Alaska LNG Summit in Valdez a Success
VALDEZ, ALASKA – The goal of the Alaska LNG Summit in Valdez was to focus efforts to harness Alaska gas for domestic use, economic growth and global opportunity. After the Summit at the Valdez Civic Center this past Thursday and Friday, it was clear to the more than 100 attendees that there is plentiful natural gas, there is both an international and domestic demand for natural gas, and the clock is ticking to get the gas to market before fields are developed in other areas.
Octavio M.C. Simoes of Sempra LNG took to the podium Thursday to address Alaskan legislators and participants who came from as far away as Japan and Indonesia to attend the event. Simoes said a Valdez LNG project has many advantages relative to liquefaction projects in other parts of the world because “It has a low-cost resource, there are existing oil and infrastructure support industries, there are low ambient temperatures for high liquefaction efficiencies, it has proximity to Asian Markets and an existing deep water port”. Despite the advantages, Simoes said state politics, lack of federal support and desires of the gas owners have served to make the project difficult. “There has not been a clear, state level political direction”, Simoes said. “When I say political, I don’t say partisanship, I say political in the sense of the parties that have an interest in coming together and doing something”. Simoes said he had not seen clear support from the Federal Government for a Liquefied Natural Gas project in Alaska.
Further, Simoes said many LNG projects in other countries were signing agreements now for projects to come online in the 2016-2018 timeframe and that the opportunity for Alaska is between 2021 and 2025, but the commitment for Alaska LNG needs to start now.
University of Alaska Vice Chancellor of Research and former Director of U.S. Geological Survey, Mark Myers, did a presentation on the wealth of oil and natural gas in Alaska, but also showed that there were many other natural gas projects already signing contracts and making commitments with buyers. “Buyers are making commitments today,” Myers said. Myers looked genuinely disappointed when he pointed out the fact that the large oil companies failed to come to the Summit. “The key is getting producers in the room, because they hold the leases on the gas,” Myers said.
CLICK HERE for Video of Myers speaking at Summit.
Bill Walker, General Counsel for the Alaska Gasline Port Authority, echoed Myers sentiments about getting the major players moving on Alaska LNG. “We can continue with the 47 year plan, because that’s how long since the first lease on the North Slope,” quipped Walker. “Nothing has changed.” Walker said Alaska has waited for lease holders to make decisions. He warned that the lease holders would make a decision in their best interest, which is not necessarily to forego their oil concerns for natural gas. “They’re going to make a decision that’s in their best interest, and there’s nothing wrong with that,” Walker said. “We are fortunate to have large companies on the North Slope and that’s great. But for them to make a decision about when this goes to market and where it goes to market, and which market is not working.” CLICK HERE for video of Walker speaking at Summit.
Radoslav Shipkoff, Director of Greengate LLC has worked on financing some of the recent landmark deals in LNG, including the 20 plus billion Australia Pacific LNG coal seam gas to liquefied natural gas project and the $18 billion Papua New Guinea LNG project and said at the conference, “The window (for Alaska LNG) is not going to be there forever. If Alaska doesn’t fill the market need, somebody else will. The work that needs to be done to prepare Alaska for that window of opportunity needs to happen now.” CLICK HERE for video of Shipkoff speaking at Summit.
To further cement the future demand for liquefied natural gas and to illuminate the possibilities for using LNG in Alaska, the program manager for Hawaii’s Gas LNG Program, Barbara Laflin Treat, illustrated Hawaii’s plan for importing LNG. While export to Hawaii from Alaska is not a big enough project to justify to building a gas pipeline, it would provide a small market and Treat said Hawaii would love to purchase LNG from Alaska.
A panel of Mayors and Municipal officials from around the State spoke of the need to ensure an Alaska LNG project meets the in-state need for affordable gas. Congressman Don Young commented via live videoconference, “The fact that we have all this gas in Alaska and no access to it is despicable.” Young admonished the lack of communication and great division between Alaskans. “I want a unified solution for this market,” Young said. “What’s good for one community is good for all Alaskans.” Young said the State needed to stop spending money on stupid studies and address people who don’t want natural gas.
Technical expert Stan Lloyd, President of Lloyd Engineering, has more than 40 years experience in the design and construction of port and harbor facilities around the world. Lloyd talked about how an LNG terminal, docks and berths could be located at the existing Valdez Marine Terminal. Further, he said an Alaska LNG project at the current marine terminal could serve to assist the marine terminal with upgrades.
The term “deep water port” was brought up many times regarding an LNG plant in Valdez, but Jeff Pierce, President of Safeguard Marine LLC, explained why choosing the right Port is important to operations. Pierce is an Alaska Marine Pilot with over 5,000 ship movements in Southcentral and Western Alaska waters. Pierce has conducted a survey on the risks and advantages of having a project in Valdez versus Cook Inlet and explained the main concerns at Cook Inlet are the ice and shallow water. The survey included soliciting opinions from other marine pilots and Port of Valdez came out the clear choice for safety and ease of operation for LNG tankers.
U.S. Senators Mark Begich and Lisa Murkowski addressed the group live from Washington, called for action on the Natural gas line, and talked of competition from other markets. Martin A. Hruska, Director of Upstream Development for Excelerate Energy shared information and options for the floating liquefaction programs his company builds and emphasized again that commitments were being made in other parts of the world to guarantee LNG to buyers on 20 year terms. Associate Director of Energy Practice for Navigant Consulting, Bob Gibb, said he has clients ready right now to make deals to buy LNG for the next 20 years. CLICK HERE for video of Bob Gibb speaking at the Summit.
Many at the Summit charged the State of Alaska with inaction, but Kurt Gibson of the Gas Pipeline Project Office for the State of Alaska addressed the Summit participants on Friday. Gibson said the Governor is working toward a solution to bring Alaska’s LNG to market and explained that several agencies within the State of Alaska have been working together on the project. “We have aligned the producers behind the AGIA (Alaska Gasline Inducement Act) and we’re moving down the continuum,” said Gibson. In fact, Gibson said he expected the lease holders (oil companies) to respond favorably to the Governors request that they harden the numbers on an Alaska LNG project and provide a pipeline project with an associated timeline by the third quarter of this year. Gibson said the State is currently in the “Concept Selection Phase,” which should last six to nine months. “In the weeks to come we will be telling Alaskans more about these steps.” CLICK HERE for video of Kurt Gibson speaking at the Summit.
Perhaps the most direct comments at the Summit came from Attorney Craig Richards as he spoke during the closing session of the Summit Friday. “What can Alaska do to get off the dime?” asked Richards. According to Richards, the options are: Do nothing; Build a Bullet Line which he said looked to have less and less promise; Provide fiscal certainty to the oil companies who don’t have the economic incentive to build a pipeline; or have the State step into a development role. CLICK HERE for video of Craig Richards speaking at the Summit.
Ideas, thoughts and perceptions were enlarged and challenged as Summit participants took a boat tour to see the existing Valdez Marine Terminal site, Port Valdez and Anderson Bay. Betty McIntosh of Alyeska Pipeline Service Company provided an overview of pipeline operations throughout Valdez and Alaska, while US Coast Guard Commander Benjamin Hawkins gave both a tour and presentation on Coast Guard operations.
A range of ideas emerged on how to move forward with an Alaska LNG project, and most of them revolved around the state aligning with buyers, then presenting their offers upstream to the lease holders. Many speakers brought up the view that for Alaska to see energy relief from such a project, bringing gas to local Alaskan communities must be a condition of the terms the State reaches with project developers. At the end of the Summit, attendees and speakers had made connections and had much to think about. Although there was much discussion and some disagreement on how to move an Alaska LNG project forward, the consensus was that many political and economic hurdles need to be torn down before serious work can begin on a LNG project, and that those hurdles needed to be taken down soon in order to put together a project that will be competitive in the world market.
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