Petroleum News, by Steve Quinn. Mike Navarre has two years to help the Kenai Peninsula Borough find its place and role in the prospective AKLNG project. The Democratic mayor understands those limits, yet he says he doesn’t want the borough to be caught off guard if the project gets under way when thousands of new workers descend....
Petroleum News by Alan Bailey. A July 17 application by BP to the Alaska Oil and Gas Conservation Commission for amendments to area injection orders for the Prudhoe Bay field marks a critical step toward the possibility of building a major gas pipeline for the export of natural gas from the North Slope. The application requests approval for an increase in the maximum amount of gas that can be withdrawn from the field and approval to inject additional carbon dioxide into the field reservoir.
Although huge quantities of natural gas have been produced from the Prudhoe Bay field along with oil over the years, most of that gas has been .... (More)
From the Senate Energy Committee: See How Envronmental Extremism is Destroying California Lives
Aussie Oil and Gas Observer: The smashing of the Shanghai stock market yesterday – an 8.5% fall (the biggest one day decline in eight years) – has reverberated around the world in both stock markets and commodity markets, and oil was not left out of the carnage. *** Japan’s average LNG price (per mmbtu) for June was down again – at US$8.65. Volumetrically this figure is largely driven by contract purchases. At this price, few if any Australian LNG projects would have been sanctioned in the last decade. ***
Quote of the day, from the classic play (and movie) Glengarry Glen Ross, which captures something of the atmosphere within employee ranks in oil companies at present:
“As you all know first prize is a Cadillac El Dorado. Anyone wanna see second prize? Second prize is a set of steak knives. Third prize is you’re fired”.
Commentary: We are very proud -- and respectful -- of one of our readers, an Australian energy expert, for acting on our suggestion that he begin writing an energy blog (Column Right).
We call him "Aussie" here, because his active energy investing and consulting do not allow him the flexibility of using his proper name on his blog at this time.
Aussie is a brilliant thinker, observer of energy trends and realities, and writer. He is also prolific, producing new commentary almost daily. He knows North American energy issues well.
In short, we are delighted to begin bringing you his commentary.
We think you'll share our respect for his wisdom and insight as he tackles the effect of this week's economic crisis in China on energy projects, prices, projections and employees.
Following is a clip from his email today. -dh
Our Face Book comment on this issue:
The science is not settled (See Praeger University comment below).
Believing that it is settled is justifying environmentally extreme movements designed to bloat bureaucracies and amass political power by forming critical partnerships with subsidized businesses that could not survive in a non-subsidized world.
This process is also known as "crony capitalism" which is designed to destroy capitalism and free enterprise over time.
One of many effects of "climate politics" is justifying massive income redistribution from economical fossil fuels, taxpayers and utility ratepayers to subsidize expensive alternate fuels represented by countless lobbyists.
This video is a true public service that can be useful in communicating basic facts to our fellow citizens, fellow taxpayers, and fellow utility ratepayers.
We are are being misled by armies of entrepreneurs with alternate energy profit motives who are major funders of political campaigns.
We can think of this wealth transfer alliance as the eco-crony capitalist-political cycle of life. -dh
New Video: What They Haven't Told You about Climate Change
Since time immemorial, our climate has been and will always be changing. Patrick Moore explains why "climate change," far from being a recent human-caused disaster, is, for a myriad of complex reasons, a fact of life on Planet Earth.
Senate Energy Committee - California Drought and ESA
ICYMI: This is a very interesting piece on the current drought in California that’s causing a “humanitarian disaster” in the Golden State. Charles Cook chronicles his firsthand experiences in California’s Central Valley that’s experiencing devastating economic impacts stemming from the state’s ongoing drought crisis. -
From: Michael Tadeo, Senate Energy and Natural Resources Committee
Golden State Dust Bowl: How environmental extremism is destroying California’s Central Valley (National Review)
August 10, 2015, Issue
By, Charles C. W. Cooke
Central Valley, Calif. — The road to Fresno is flanked by missed opportunities. Just ten years ago, to drive across this extraordinary valley was to be blinded by miles upon miles of burgeoning green life. Now, the fields that run alongside State Route 180 resemble the squares on a giant, schizophrenic checkerboard. On one block there are pistachios, almonds, tomatoes, and grapes, stretching as far as you can see; on the next all is brown and fallow, and the dust swirls upward toward the heavens. On the edge of the small farm town of Mendota, an abandoned sugar plant stands defiantly against the sky. It is beautiful, in a peculiar way — a fading Hopper sketch for an unsure world. This was a resolute place, once.
That was before the decline; before the worst drought in 1,200 years turned some of America’s most fertile ground into a Dust Bowl; before soft-handed politicians in a faraway city took a look at an economic miracle and concluded that it was expendable. There is no question that God has played His role in bringing about this crisis: It has not rained consistently in the Central Valley for half a decade now, and the reservoirs in the northern part of the state are dangerously low. But Caesar must share in the blame. Because the valley is liable to become parched in rainless times, California has constructed a complex system of pipes and pumps that funnel lifesaving water southward from the Sacramento–San Joaquin Delta. Since 2007, that system has been deliberately crippled. In that year, the Natural Resources Defense Council convinced a judge that, by operating the pumps at high capacity, California was killing too many smelts — a small fish that is explicitly protected within the Endangered Species Act. In consequence, the throughput was severely curtailed, and the farmers, who under the state’s “seniority” system have the last claim on the water, were all but cut off. Two years later the drought began, and a blow was struck upon a bruise.
On the edge of a field on the outskirts of Mendota, unemployed farmworkers have built a tattered town. In another era it would have been described as a “Hooverville”; today, it bears no appellation at all. These are forgotten people, and their hamlet is veiled by indifference.
I meet Frederico, a Guatemalan farmhand who has lived here for six years. He has only a few dollars to his name — kept in cash, of course — but he considers himself “one of the lucky ones” nevertheless. “I could have nothing,” he tells me, gesturing toward a hut that he has built from abandoned sheets of wood and a stretch of discarded canvas. “But I have a house.”
Frederico is one of the many workers in California’s Central Valley who have seen their livelihoods all but destroyed by the Great Drought. “I manage to work a little here and there,” he explains, “but the water . . . the water. Often I have to go 20 miles to find work.”
Above all else, he misses the shade. “In 2008 and 2009, they started to cut my hours,” he says. “Eventually, I couldn’t pay rent.” So he moved here, to a dusty pasture by the side of a highway, and he built his tumbledown shack. “I went to the recycling place and found the bits for my house,” he recalls. “There were trees here. But they burned down. It is so hot.”
Frederico’s neighbor, a new arrival to the camp, is burning trash in a hole. He, too, has come from Mendota. “I was living in an apartment building,” he tells me, declining to give his name. “But when I lost my job, I didn’t have money for rent.” His landlord wanted a long-term lease, and he couldn’t pay. Since moving out here, he has gained occasional employment. But it is barely enough to provide food and water. “If somebody finds a job,” he tells me, “they communicate it to the whole camp. That person becomes a hero.”
He does not expect to move out anytime soon. “I am working on a garden,” he says, with a proud smile. He has started to decorate, too, putting on a wooden front door and hanging a painted sign from the roof. There is a bank of dirt behind the first row of homes, and he has planted seeds into it — some oak, some pine. Eventually — in decades — they will accord him some relief from the sun.
I meet the town’s self-appointed leader, a Salvadoran immigrant who has been here for six years. “I felt super when I was able to work,” he tells me. “Now I can’t buy medicine; I can’t buy food. I used to work 40 hours a week. Now I work eight.” Compared with the elderly workers, who cannot compete in this market, he has it good. “The older people are getting into drugs and alcohol,” he says. “I resolve any conflict here. People have started to respect and look up to me.”
Happily, he has little to do as peacemaker. Generally, the camp’s 50 or so residents look out for one another, sharing skills and food and news of job openings. When things become especially dire, some ride broken bicycles around the fields, in search of bottles that might carry a small recycling value. And then they wait: for work, for the food bank, for a sign from above.
Some of these people are in the United States illegally; others are citizens who have fallen on hard times. The cynic will wonder whether it is America’s problem that a group of lawbreakers cannot find work. I caught myself wondering precisely this when touring the camps. And yet, wherever one’s sympathies lie on that thorny question, to look at the tents in isolation is a mistake. Mendota’s unfortunates are symptomatic of a much, much broader problem — a canary in the coal mine. A decade ago, the Central Valley was a wonder of the world — a place where anybody could find work. Today, it is playing host to a humanitarian disaster.
In the parking lot outside a gas station in nearby San Joaquin, Mayor Amarpreet Dhaliwal runs me through the decline. An immigrant from Punjab, in India, Dhaliwal has seen the region at its best and worst. “I’ve been here since 1983,” he says. “I worked in the fields for my first year and a half. I did everything that the farmworkers do. The picture has been slowly changing.”
The scene that Dhaliwal paints is best described as one of trickle-down poverty. “I’ve been running a small business here since 1991,” he says. “There aren’t so many customers these days. I also run an agricultural-hardware business here in town — and a small farm. We have seen the same trend. I have the numbers for the last 14 or 15 years, and there’s a downward trend. We’re just waiting for the rain.”
As we chat, a couple of older men amble slowly and unsurely down the fading railway lines that run through the city. One of them is wearing a ripped vest and a faded New York Yankees cap; the other is in a filthy Dickies shirt and a tattered Puma hat. Neither man has many teeth left, and those that do remain are rotten and brown. The heavy green stains on the pair’s jeans and sneakers reveal that they are returning from a shift in the tomato fields. This has been a good day.
Such days are few and far between. “They used to come and drag us out of the house,” one of the men tells me. Now, “they rotate people around to give us all a chance.”
“Sometimes people bring them food or clothes,” Mayor Dhaliwal says. “The charities have stepped up to the plate. We have a kitchen that comes two days a week. We also have a food bank. And that’s great. But these men want to earn their bucks. They don’t want handouts. This is about dignity. I want real jobs out there. I want people lining up around the block, not handouts.”
As we leave, the taller of the men clasps his hand around Mayor Dhaliwal’s arm and speaks quickly in Spanish. He is clearly nervous. “He is saying that he sleeps poorly because he lives next to the railway line,” Dhaliwal tells me. “He is worried that the gas tanks behind his home are going to explode and kill him.”
“I got this mark from a snake,” the mayor tells me, pointing to the long scar that runs along his elbow. He looks at up at the sky. “I could have died, but God saved me.”
In Huron, I meet with a peer of Dhaliwal’s, Mayor Sylvia Chavez. Home to 7,000 people, Huron is the fourth-poorest municipality in all of California. “Look outside,” Chavez urges me. “It’s June, and the town is empty — as if it were a winter day! Usually, we’d have trucks and buses coming through. Usually, there would be traffic lines at the four-way stop. Usually, there would be lots of new faces.”
Not anymore. Huron, which has a population that is 98 percent Hispanic, has an unemployment rate of 35 percent. “The guy at the gas station across the street no longer sells gas, because there’s nobody to sell it to,” Chavez tells me. “He just does contract work now.” This, it seems, is a fairly common story. Ten years ago, Huron Tire Service Inc. was in such demand that the owner was running out of space in which to keep his inventory. “There were piles of tires all over the place,” Chavez says. Today, he orders his supplies ad hoc.
The decline in commercial activity has hit the city’s government hard. Sales-tax and gasoline-tax receipts are down dramatically. Courtesy of harsh spending cuts, 2015 was the first year in five that the city was in the black. “We’re just holding on,” Chavez tells me. “We’ve had to cut a lot. It’s difficult to know what to do.”
The human cost is real. “People used to leave their doors open at night,” Chavez recalls. “Now they can’t leave anything outside. We have a lot of stealing now. There are break-ins at homes; there is theft from farms and stores. I don’t walk around late at night anymore.” Domestic violence and child abuse have become “big problems,” as has substance addiction. Chavez cannot work out why the decline of the area hasn’t become a bigger story. Why isn’t it leading the national news?
Even locally, there is a good amount of shoulder-shrugging. “I went to a meeting in Fresno,” she says, rolling her eyes, “and they were talking about putting together a new committee to regulate the supply of groundwater. I sat there listening to them and I thought, Another agency: That’s exactly what we need!”
Huron serves as a particularly extreme example of the Central Valley’s predicament. But the challenges that it is facing are by no means unique. In her downtown office, the sheriff of Fresno County, Margaret Mims, lays out the numbers. “Back in 2010,” she explains, “we just didn’t have the sales or property taxes. So we had to lay a whole lot of people off.”
“A whole lot” is no exaggeration. In the space of a few months, the county had to let 77 people go. “We lost deputy-sheriff positions. We lost correctional-officer positions. It affected everybody.” Things are improving — slowly. But, Mims sighs, the department is “still about 70 deputies short of where we were in ’09.”
“The unemployment rate has made the gangs worse,” Mims tells me, “especially if there is violence in the home. The kids look outside, and they see the gangs. They move from a dysfunctional family to a functional one.” Such behavior makes the economic picture considerably worse, contributing to a disastrous spiral that is going to be extremely difficult to break. A piece of copper from an automated pump may be worth around $10 to a criminal, but it costs around $2,000 to replace. Even worse, if farmers do not initially notice the theft, they may have to wait for replacement parts and end up losing their crops. This results in fewer opportunities for work, which leads more people to crime, which . . .
“In the ’09–’10 budget year, we closed down three floors of our county jail,” Mims recalls with a grimace. “We just couldn’t hold people who needed to be held. That was a horrible time to live through.” It was not just petty thieves who benefited from the absence of jail space. “There are 442 inmates per floor. We had to let 1,326 people go,” Mims says. “We couldn’t afford the staff that it took to guard them. I just hated the message that it sent. The feeling out there was, ‘We can do whatever we want because they don’t have jail space.’” Eventually, Mims had to draw a line — at murderers.
Todd Suntrapak, the CEO of Valley Children’s Hospital, knows all about such tough choices. The drought, he tells me, is “not a very sexy issue.” In consequence, the coverage of its ruinous fallout has been “limited to this valley.” “That this is not a bigger issue in Sacramento — or even nationally,” he submits, is “unimaginable.”
For the facility he manages, the drought has been little short of a disaster. Valley Children’s is the only pediatric hospital between San Francisco and Los Angeles, and it was short of doctors when times were good. Now, it simply cannot cope with the demand. “We have seen double-digit increases in volume to our ER for the last four years,” he records. “Thirty-three percent of kids in the area are living in poverty, and that number is likely to increase.”
Newly unemployed workers continue to stream in, mostly “coming for the primary care that they were unable to get in their communities.” By the time they get here, they’re invariably sicker. Because so many fields are fallow, the amount of particulate matter in the air has increased considerably. This has led to an increase in chronic respiratory diseases, and it has provoked lethal complications among those who are already ill. “The dust can be a death sentence,” Suntrapak concludes. “If you have a weak immune system, it’s catastrophic.” And it’s not just the environment. The “child-abuse-prevention team is busier than it’s ever been.”
This year, Suntrapak’s staff is already 20 percent over its budget assumptions. The state is paying, too. Eighty-two percent of the patients at Valley Children’s are on Medi-Cal, California’s version of Medicaid. Six years ago, that number was 70 percent. For many, it is no mean feat just to get here. “They use up whatever gas money they have for the month just to reach us,” he tells me. “And then they can’t pay for the medication they need.”
At an emergency meeting run by El Agua Es Asunto de Todos, attendees are tearing their hair out. El Agua was formed by a former consul to Mexico, Martha Elvia Rosas, in the hope that sustained action would draw attention to the water crisis and force the federal government to act.
The speakers are schoolteachers, charity workers, medical professionals, university professors, family farmers, and local politicians — not your typical critics of runaway environmentalism. But, having watched their communities crumble, they have been moved to act. “There has to be a compromise,” one woman tells me before the meeting starts. “People are suffering.”
“People go to the grocery store,” says a teacher from the city of Firebaugh, “and they see melons, they see lettuce, they see tomatoes — and they think it’s all okay. In San Francisco, they turn on the faucet and they see water. It’s all taken care of. Nobody cares. People haven’t seen the devastation that’s going on here.”
When I ask for information, the visitors surround me and share their stories of decline. A once “vibrant school system with lots of parent support” has been turned into a nightmare, in which families “starve and scrape together to survive”; there is abundant “domestic violence,” and “kids need constant counseling”; single-family homes are now “hovels for multiple families,” while “garages are shelters for out-of-luck workers”; the food banks have “gone from assistance to subsistence” — so necessary, perhaps, that “in 70 or 80 percent of communities, they are indispensable.”
One gentleman, a soft-spoken local politician whose constituents have been hit hard, strikes a desperate tone. “We’re losing hope,” he laments. “Is anybody out there listening to us?”
He is unsure that they are. “We’re starting to think of extreme ideas,” he says. Those ideas? Blocking the freeway; limiting the flow of produce to market — anything that will force people to pay attention.
It is clear that he is just blowing off steam with such talk. Even the most passionate of my interlocutors — a middle-aged Hispanic man who talks in fiery, urgent language — is aware that such courses of action would be counterproductive. “This is a population that wants to work, not cause trouble,” he tells me. “If they had their way, you would only see them early in the dawn hours of the morning, when they are going into the fields. Then you would see their shadows when they leave the fields at night. They are not going to do anything sensational. They don’t want to ruffle feathers.”
He will be setting no fires. But his anger is real, and it is palpable. “I love the environment,” he says. “I fought to protect the majestic redwoods. But when our group invited the EPA to meet with the farmworkers and families here, they declined.” So, disgracefully, have California’s elected representatives. Time and time again I hear it said that politicians outside California are more interested in finding a solution than those within. “Where is Barbara Boxer? Where is Nancy Pelosi?” Noting caustically that Hispanics are being disproportionately affected, some go so far as to suggest that there is racism at play.
There is not — just environmental zealotry and an arrogant indifference to its human cost, borne by these people suffering under the sun. People who walked into the fields looking for the American dream but found it dammed at the source. If it so wished, Congress could amend the Endangered Species Act tomorrow, and the valley could enjoy a little more of the water that it needs to raise its daily bread. But, for now at least, Congress will not do so — not, one suspects, until breakfasting grandstanders in Washington, D.C., come to ask in irritation why the orange-juice jugs are empty and there are no longer any melons in the fruit bowl.
Deputy Communications Director
Senate Energy & Natural Resources Committee
Vancouver Sun by Dirk Meissner.
Could the Alaska gas pipeline/LNG project's need for fiscal certainty be modeled after BC's attempt to provide a 25 year window of certainty for investors?
Alaska Governor Bill Walker (NGP Photo) has pledged to seek a fiscal certainty for Alaska's gas. But we have observed that since the major producers own both oil and gas facilities in the state, providing certainty for only the gas still leaves investors vulnerable to predatory taxation.
Unfortunately Alaska has a long history of increasing or enacting oil taxes over the years. It has even demonstrated an unjustifiable greed in enacting RETROACTIVE oil tax increases.
Therefore, we believe that the only effective fiscal certainty that will provide a proper investment environment for a $45-65 billion Ak-LNG project will be creation of tax certainty for both the investors' oil and gas holdings -- and property. -dh
A liquefied natural gas industry: the British Columbia government fought an election on it, launched an extraordinary summer legislative session and made financial concessions, but it still isn't enough for the companies that want even lower taxes and have expressed concerns over the availability of workers.
The Liberal government's LNG dream is expected to move towards reality this week when a bill is adopted for a 25-year agreement on what could be B.C.'s first LNG plant.
B.C.'s politicians were recalled this month to debate and pass a single piece of legislation that aims to provide certainty to LNG investors and revenues to the province.
"I think there's more work to do in terms of making sure we are in fact globally competitive," said B.C. LNG Alliance president David Keane. "I think the government has more to do."
Pacific NorthWest LNG, a joint venture backed by Malaysian state-owned energy giant Petronas, plans to build a US$36-billion LNG plant at: http://www.vancouversun.com/business/pass+year+industry+wants+more/11226540/story.html#ixzz3gRB8smIT
By Larry Persily
July 7, 2015
|Other recent Persily work|
(This update, provided by Larry Persily (NGP Photo) of the Kenai Peninsula Borough mayor’s office, is part of an ongoing effort to help keep the public informed about the Alaska LNG project.)
The Alaska LNG project is a planning and coordinating effort of immense proportions. Not surprising when you consider that the pipeline construction alone requires piecing together about 115,000 40-foot-long sections in precise order, in rough terrain, in remote locations — and with 446 waterbody crossings.
That’s 447 if you count the almost 30 miles across Cook Inlet to reach the proposed liquefaction plant at Nikiski.
The project teams are mapping out every detail of building 870 miles of pipeline to move natural gas from Point Thomson to Prudhoe Bay (about 63 miles of 32-inch-diameter pipe) and on to Nikiski (about 807 miles of 42-inch pipe). The right amount of pipe has to be at the right place at the right time with the right equipment for welding, digging and pipe laying during two years of construction, and that’s after two years of prep work to build construction camp and compressor station pads, storage yards, clear rights of way, develop gravel sources and create access roads.
No easy task when you’re moving and frequently relocating 9,000 pieces of equipment that would be used to build the mostly buried pipeline. Still more equipment would be used to build the North Slope gas treatment plant and the liquefied natural gas plant and marine terminal at Nikiski. An estimated 5,000 to 7,000 workers would be on the pipeline crews, with all of them living in work camps. Several thousand more are expected on the job at the gas treatment plant and the LNG plant, with the project estimating 15,000 workers total.
Pipe storage yards would be sited about every 18 miles along the route, with the project requiring about 18 million cubic yards of gravel for access roads, pipeline right of way and compressor station pads. The project would use existing pads wherever practical.
Think of it as a choreography of engineers, geologists, biologists, environmental specialists and logistics planners. Everyone has a role and everything has its place. And it’s all synchronized for efficiency, cost savings and to limit environmental impact.
“Pipeline construction is a moving assembly line,” an Alaska LNG team member said.
INFORMATION SHARING AT WORKSHOPS
Almost two dozen Alaska LNG team members met with nearly three dozen federal and state regulatory agency personnel June 24-25, 2015, in Anchorage to share preliminary plans for pipeline construction and waterbody crossings and to listen to how and where the plans might be improved.
It’s not only construction needs that dictate the planning work. There are operational issues to consider, too. For example, the gas will be cooled for transit through permafrost zones along the proposed route so that it doesn’t melt the ground. That will require cooling units at the first six compressor stations whose job is to keep pushing gas through the line.
But the last two compressor stations on the route southward, including the one before the line enters Cook Inlet, will be built with heating units to warm up the gas in an effort to match the ground temperature in Southcentral Alaska and the water temperature in the inlet. Just as thawing frozen ground is bad, so too is freezing soil in the wrong places.
The gas temperature should mimic the terrain it moves through, not change it. As an Alaska LNG team member said, the idea is to work with Mother Nature, not against her.
If the project stays on schedule, if the marketplace cooperates, if the project sponsors and the state of Alaska successfully negotiate fiscal terms, and if investors sign up for the $45 billion to $65 billion project, site preparations for the pipeline work could occur in 2020-2021, with actual pipeline construction in 2022-2023 and first LNG production in 2024-2025. There are a lot of unknowns to get to that point, but the project teams are doing their part to get ready.
The teams are from project partners ExxonMobil, BP, ConocoPhillips and TransCanada. The state of Alaska is also an investor in the project.
Of the 446 waterbody crossings, Alaska LNG’s preliminary plan is to:
- Use open-cut trenching to install the pipe in a little more than half the locations.
- Temporarily restrict or divert the water flow for pipeline installation at fewer than half the crossings — called “flow isolation”.
- Drill and pull the pipe under the river or bridge the waterway in a small number of locations, likely single digits.
While still preliminary, the plan is to dig trenches and lay pipe across approximately half the open-cut water crossings during the winter, when the flow is frozen or minimal. The others would be crossed during the summer, when crews would work fast and, in some small crossings, the pipe could be in place in a matter of hours.
Temporary diversions would be used for the flow-isolation crossings, which could include water-filled “aqua dams,” sand bags, concrete blocks, steel flumes or pipes — it just depends on the water flow, soil and site conditions, team members explained.
Alaska LNG will decide on the most appropriate water-crossing methods in consultation with the Alaska Department of Fish and Game, U.S. Army Corps of Engineers and other state and federal agencies. Pipe specifications will be under the jurisdiction of the U.S. Pipeline and Hazardous Materials Safety Administration.
The “trenchless” crossings will use horizontal directional drilling to run pipe under the river bottom. The process involves drilling an initial pilot hole beneath the river, about 5¼ inches in diameter, then using successively larger drill heads to ream out the hole, making it bigger until it is maybe a foot larger in diameter than the 42-inch steel pipe, team leaders told federal and state regulators. The full length of the pipeline, all welded together and laid out in a large staging area at the entrance to the hole, is then pulled through to the other side.
An Alaska LNG pipeline team member said the process is so accurate that crews can drill the pilot hole and hit a stake on the other side of a river.
But sometimes the river is too deep, the ground too full of boulders or the geology just not right to go through or under the waterway. In those cases, the Alaska LNG teams are looking at building pipeline bridges, especially in areas of steep terrain.
A particularly steep area along the route is in the Nenana Canyon, just south of the community of Healy and east of Denali National Park, in a tight area of the Parks Highway, Nenana River and Alaska Railroad. Project teams are working to find the best way through that congestion.
The bridge proposals are still preliminary, as are all of the water crossings, team members told state and federal regulators. The teams and their consultants have a lot of work to do this summer to firm up their plans, with more information and a lot of details to come in the next round of environmental reports the project expects to file in February 2016 with the Federal Energy Regulatory Commission.
In addition to consulting with state and federal wildlife, lands and water managers, Alaska LNG will be working with a visual-impact consultant regarding the bridges, which likely would be within eyesight of travelers on the Parks Highway, a National Scenic Byway.
PIPELINE CONSTRUCTION PLANS
Much of this summer’s field work and office analysis is aimed at better identifying soil conditions, terrain, hillsides, vegetation, geology, safety and environmental concerns as Alaska LNG continues to make decisions not only on waterbody crossings but also pipeline specifications to match different ground conditions such as discontinuous permafrost that would put additional stress on sections of pipe.
Highway and road crossings will be underground, generally at least four feet below the road base, the teams reported, with heavier steel pipe for additional protection.
Current plans, subject to change, show about 45 percent of the Prudhoe-to-Nikiski pipeline built in the winter season and 55 percent in the summer, over two years. Depending on the weather — freeze-up, break-up, road restrictions and terrain — some of the pipe laying could be done in shoulder months, the teams said.
All 63 miles of the Point Thomson line would be built above ground and during the winter.
The mainline would likely be divided into four “spreads” of about equal mileage, with four contractors all working at the same time on their spread. Crews would move around, laying pipe in areas best suited for the season. Frost heaves, permafrost, thaw settlement, steep terrain and fish and wildlife would be among the considerations in deciding summer and winter work.
Some areas will be more easily accessible to work crews than others. Reaching the pipeline work on the West Side of Cook Inlet will be challenging, the teams reported. Contractors would move some equipment and pipe by barge from Anchorage, and the current proposal is to move much of the equipment across the frozen Yenta River in the winter, then park it there until construction work resumes with warmer weather for the final southerly push toward tidewater
For those last miles on the West Side of Cook Inlet, the pipeline route would be in the uplands, away from the wetlands and the ENSTAR gas line and behind the Beluga power plant before turning toward the inlet.
The Cook Inlet crossing would be a separate contract; that work will be covered in an Alaska LNG workshop for state and federal regulators in August.
Tokyo Gas sees Alaska in potential LNG supply mix
By Larry Persily email@example.com
June 9, 2015
This report, provided by the Kenai Peninsula Borough mayor’s office, is part of an ongoing effort to help keep the public informed about global LNG markets and the potential for the Alaska LNG project.)
Natural gas can grab a bigger share of Japan’s energy mix in the years ahead if the price is “economically reasonable,” said a senior vice president of Tokyo Gas, adding that diversified supply sources are also important to the country that is so dependent on imported energy.
Affordable pricing, as it affects Japan’s demand for liquefied natural gas imports, could mean a difference of up to 40 million metric tons a year (more than 5 billion cubic feet of natural gas per day) by 2030, said Tomo Hoshizaki, senior vice president for midstream and downstream business development at Houston-based Tokyo Gas America, the utility’s U.S. subsidiary.
Price is that important, he said, particularly for power generation and industrial customers, though Hoshizaki never quoted a price or provided a range of what might be considered “economically reasonable.”
He did, however, list several potential new long-term LNG supply sources for Japan, including Alaska, Canada, the U.S. Gulf Coast, Russia and East Africa. Hoshizaki presented at the Canada LNG Export Conference May 21 in Calgary, Alberta.
Tokyo Gas was an original customer of the LNG plant in Nikiski, Alaska, when Phillips Petroleum and Marathon Oil started shipments of Cook Inlet gas in 1969 from the first export plant in the United States. The small plant is still in operation. A partnership of ConocoPhillips, ExxonMobil, BP, TransCanada and the state of Alaska is looking at the same industrial area in Nikiski to build a much larger plant — almost 20 times the capacity — to liquefy Alaska North Slope gas for export. An investment decision could come by 2019.
Much of Japan’s potential for increased LNG demand could come from the permanent retirement of many of its nuclear power plants, Hoshizaki explained. Though Japan is expected to restart some of its shuttered nuclear reactors — closed down after the 2011 Fukushima disaster — their output will start declining in the 2020s as many reach the end of their 40-year life span. That opens up the potential for increased natural gas imports, but only if the gas is affordable and the supply is sustainable, Hoshizaki said
Price is imperative. Japan paid $29 billion for LNG in fiscal year 2010, the last full year before the Fukushima meltdown drove up gas imports to replace lost nuclear power. The country’s LNG import bill in calendar 2014 was $65 billion, according to a presentation in Calgary by Takashi Yamada of the Japan Oil, Gas and Metals National Corp.
Tokyo Gas, Japan’s third largest buyer of LNG behind Tokyo Electric and Chubu Electric, last year purchased almost 13 million tons of LNG, holding long-term contracts for supply from Australia, Malaysia, Brunei, Indonesia, Qatar and Russia. It also has contracts for LNG deliveries from two U.S. export plants under construction.
The utility forecasts its import volume climbing to 16 million tons by 2020, mostly for increased sales to industrial users and power generators. “LNG and natural gas demand can be increased by competitive and sustainable supply,” Hoshizaki said.
LNG prices in Asia have come down substantially in the past year, both long-term contract prices linked to oil and spot prices driven down by the current oversupply in the market. To keep prices affordable in the years ahead, Tokyo Gas is looking for pricing linked to market supply and demand, not just strictly oil. And it wants more flexibility to move around the cargoes it buys to better serve its own financial interests, not the market-control interests of exporters.
Hoshizaki showed a slide listing seven Japanese LNG importers that have all signed contracts to take LNG from plants under construction in Texas, Louisiana and Maryland, with the cargoes priced at the U.S. benchmark for natural gas plus liquefaction and shipping costs — no oil linkage.
The Japanese trading company Mitsubishi is one of those seven buyers of U.S. LNG, and an official from one of the company’s subsidiaries said at the Calgary conference that the biggest long-term growth potential for LNG demand in Asia will not come from the two largest customers today, Japan and South Korea, but from China, India and Southeast Asia.
Shinya Miyazaki, CEO of Diamond Gas Management Canada, a Mitsubishi subsidiary active in Canadian gas development and LNG export proposals, said his company forecasts an additional 130 million tons a year of LNG demand in Asia between 2015 and 2030, much of it from China and India.
Vancouver-based Teekay Corp., which operates 48 LNG tankers, also sees the strongest long-term growth potential in China and India, said Ian Fraser, director of Teekay Gas Services. LNG import capacity in those two countries is set to triple by 2018, Fraser said, with further growth expected.
Potential new suppliers include Canada, the U.S. West and Gulf coasts, Russia and East Africa, along with expansions in supply from Australia and the Middle East, Miyazaki said.
Positive qualities for potential LNG suppliers looking to sign up customers include abundant, proven resources, along with predictable delivery, government support, proximity to the Asian market, destination flexibility and allowing investment in the full value chain. Negatives, Miyazaki said, include no history of LNG exports, and regulatory, fiscal and labor uncertainties.
Community acceptance, also called “social license,” is one of those uncertainties, and a frustrating one for proponents of LNG export projects on Canada’s West Coast. A lack of social license for energy projects is denying Canada access to global markets, said Perrin Beatty, president and CEO of the Canadian Chamber of Commerce.
“It is so often discouraging to read the news and see the headlines” of energy-vs-environment debates, he said, referring to disputes over oil and gas pipeline routes and LNG plant sites. “Anything that diminishes the Canadian brand costs us.”
By Larry Persily firstname.lastname@example.org
May 29, 2015
(This update, provided by the Kenai Peninsula Borough mayor’s office, is part of an ongoing effort to help keep the public informed about the Alaska LNG project.)
Acknowledging that the Alaska LNG project is different from 32 other export applications on file, the U.S. Department of Energy May 28 granted conditional approval for liquefied natural gas exports from the proposed terminal at Nikiski, Alaska.
Approval for exports to nations lacking free-trade agreements with the United States — including major LNG buyers Japan, Taiwan, China, India and other Asian nations — is a big step for project developers looking to make sales calls on prospective customers. The Alaska LNG partners applied for export authority 10 months ago; some Lower 48 projects have been waiting three years for Energy Department approval.
Alaska LNG received approval for exports to free-trade nations in November 2014, but other than South Korea, none of the 20 nations on the U.S. free-trade list are significant LNG customers.
In granting conditional approval for sales to non-free-trade nations, the Energy Department said Alaska LNG is different from Lower 48 proposals because North Slope gas is stranded, unable to reach domestic or foreign markets. As such, exports of Alaska gas overseas would not diminish the amount available to Lower 48 consumers — a major consideration for the department in its review of proposed export projects on the U.S. Gulf, East and West coasts.
The department in August 2014 amended its procedures and stopped issuing such conditional approvals, instructing applicants that they needed to complete their full environmental review at the Federal Energy Regulatory Commission before a decision would be taken on their export application. That rule change did not apply to Alaska, which the department said it would consider separately.
In its May 28 order, the department noted the Alaska project “is substantially more capital-intensive and will require substantially greater expense toward environmental review than any project that has been proposed for the Lower 48.” As such, the regulatory certainty of export approval — even conditional approval — “will be of greater benefit” for the Alaska project, which the sponsors told the department could cost $1.5 billion for environmental and engineering work to reach FERC approval.
Energy Department approval of Alaska is conditioned on FERC completion and acceptance of an environmental impact statement for the project. The partners are working with federal regulators on gathering environmental and engineering data that will go into the EIS, with the project expected to file its formal application with FERC in late summer 2016.
Alaska LNG, under its current work schedule, hopes for a final EIS and FERC decision by fall 2018, putting the partners in a position to make a final investment decision on the $45 billion to $65 billion development. The sponsors include North Slope oil and gas producers ExxonMobil, BP and ConocoPhillips, along with the state of Alaska and pipeline partner TransCanada.
Construction could take four or five years, with first gas deliveries possible by 2024-2025.
The boom in U.S. shale gas production has sparked a push to build liquefaction plants to ship the fuel to overseas buyers. LNG export terminals are under construction in Texas (one), Louisiana (two) and one on Chesapeake Bay in Maryland. The department has granted export approval to an additional four projects, though each lacks either FERC approval to proceed or an investment commitment by project sponsors.
The Energy Department granted Alaska LNG’s request for 30 years of exports, at a maximum of 20 million metric tons per year — averaging 2.5 billion cubic feet per day of natural gas liquefied and loaded aboard specially designed ships to keep the LNG cold during the voyage overseas. At 30 years, the approval is 10 years longer than the department has granted most export applications.
Under federal law, natural gas exports are generally considered to be in the public interest unless challengers can prove otherwise or the department determines the public would be harmed. The only significant opposition to the Alaska LNG application came from the Sierra Club, which cited alleged environmental damages. The department dismissed the group’s objections.
Among the conditions imposed on Alaska LNG, the Energy Department required:
- Project updates April 1 and Oct. 1 each year, including reports on the status of any long-term sales contracts.
- Alaska LNG partners must file with the department any long-term sales contracts, though the companies may request confidentiality of proprietary information.
- Department approval for any change in management control of the project.
It's An Uphill Road For An Alaska LNG Project
Whether most Alaskans appreciate it or not, the best hope for a successful, Alaska LNG project is that Alaska's largest producers support it. Today, we analyze why that so.
Alaskans have consistently supported higher taxes on Alaska's oil companies and higher spending on social services -- with some exceptions.
The Alaska tax and spend model is not unlike the model employed nationally, in Washington D.C., except national leaders are capable of spending more than they take in by merely printing more money.
Ultimately, that model taxes the public via inflation rather than directly, diminishing the value of the money as it lowers the value of individual savings and paychecks.
The beauty of that model is that a future generation pays for the votes attracted by this generation of politicians.
As politicians increase tax levels, their overspending redistributes wealth to some individuals and to supporters able to maintain investments in real estate, land, capital projects and enterprises producing recurring revenue -- investments that benefit from inflation.
It can be and often is an intellectually dishonest, but effective formula for gathering reelection votes from some at the expense of others.
Logically, that concept is unsustainable. The concept is unsustainable because more and more taxation must end at some finite point and because ever higher government spending depends on that finite tax revenue.
As the unsustainable economy approaches, liberal lawmakers have historically found it quite tempting to unfairly demonize companies for not, "paying their fair share", and to embarrass fiscally responsible lawmakers for being, "uncaring and insensitive to the needs of...."
As we'll explain, the day of reckoning has now caught up with Alaska. The state imposes high taxes, is depleting its remaining savings accounts while continuing its spending spree. (No one can say Alaska's leaders were not warned!)
Alaska's elected leaders tasted an addictive elixir of $900 million in bonus bids from the 1969 Prudhoe Bay Lease Sale.
In 1971 Congress approved the Alaska Native Claims Settlement Act, critical to the approval of a project to transport the immense Prudhoe Bay oil reserve to market.
Congressional approval of the Trans Alaska Pipeline System (TAPS) in 1973, by the tie breaking vote of Vice President Spiro Agnew, coincided with mid eastern turmoil, including the Arab oil embargo and a later takeover of Iran's monarchy by Islamic extremists, still in power.
So, oil prices remained high, for a time.
Alaska's government spending and tax policies were mostly controlled by democrats and a few liberal republicans during the decades of the seventies and eighties, when the high oil prices magnified the value of high production, around 2 million barrels per day.
Yes, the former 'pioneering state' had now become addicted to a growth in income and spending phenomenon that is probably unique in the history of American states. (Other states, because of the blessing of advanced 'fracking technology' are encountering tax and spend challenges, too.) We believe none have reached the level of tax and spend excesses adopted by Alaska -- though Alaska could serve as a role model for the need to avoid unsustainable tax and spend policies.
When oil prices began to fall in the mid-eighties, many oil field and support industry employees -- and those dependent upon them -- left the state. However, production was still strong and the state pretty much continued its march toward becoming the most attractive welfare state in the nation. We are not aware of any significant social program anywhere that is not replicated in Alaska, and, at a high per capita cost.
From the 80s onward, Alaska has became the highest per capita taxing and spending state and with the highest number of not-for-profit organizations per capita in the U.S., a vast number of which came to depend on government largess -- 90% funded by oil taxes.
- more moderate climate and terrain
- more inexpensive logistical costs
- better proximity to the markets
- gas reserves closer to LNG tidewater facilities (i.e. no cost for an 800 mile Arctic/Sub Arctic pipeline)
- lower labor costs
- lower political risks
· There are many global players trying to enter the market, including over 35 projects seeking ground-breaking in North America
· Prices of the underlying commodities have slipped dramatically. This includes crude oil (Far Eastern LNG is linked to oil prices), natural gas for LNG, and land-based gas deliveries
· Japanese nuclear power is re-emerging after being shut down, and China (among others) are seeking more nuclear plants
· The rate of demand for power appears to be slowing, in keeping with slower global economic growth (see charts below)
A report CITI crossed our desk today, which underlines (and adds to the count of) growing pains being felt by the global LNG market. In particular, this raises serious questions about the ability of LNG exports from the US to have much impact on raising the price structure for domestic natural gas.
Dave Harbour, publisher of Northern Gas Pipelines, is a former Chairman of the Regulatory Commission of Alaska and a Commissioner Emeritus of the National Association of Regulatory Utility Commissioners (NARUC). He served as NARUC's official representative to the Interstate Oil & Gas Compact Commission (IOGCC). Harbour is past Chairman of the Alaska Council on Economic Education, former Chairman of the Anchorage Chamber of Commerce, and past President of the American Bald Eagle Foundation and the Alaska Press Club. He is Chairman Emeritus of the Alaska Oil & Gas Congress.
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