About the 'we have a glut of ng now' so a pipeline isn't needed idea. Yes, there's loads of shale gas in the US. And the LNG business is expanding dramatically. NG is going for $3.56, down from $12 a yr earlier. If its the case that the N Slope gas will never be needed, those companies trying to hold onto their leases up there are fools. Are they fools? Or are they just looking at the long term? I'm not sure I'd bet on them being fools.
What's the outlook for ng 10+ yrs from now? That's the question that's relevant to an Alaskan gasline. Cause it'll be at least 10 yrs before any gas actually moves.
If we're really gonna stop building new coal and nuclear plants and if we're gonna have a lot of electric cars running around, we're gonna need something to burn to generate that electricity. Cause contrary to the dreams of green-minded folks we're not gonna be able to run our economy on wind and solar power alone.
Another thing to think about re whether the north slope gas is needed, think about where this pipeline is gonna go. Alberta. From Alberta it can join up with the existing pipeline network and move south or .... but .... whats in Alberta? All that heavy oil locked up in oil sands. What do you use to get it out? NG. You inject steam to make the heavy oil flow and you make the steam by burning natural gas. As the oil sands industry has grown an increasing percentage of Canada's natural gas is used in Alberta i/o coming to the US. If the Alberta oil sands industry is gonna grow dramatically as oil prices rise, they're gonna need more and more ng to get the oil out. A lot of that no slope gas going through the pipeline may never compete with Marcellus and Haynesville shale or LNG in US markets.
Lastly, I will say I do think this is all a feather in Palin's cap. She shook up the game, played hardball with some big companies and developments are breaking the way she wants them to. XOM signing with Transcanada does make their gasline a lot more credible. It doesn't surprise me that after moving to cancel XOM's Pt Thomson lease, we now see Palin and XOM shaking hands on a deal. I'm betting BP and COP come in too and I'll bet negotiations are going on as we speak. Then you'll have the state of AK plus all the major no slope companies pulling in one direction. I'm thinking if any Alaskan gasline is permitted to be built, its gonna be this one.
Three stories follow - note especially the last one written from a Canadian perspective from the Vancouver Globe and Mail:
Exxon Joins TransCanada On Alaska Gas Pipeline
By Russell Gold
12 June, 2009
The Wall Street Journal
Exxon Mobil Corp. is throwing its weight behind what could become one of the world's biggest engineering projects: a proposed $26 billion natural-gas pipeline connecting Alaska's North Slope to Chicago.
The oil giant said Thursday it is joining an existing effort by TransCanada Corp. to build a pipeline. Exxon controls the largest share of natural gas on the remote North Slope and its involvement was seen as critical to any project.
While Exxon's announcement tilts the scales in favor of the pipeline being built, the project faces numerous challenges and is still far from becoming a reality. Among the most serious questions it faces is whether the Alaskan gas is even needed. North America is in the midst of a natural gas glut, driving down prices, and observers believe liquefied natural gas imports are set to grow as overseas producers seek to unload their gas in the U.S.
The TransCanada proposal already has the backing of the Alaskan government, which last August passed legislation to provide up to $500 million in funds to pay for preliminary work. Even moving quickly, the pipeline isn't expected to receive certification from the Federal Energy Regulatory Commission until 2014, and wouldn't begin moving its four billion cubic feet of natural gas daily until the end of the next decade.
Alaska Gov. Sarah Palin has urged the project forward. "It's absolutely needed and we can't be short sighted with these long lead time developments," she said in an e-mail.
BP PLC and ConocoPhillips, which both control large gas deposits in Alaska, are working on a competing pipeline proposal, but it doesn't have the support of the state government. ConocoPhillips spokesman Charlie Rowton didn't rule out ultimately working with the Exxon Mobil-TransCanada pipeline: "We're willing to look at any and all proposals," he said.
The North Slope holds some 35 trillion cubic feet of known gas reserves. The state estimates undiscovered reserves could bump that figure to as much as 250 trillion cubic feet. By comparison, U.S. consumption in 2007 was just over 23 trillion cubic feet.
While the remote North Slope holds an enormous gas deposit, available gas in the Cook Inlet that feeds Anchorage and nearby cities has appeared thin in recent months. That has added urgency to the state's multi-year attempt to jumpstart a pipeline.
---
Exxon, in Switch, Joins Plan to Build 1,700-Mile Natural Gas Pipeline From Alaska
By JAD MOUAWAD
12 June, 2009
The New York Times
In a surprising about-face, Exxon Mobil said Thursday that it would work with a Canadian pipeline operator, TransCanada, to build an ambitious natural gas pipeline from Alaska, the latest twist in long and protracted efforts to bring Alaska's vast gas supplies to the United States mainland.
The participation of Exxon, which holds the largest natural gas reserves on Alaska's North Slope, lends credibility to a plan by TransCanada that last year won Alaska's competition to build a 1,700-mile pipeline. It also deals a blow to a rival project from BP and ConocoPhillips and introduces more uncertainty into one of Alaska's biggest political and economic debates.
The competition to build a gas pipeline was set up by Gov. Sarah Palin, who had been critical of the slow pace at which oil companies, including Exxon, were moving.
Financial details of Exxon's participation were sketchy on Thursday, but TransCanada said it would retain the majority interest in the project. Both companies essentially invited BP and Conoco to abandon their rival effort, saying they would be welcome to join the TransCanada plan.
''It has always been our position that the project will require the support of all the North Slope producers, the state of Alaska and TransCanada, and we will need to work with them,'' Marty Massey, a senior executive with the Exxon Mobil Production Company, said during a conference call.
Rumors of Exxon's entry to the project had been swirling for several days in Alaska. With production from the Prudhoe Bay oil field declining, Alaskans have been hoping for years that natural gas would take over as the state's financial mainstay.
Alaska's estimated 35 trillion cubic feet of gas reserves are now being reinjected into oil fields or left in the ground because there is no way to get the fuel to consumers.
With Exxon and TransCanada on one side, and BP and Conoco on the other, there are two contenders for what would be the biggest civil engineering project in North America, and one of the most challenging. It would dwarf the 800-mile trans-Alaska oil pipeline, a momentous project that was completed in 1977.
BP and Conoco said their joint pipeline project, called Denali, was going forward. But both said they would be open to alternative plans.
Charlie Rowton of ConocoPhillips said, ''We do believe the opportunity exists for more collaboration among key stakeholders interested in an Alaska gas pipeline project.''
Steve Rinehart, a BP spokesman, said, ''BP as a producer and prospective shipper will consider any viable project to deliver gas to market.''
TransCanada has estimated that the project would cost $30 billion. It would stretch roughly 1,700 miles from the North Slope of Alaska through Yukon and northeastern British Columbia to the Alberta border near Boundary Lake. From there, it would connect to Alberta's existing gas infrastructure, which is linked to the United States.
The pipe would have a daily capacity of six billion cubic feet of natural gas, or about 10 percent of current domestic consumption. It would begin operations in 2018.
Building an Alaska gas pipeline has been sought for decades as a crucial element of the nation's energy security. But new drilling methods in places like Texas and Oklahoma have unlocked substantially more domestic gas reserves in recent years than most experts ever anticipated. Instead of a facing a potential gas shortage, the nation is looking at the possibility of a surplus.
When Governor Palin took office in late 2006, she interrupted the negotiations that her predecessor, Frank H. Murkowski, had been pursuing with the North Slope oil operators, BP, Conoco and Exxon Mobil, to build a pipeline. After saying the talks were too secretive and not competitive, the governor sought to bring in new operators to secure better terms for Alaska. Late last year, Alaska picked TransCanada as its preferred operator after a competition that was shunned by the major companies, including Exxon.
Tony Palmer, vice president of Alaska development for TransCanada, said the project would make economic sense as worldwide gas supplies tighten and prices rise, and he welcomed Exxon's decision to participate.
''We think it is an important step forward,'' Mr. Palmer said.
Exxon backs Alaska gas pipeline; Decision jeopardizes Mackenzie project crucial to development of Canada's north
DAVID EBNER
12 June, 2009
The Globe and Mail
VANCOUVER -- Exxon Mobil Corp. XOM-N has joined forces with TransCanada Corp. TRP-T on its $26-billion (U.S.) natural gas pipeline from Alaska to Alberta, a move that jeopardizes the Mackenzie Valley gas project vital to the development of Canada's north.
Exxon, the world's largest publicly traded energy company, controls the most gas in northern Alaska and is also the key backer of the Mackenzie project through its controlling stake in Calgary's Imperial Oil Ltd., IMO-T which puts the Texas-based company in the role of deciding which project goes ahead.
With Exxon's decision to co-develop the Alaska pipeline and reportedly take a minority equity stake, TransCanada is much closer to meeting its target of shipping gas south to a hub on the Alberta-British Columbia border by late 2018.
The deal represents a significant shift in plans for pipelines from the north. For years, the Mackenzie Valley gas project in the Northwest Territories had a decisive lead and was viewed as much more likely to be built first. But that project has been stalled by an extremely slow regulatory review, which is now in its fourth year and is not expected to be completed before next year.
The $16-billion (Canadian) Mackenzie Valley pipeline is crucial to the economic development of Canada's north and claims of sovereignty over the barren region. The start of pipeline construction was expected to spur gas exploration and ignite the local economy, making Inuvik, on the Beaufort Sea, a new economic hub.
Exxon and Imperial both said that Mackenzie is still on track and unaffected by the Alaska development. But because of numerous regulatory delays, the Mackenzie project wouldn't be completed before 2017 at the earliest, and most analysts doubt the two projects could proceed at the same time because of required construction resources.
“Exxon has firmly thrown its weight behind Alaska, and it's at the detriment of Mackenzie,†said analyst Chris Theal of Tristone Capital. “Exxon is saying it without coming out and saying it directly.â€
Underpinning both the Alaska and Mackenzie pipelines is the long-term demand for gas to generate electricity to heat homes and power industries. The demand is strong enough for both, even with the discovery of major pools of shale gas throughout the United States and in northeastern British Columbia that have already significantly bolstered supply, Exxon and TransCanada said in a call yesterday.
While the Alaska pipeline would cost almost twice Mackenzie's price tag, it would deliver four times as much natural gas to customers.
The Mackenzie line is “stuck in the mud†and Alaska is “not only moving forward but it's getting momentum,†said Fred Carmichael, chairman of the Aboriginal Pipeline Group, a junior partner in Mackenzie project.
“They obviously prefer Alaska over Canada, simply because of the dollars,†he said. “As mad as I am, as disappointed as I am, I have to face the reality that this is a business deal, and there's more money for [Exxon] and TransCanada to be made on the Alaska pipeline than this one.â€
Mr. Carmichael also blasted Ottawa for not doing enough to support the Mackenzie project, seen as the crucial economic development for the Northwest Territories, whose annual budget is almost entirely funded by the federal government.
Imperial and Ottawa are in detailed talks about public financial support, which is expected to be several billion dollars.
Jim Prentice, the Ottawa minister overseeing the government's role in the pipeline, said yesterday that Mackenzie's development remains several years ahead of Alaska. He spoke yesterday with Hal Kvisle, chief executive officer of TransCanada, and Bruce March, CEO of Imperial, and they both repeated their commitment to Mackenzie.
“[We] would like to see the Mackenzie project built first,†Mr. Prentice said.
Washington has already authorized $18-billion (U.S.) in loan guarantees to build the Alaska pipeline. Discussions are under way to boost it to $30-billion.
“This is a significant step forward on a project very important to the President and the Department of the Interior as a way to get American energy to the lower 48†states, U.S. Interior Secretary Kenneth Salazar said in a statement.
TransCanada and Exxon's next big hurdle comes a year from now, when they solicit long-term contracts to carry gas on the Alaska line. With Exxon on board, it is ConocoPhillips Co. and BP PLC that need to be wooed. The two other large holders of Alaska gas are working on their own pipeline idea, called Denali.
The TransCanada plan is “the best opportunity to bring all the parties together,†said Marty Massey, U.S. joint interest manager at ExxonMobil Production Co. |
