reduction in energy cost and in the Bethel area, the reduction would be up to 65% in energy cost from this project.
  • Presentation to representative of Repsol from Spain who met with AGPA representatives in their Houston office. Respol was doing exploration on the North Slope and very interested in the LNG opportunity for gas anticipated located in their exploration process.

March, 2012

  • Attended meetings/ provided Project briefings  in New York City with representatives of Tokyo Gas at the invitation of Tokyo Gas.
  • Provide a LNG project briefing to Hawaii’s Lieutenant Governor Brian Schatz. This briefing was made at the request of the Lieutenant Governor’s office asking to see how LNG from Alaska could be of benefit to the State of Hawaii.
  • Received a study by the McDowell Group which compared the benefits to Alaska from the large volume line to Valdez as compared to a proposed bullet line as well as the proposed line to Canada. The McDowell Group’s analysis showed significantly greater benefits to all Alaskans from the larger volume line to Valdez rather than the smaller volume line as was proposed in House Bill 9.
  • Provided briefing to officers and board members of ATHNA Corporation in Glennallen as to the benefits to their area of lower cost energy resulting from the large volume project to Valdez.
  • At the request of the co-chair of the House Finance Committee, prepared and presented at a hearing before the House Finance regarding HB 9 with follow up meetings with House Speaker Chenault and Representative Hawker to discuss their proposed legislation.
  • Attended meetings in Houston, Texas with representatives of Shell Oil regarding the benefits to Shell’s offshore exploration from the All Alaska line to Valdez for export to the Asian markets.
  • At the request of Senate Resources committee, provided testimony to Senate Resources comparing the benefits of the All Alaska line to a smaller volume bullet line.

April, 2012

  • Attended multiple meetings in Seoul, Korea with representatives of East West Power, Korean Electric Power Company (KEPCO) and KOGAS (the largest buyer of LNG in the world) All three companies were very interested in LNG from Alaska and were quite surprised that Alaska was not more aggressive in moving Alaska’s resources to the market.
  • Received a Letter of Interest ( LOI) from KOGAS in Korea.  KOGAS expressed their interest in working with the Port Authority in this LNG Project. KOGAS is the largest buyer of LNG in the world.

May, 2012

  • Began preparation of LNG export license from Port Valdez to FTA countries (Korea).

June, 2012

  • Attended / participated in the World Gas Conference in Kuala Lumpur. At the conference there were multiple meetings whereby the Alaska LNG opportunity was presented to multiple country / company representatives also in attendance at that conference.
  • Attended multiple follow up meetings in Seoul, Korea with representatives of East West Power, POSCO, SK Energy and KOGAS. All of these meetings were as a result of meetings several months prior. Each company was particularly interested in LNG from Alaska but concerned about the lack of progress in Alaska in comparison with other projects being advanced around the world.
  • Received a Letter of Interest (LOI) from POSCO regarding their interest in working with the Port Authority and in purchasing LNG from Valdez for shipment to their company in Korea.
  • Discussions with Hawaii Governor Neal Abercrombie regarding the benefits of LNG from Alaska to Hawaii. Governor Abercrombie offered to and did set up numerous meetings in Hawaii for AGPA presentations.

July, 2012

  • Completed and filed LNG export license from Port Valdez to FTA countries (Korea).
  • Provided another briefing to   Hawaii Lieutenant Governor Brian Schatz. Also attended meetings and gave a presentation to Hawaii Gas Company as well as Hawaii Electric Company (HECO) regarding LNG from Alaska to Hawaii. These meetings were set up by Hawaii Governor Abercrombie.
  • Completed the application for the lease of Anderson Bay in Valdez, the location of the prior licensed/ permitted LNG export facility from Port Valdez.

August, 2012

  • Having received a request from ExxonMobil / TransCanada Pipeline regarding their upcoming non-binding Open Season, began working with all companies in Asia with whom we had received Letters of Intent. The goal was to aggregate a volume to nominate in the upcoming Open Season from Prudhoe Bay to Valdez.
  • The Port Authority received a written expression of interest from PTT International, Thailand in participating with the AGPA in the upcoming AGIA open season.

September, 2012

  • Met with representatives of POSCO  who travelled to Alaska from Korea to meet with the AGPA Board of Directors. POSCO expressed their strong interest in working with the Port Authority and shipping LNG from Alaska but again expressed their serious concerns that Alaska was not advancing a project in the time frame to meet their needs.
  • Received a study prepared by Safe Guard Marine, LLC, comparing the safety hazards associated with large ships (Q-Flex/ Q-Max LNG Tankers) into Cook Inlet vs. Valdez. The analysis clearly showed the unanimous support amongst the 18 ship pilots who participated in the analysis and acknowledgment that the safest location, by far, would be deep water, ice-free Port Valdez vs. the shallower winter-ice conditions of Cook Inlet.
  • The Port Authority participated in the Alaska LNG Summit sponsored by the City of Valdez. The Port Authority attended and gave several presentations at that conference. Many good contacts were made as a result of that conference which resulted in follow up meetings and presentations.
  • The Port Authority submitted a full project nomination to the AGIA Open Season sponsored by ExxonMobil and TransCanada. The volumes that the Port Authority were able to aggregate were enough for a full project (3 bcf/day). The nomination was submitted to ExxonMobil and TransCanada requesting the next step in this process. As of the date of the drafting of this annual report (January 17, 2013), there is yet to be a response to the Port Authority from its submittal to TransCanada / ExxonMobil on their gas  nomination of their Open Season.
  • Participated and presented the Alaska LNG Project to the 8th Annual Alaska Oil and Gas Congress in Anchorage.
  • Received a Letter of Interest (LOI) from PT PNG LNG, Indonesia expressing their interest in working with the Port Authority and participating with the Port Authority in the AGIA open season.

November, 2012

  • Participated as a presenter in the North American Gas Summit in Washington, D.C. Many contacts made at this conference with representatives of QatarGas, Misui, and JOGMEC. Follow up meetings with each as well as a private dinner sponsored by JOGMEC in Washington, D.C.
  • Attended following up meetings with representatives of the Department of Energy regarding the status of the AGPA export license application.
  • Provided Project briefings and updates with Senator Lisa Murkowski.
  • Provided Project briefings and updates with Senator Mark Begich.
  • Alaska LNG Project update/briefing to the White House Energy Advisor to President Obama regarding the status of the Project. Discuss the status of the pending export license and respond to requests from the White House as far as assistance to the project.
  • Meeting and presentation with representatives of Resource Energy, Inc., a consortium of Japanese companies interested on LNG from Alaska. This consortium  also submitted a bid near identical to the AGPA’s volume at the September AGIA Open Season.
  • Follow up meetings in Korea with high-level representatives of POSCO and POSCO Energy regarding status of the Open Season nomination, export license and project timeline. POSCO Energy again expressed their concerns in Alaska not moving forward fast enough in bringing its LNG to the Asian market.
  • Meet with the President and CEO of Resource Energy, Inc. in Tokyo as well as representatives of NIPON Oil & Energy Corporation. Presentations were made to both of these companies / entities and they expressed their strong preference for LNG from Alaska but were concerned about the potential timing of LNG coming from Alaska.

December, 2012

  • Met with representatives of Qatar Gas in Houston as a follow up to meetings / discussions in Washington D.C. following the AGPA presentation at the North American Gas Summit.

 

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