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Alaska LNG team provides project update

The Alaska natural gas development team of ExxonMobil, BP, ConocoPhillips and TransCanada provided an update Feb. 15 on its project to move North Slope gas to tidewater, where it would be liquefied, loaded aboard tankers and shipped overseas.

In their letter to Alaska Gov. Sean Parnell, the four companies reported their “concept selection” work of the past several months had settled on using 42-inch-diameter pipe for the 800-mile line (primarily underground), up to eight compressor stations along the route, and building the gas treatment plant near Prudhoe Bay on the North Slope.

The pipe size, number of compressor stations and gas treatment plant location were undecided in the companies’ Oct. 1 project update to the governor.

“Our companies are now working toward the next decision points,” the Feb. 15 letter said. “(We) will keep you advised of our progress.”

More than 300 employees from the four companies and their contractors are working in teams divided between commercial issues, pipelines, LNG plant, producing fields and project integration. That is up from 200 workers assigned to the teams as of the October report.

The proposed Alaska LNG project would be among the largest and costliest natural gas projects in the world.

The next step in the project’s development could take 12 to 18 months, according to the companies’ October timeline, and would include preliminary engineering, technical and environmental data collection, and continued business structure and financing plan efforts. Front-end engineering and design, permitting and other detailed work could take an additional two to three years, with five to six years for final engineering, equipment and pipe fabrication and construction.

The Feb. 15 update does not announce a decision on a site for the liquefaction plant. The Oct. 1 update said the development team was looking at 22 possible sites in Cook Inlet, Prince William Sound (including Valdez) and elsewhere in Southcentral Alaska. The latest update does provide a larger number for the amount of land that would be needed for the liquefaction plant — as much as 600 acres, rather than the October number of 500 acres. The plant’s capacity was unchanged at 15 million to 18 million metric tons of LNG per year, averaging about 2 billion to 2.4 billion cubic feet of gas per day, with three production units at the plant.

The Feb. 15 update does not provide any new details on the pipeline route through Alaska, which would be determined by the location of the liquefaction plant and marine terminal. The update also does not provide any new information on engineering and design or environmental work for the project.

Construction costs for the gas treatment plant, pipeline, compressor stations, liquefaction plant and shipping terminal are estimated at a combined $45 billion to $65 billion in 2012 dollars.

The North Slope treatment plant would be sized to handle 3 billion to 3.5 billion cubic feet of gas per day, accommodating seasonal variability — the equipment can process more gas when it’s cold outside. The plant would remove carbon dioxide and other impurities from the gas stream. The October report had said the companies were considering building the gas treatment plant either at the tidewater end of the pipeline in Southcentral Alaska or on the North Slope.

The LNG plant would include two storage tanks, each capable of holding almost 6 billion cubic feet of gas in liquid form, a detail not included in the October report.

The companies, in their letter to the governor, restated their position from October that “a competitive, predictable and durable oil and gas fiscal environment will be required for a project of this unprecedented scale, complexity and cost to compete in global energy markets.”

The letter also restated that the pipeline would include five off-take points for access to the gas for in-state distribution, totaling 250 million to 500 million cubic feet per day, based on demand.

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