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CALGARY — A massive new proposal to export natural gas from Alaska brings a major competitor into the race to carry North American gas to Asia, and adds pressure on Canadian export projects to build quickly or risk losing out.
The Alaska Southcentral LNG project would include construction of a 1,300-kilometre pipeline from Alaskan North Slope gas fields to southern waters, near Valdez or Anchorage, where a new terminal would load liquefied natural gas on to tankers.
It is notable for the stature of its backers – BP PLC, Exxon Mobil Corp., ConocoPhillips Co. and TransCanada Corp., which have now joined forces after duelling for years over separate gas pipeline projects – and for its scale.
With a price tag of $45-billion to $65-billion-plus (U.S.), the Alaska project is a study in superlatives. It would use 1.7 million tons of steel, take 15,000 people to build and load three billion to 3.5 billion cubic feet of natural gas a day on to ships bound for Asia.
It would elbow itself into a market that has been the focus of a global scramble, with numerous LNG terminals either being proposed or built in Qatar, Australia and elsewhere.
Although it has already seen $700-million in planning expenditures, the Alaska project is just getting started. It will take eight to 10 years to design and build.
Its projected costs are so high, however, that some are already questioning how it could be profitable. Indeed, its backers make clear in a letter released this week that “additional commercial agreements as well as support from the State of Alaska will be required in order to progress this world-class opportunity.”
It nonetheless adds a significant wrinkle to plans to ship natural gas off Canada’s west coast. Some seven projects are under development or consideration there, contemplating, in total, several times the volume of daily exports that might flow out of Alaska. One, backed by British giant BG Group PLC for construction at Prince Rupert, also stands to be among the largest in the world at 4.2 billion cubic feet a day.
Alaska has advantages. It is located geographically nearer Asian markets, and would use gas supplies that could be considered more certain than B.C.’s shale gas, little of which is yet in production. And its timing makes clear that B.C. projects have an increasingly narrow window to construct, lest they find their opportunity seized by others, said Jihad Traya, Calgary-based associate director of North American natural gas for IHS CERA.
“It is a tight global market, meaning that there is more supply being proposed than potential markets,” he said. Canadian projects, he said, are already at a disadvantage relative to other parts of the world. “We’re somewhat behind the eight ball when it comes to getting the developments rolling, getting the contracts signed, getting the facilities built.”
For the rest of this article, please go to the Globe and Mail website: http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/alaska-plan-intensifies-gas-race-to-asia/article4590398/