Partners release Alaska gas pipeline, LNG facilities cost estimate

The proposed 800-mile natural gas pipeline from Alaska’s North Slope to a planned gas liquefaction plant and export terminal in south-central Alaska would be “a megaproject of unprecedented scale and challenge” costing $45-65 billion, said three ANS producers and TransCanada Corp.

It also would consume up to 1.7 million tons of steel, employ 15,000 workers at its construction peak, and establish a permanent workforce of more than 1,000 in Alaska by its completion in 5-6 years, according to ExxonMobil Corp., ConocoPhillips Co., BP PLC, and TransCanada. Permit delays and other obstacles could lengthen the time to completion and startup, they warned.

“This opportunity is challenged by its cost, scale, long lead times, and reliance on interdependent oil and gas operations with declining production,” they said in an Oct. 1 letter to Gov. Sean Parnell (R).

“The facilities currently used for producing oil need to be available over the long term for producing the associated gas for an LNG project,” the four Alaska pipeline project partners continued. “For these reasons, a healthy long-term oil business, underpinned by a competitive fiscal framework and LNG project fiscal terms that also address [Alaska Gasline Inducement Act] issues, is required to monetize North Slope natural gas resources.”

Parnell, who received the letter on Oct. 3, said that it met a critical benchmark he laid out in his January state of the state address when he called on the companies to provide more specific numbers for the project and identify a timeline by the end of 2012’s third quarter.

He said the companies also reached a third benchmark from his January address when he asked them to complete discussions with the Alaska Gasline Development Corp., the LNG facilities developer, on possibly consolidating their work. The APP partners said in their letter that a framework has been established between the two state-sponsored entities to share information, Parnell said.

Contact Nick Snow at nicks@pennwell.com.

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