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      This is your public service 1-stop-shop for Alaskan and Canadian Arctic energy commentary, news, history, projects and people. We update it daily for you. It is the most timely and complete northern energy archive anywhere — used by media, academia, government and industry officials throughout the world. Northern Gas Pipelines may be the oldest Alaska blog; we invite readers to name others existing before 2001.  -dh

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8-28-15

28 August 2015 2:22pm

 
 
TransCanada officials in Thunder Bay to rally support for Energy East pipeline
... a natural gas pipeline to carry oil across Canada are in Thunder Bay trying to ... TransCanada Ontario regional director Stefan Baranski told CBC News that if ... it would still take at least five years for oil to flow through the pipeline.
 

8-27-15 Imperial Seeks To Keep Mackenzie Project Alive

27 August 2015 12:26pm

Federal Judge Stops Massive Federal Overreach--At Least For Now

BREAKING NEWS: Our friend, Julia (Bell) Slingsby, Press Secretary of the Committee on Natural Resources writes in response to a N.D. federal judge’s announcement  blocking implementation of the EPA’s Waters of the United States rule: “The Waters of the United States rule is unlawful and an abuse of executive power," she says.

"The judge’s decision to block the rule— which was challenged by 13 states – is encouraging, especially as EPA’s credibility has been questioned in the past month. The EPA needs to be stopped before it does more harm to our nation’s precious water resources.”

We also heard from Denny DeWitt of DeWitt & DeWitt, LLC, Government Relations Consulting in Juneau.  He reports, "The federal District Court of North Dakota granted the requested injunction against the WOTUS regulations that were to take effect tomorrow. The state of Alaska is one of 13 states in this case."

We would add our congratulations to the State of Alaska, its Attorney General, Governor Walker and all those who worked on this massive case of Federal Overreaching Authority.  
 
-dh

Canadian Television by Lauren Krugel, CP.  CALGARY -- Imperial Oil is hanging on to hope that its long-dormant plan to tap into natural gas fields in the Far North may eventually come to fruition.

The lead partner in the Mackenzie Gas Project has written to the National Energy Board seeking a seven-year extension to a sunset clause attached to federal regulatory approval granted in 2011.

The clause requires Imperial and its partners to break ground on the project by the end of this year. But that's not feasible in today's market environment, with natural gas prices about half what they were when the regulatory application was first filed in 2004.

The request was made in a letter to the NEB penned by Imperial (TSX:IMO) senior vice-president Bart Cahir. Attached is an updated project schedule that would see production begin in 2022 and wrap up in 2026.


 
 
 
 
 
 
 
Ewart: CERI gas study reinforces wisdom of Energy East conversion deal
Calgary Herald More from Stephen Ewart, Calgary Herald ... Even with a resolution of TransCanada's standoff with Enbridge GasDistribution ... Natural Gas Supply Forecast and Impacts report from Calgary-based CERI released Wednesday. ... “Pipeline imports of U.S. natural gasinto Eastern Canada will grow from the ...
 
Categories:

8-26-15 Alaska AGAIN prepares olive branch for visiting federal delegation

26 August 2015 7:27am

Calgary Herald by James Wood: The president of the country’s major oilpatch lobbying group says the energy industry doesn’t want government to put its planned review of Alberta’s energy royalties on hold.


Alaskans Prepare For President Visit

Governor Bill Walker, POTUS visit, federal overreach, Photo by Dave Harbour"We don’t have a lot of presidents who stop here unless they’re low of fuel,” Gov. Bill Walker (NGP Photo) said...."

White House Video/Alaska Public Television: "...the president says he’s coming to Alaska because it’s on the front lines of climate change, with lives and communities already being disrupted.

“What’s happening in Alaska isn’t just a preview of what will happen to the rest of us if we don’t take action. It’s our wake-up call,” Obama says. “The alarm bells are ringing. And as long as I’m president, America will lead the world to meet this threat — before it’s too late.”  (See the video.)

Comment: Your writer suggests that Alaskans better learn that this president and his party and its supporters are determined to:

-STOP development in Alaska.

-Eliminate free enterprise jobs and conservatively voting employees.  

-Replace them with bureaucrats loyal to the regime, supported by armies of environmental and social activists.

In these pages, we have provided ample demonstration of this principle.

We remember treating President Carter and Interior Secretary Cecil Andrus well on their visits to the state.  They burned our olive branch when the two then  created -- with their congressional allies -- the Alaska National Interest Lands Conservation Act.

ANILCA continues to VIOLATE THE STATEHOOD COMPACT and descimate Alaska's economy.

The Obama Climate Change initiatives are only pretext to the accumulation of more partisan power at Alaska's expense and at the expense of every American energy consumer and job seeker and supporter of Arctic Sovereignty and national defense.  

For those still in doubt, read our report, "UN Climate Change Chief, Christiana Figueres: Against Capitalism...."  

To these 'end justifies the means' operatives, it's not about the environment; it's about power.

Lastly, we think all recent presidents have underrated Alaska's importance to North America's Arctic defenses, which should be founded on assuring jurisdiction over and development of Arctic resources.   Without a proper national defense and natural resources to back it up, North America is vulnerable and all other issues then become academic if not irrelevant.       -dh

Report and Commentary: On Monday, a number of well-intended Alaska organizations sent a letter to Barak Obama, in the wake of years of Federal overreach.  

Alaskans have learned that the federal government constantly challenges the sovereignty and constitution of their state.  

The communication was designed to prepare Obama for his trip to the state next week.  It is a very diplomatic letter, very politically correct.

The letter notes the many natural resource wonders of Alaska and the need -- and constitutional mandate -- for Alaskans to develop those resources.  

In part, it says, Alaska depends on the responsible development of its natural resources to expand and support its economy.  Article VIII of our state constitution mandates that we develop our resources to the maximum benefit for all Alaskans. To do that, we need access and responsibility for our own lands.  (See the complete letter here....)

Interior Secretaries (i.e. 1, 2) for this Administration alone have accomplished not one step toward supporting Alaska's best interest -- which parallels the best interest of all Americans: responsible development of Alaska's resources.

Once again, Alaska offers the olive branch and while we respect the 'high road' nature of this letter, we know Alaska's history of federal oppression.

We expect the president and secretary of state have not become more respectful of Alaska's constitutional guarantees and obligations.  We expect them to be greeted by armies of environmental activists, many of them flown in to celebrate a new era of eco-domination over Alaska's Constitution.

...and, as we prepare to welcome the presidential delegation, we also remember memorizing at the school of hard knocks the definition of insanity. 

Salon thinks we're insane for overusing a cliche.  But we always "consider and are often comforted in knowing the source" of criticism.

Peace, dear reader.  -dh


Today's Consumer Energy Alliance relevant energy links:

Alaska Business MonthlyMessage to President Obama from Alaska     On behalf of our organizations and the tens of thousands of jobs we represent, we welcome you and Secretary John Kerry to Alaska. Thank you for coming, and we hope you take the opportunity to learn Alaska's true story and its value to the nation. As you visit our state, often referred to as “The Last Frontier,” you will see firsthand Alaskans’ achievements and the tremendous opportunities that are yet untapped for the United States.
 
Capital Soup:  Officials to Converge in Tampa to Discuss Shared Opportunities and Challenges in Energy at Gulf Coast Energy Forum 
Members of the Gulf Coast’s diverse energy community will gather in Tampa on Wednesday for the annual Gulf Coast Energy Forum, sponsored by Consumer Energy Alliance (CEA) and the Partnership for Affordable Clean Energy (PACE). The Forum will bring together grassroots leaders, elected officials and organizations across the Gulf Coast, as well as thought leaders in the energy field, to discuss shared opportunities and challenges in energy for the region.
 
Consumer Energy AllianceConsumer Energy Alliance Welcomes New Member: Ohio AgriBusiness Association
Consumer Energy Alliance (CEA) is pleased to welcome the Ohio AgriBusiness Association (OABA) as its newest affiliate member. Established in the late 1800s, OABA represents more than 240 companies including manufacturers and suppliers of plant nutrient and protection materials, the grain warehousing and marketing industry, the feed and seed industry, as well as businesses providing equipment, financing, insurance, and consulting, to agribusiness.
 
Consumer Energy AllianceEnergy Day Festival Links Future Generations with Future Prosperity
The U.S. Dept. of Labor announced in October that the number of job openings in the U.S. has reached 4.8 million, the highest since January 2001. In addition, a recent report by Manpower, a worldwide staffing company, predicted that the number of jobs in the energy sector, unquestionably one of the nation’s fastest growing industries, would nearly double to about 3 million by 2020.
 
Consumer Energy Alliance: For President Obama, Responsible Development Should be Job #1 in the Arctic
In National Journal, Consumer Energy Alliance President David Holt responds to the question “Can Arctic Drilling Be Done Safely?” with a resounding yes, outlining how responsible arctic development is paramount in ensuring West Coast energy stability and national energy security.
 
Christian Science MonitorOil prices collapse: Will Arctic drilling survive the crash?
Italian oil group ENI is expected to begin production from the Goliat Field off Norway in a few short weeks. The project, which has cost $5.6 billion, is expected to produce 34 million barrels of oil per year by the second year of production.
 
Business InsiderLow oil prices are making Arctic drilling even tougher
Italian oil group ENI is expected to begin production from the Goliat Field off Norway in a few short weeks. The project, which has cost $5.6 billion, is expected to produce 34 million barrels of oil per year by the second year of production.
 
Alaska Dispatch NewsAlaska Gov. Walker to Obama: Help us put more oil in the pipeline
President Barack Obama is visiting Alaska next week, where he’s expected to argue climate change is an urgent problem that requires international action. The message he’ll hear from Gov. Bill Walker? Walker wants the federal government to help Alaska access more fossil fuels — consumption of which is widely viewed as one of the primary drivers of climate change.
 
Alaska Dispatch NewsObama won't let real Alaska voices disrupt climate change photo-ops on Arctic trip
President Barack Obama is coming to Alaska. So what? He’s not coming to learn. He’s made that perfectly clear in the video he circulated when he announced his trip. He’s coming to use Alaska as a backdrop to further his argument on climate change.
 
E&E NewsObama's Alaska trip will help him present a more dramatic view of climate change
President Obama's summer climate change tour will culminate in the Alaskan Arctic next week, putting him in a setting that has experienced the country's most dramatic climatic changes and one that Obama hopes will help him boost public support.
 
Washington TimesObama accuses Kochs of un-American campaign to undermine green energy
President Obama accused conservative opponents of his climate change agendaMonday night of carrying out an un-American campaign to protect their fossil fuel interests at the expense of the country. “They’re trying to undermine competition in the marketplace and choke off consumer choice and threaten an industry that’s turning out new jobs at a fast pace,” Mr. Obama said at a clean energy summit here.
 
Town HallLas Vegas Review-Journal: Obama’s Clean Power Plan Is ‘Unlawful Overreach’
You know about Obama’s Clean Power Plan that will save all of humanity from the non-threat that is global warming. It aims to reduce carbon emissions by nearly 30 percent from 2005 levels by 2025. In the process, the regulatory costs will soar into the hundreds of billions of dollars, millions of jobs from black and Hispanic communities will be gutted, fixed-income seniors will have their budgets nuked by rising energy costs, and the plan pretty much punishes states that didn’t vote for Obama in 2012.
 
ForbesFracking Is Our Clean Power Plan
As environmental groups gather to strategize maximum mileage from the president’s “Clean Power Plan,” they would do well to remember what they might regard as the greatest environmental triumph of this century: The U.S. already leads the world in carbon emissions reduction, with emissions down 26% since the shale boom hits its stride in 2007.
 
Fierce EnergyBillion dollar injection: Obama shepherding new era of clean energy
President Obama's been busy over the past couple days. In addition to giving the keynote at the National Clean Energy Summit in Las Vegas -- where he announced a robust set of executive actions and private sector commitments to advance the country's transition to cleaner sources of energy and cut energy waste -- he has blessed more than a billion dollars in initiatives to advance innovative clean energy technologies.
 
Heartland InstituteAffordable Energy Summit Counters Obama-Reid Event
A coalition of Republicans, Democrats, and Libertarians rallied today in Las Vegas to call for affordable energy and an end to government favoritism toward so-called “clean” energy sources. Speakers at the Affordable Energy Summit 8.0 explained wind and solar power championed by Barack Obama, Harry Reid, and renewable power activists at the rival Clean Energy Summit 8.0 are prohibitively expensive, yet producing few if any net environmental benefits.
 
Huffington PostEnvironmental Activists Arrested Outside John Kerry's House
Twenty activists protesting an international pipeline expansion project were arrested outside Secretary of State John Kerry’s residence in Washington, D.C., on Tuesday. They were part of a group of about 100 demonstrators organized by the youth environmental group Midwest Unrest. The protesters were calling on Kerry to block Enbridge Energy from expanding its Alberta Clipper oil sands pipeline, which runs from Canada to Superior, Wisconsin.

Associated PressPart of Indiana BP Oil Refinery Reopens; Ohio Gas Prices Could Fall
BP says it has restarted a portion of a large Indiana oil refinery whose unplanned shutdown for repairs caused gasoline prices in the region to spike earlier this month.
 
OilPrice.comFate of U.S. Fracking Could Rest With Colorado Supreme Court
The oil and gas landscape is changing fast these days. And a big item this month suggests the courts may have a major impact on shaping the sector over the coming months. Especially issues like fracking.
 
Lincoln Journal StarBold Nebraska searching for evidence of TransCanada influence
Bold Nebraska has gone fishing. Volunteers for the environmental advocacy group known for its opposition to the Keystone XL pipeline spent hours Tuesday poring over boxes of records from former Gov. Dave Heineman’s administration.
 
BloombergOil plunge has gone too far, Morgan Stanley says
The global oil market is healthier than it looks, signaling that crude’s plunge to six-year lows has probably gone too far. While futures tumbled below $45 a barrel in London for the first time since 2009, Morgan Stanley and Standard Chartered Plc say other measures suggest physical markets for crude have stabilized or even strengthened in recent weeks.
 
BloombergEnergy Companies Cheaper Than Assets after Rout, Oil Search Says
Oil and gas companies are looking more attractive to buy than individual assets following the plunge in share prices, according to Oil Search Ltd., Exxon Mobil Corp.’s partner in Papua New Guinea.
 
Houston ChronicleTough times force companies to cut deeper, innovate
Oil prices recovered slightly Tuesday from the dramatic sell-off a day earlier, but not enough to brighten the dim outlook that's intensifying the industry's drive to find new ways to slash costs and operate more efficiently.
 
Fierce EnergyWhen is enough enough? Energy efficiency in Nevada, California
As the National Clean Energy Summit 8.0 wraps up in Nevada, a new report from the national nonpartisan business group Environmental Entrepreneurs (E2) and the Natural Resources Defense Council (NRDC) identifies energy efficiency as an economically beneficial way for Nevada to meet new carbon pollution limits set by the federal Clean Power Plan -- the cornerstone of President Obama's climate agenda.
 
San Francisco GateTroubled California oil field regulator faces major overhaul
California’s embattled oil field regulatory agency will undergo a sweeping overhaul following revelations that the office for years let petroleum companies dump their waste water into federally protected aquifers.
 
Denver Business JournalPain and gain on the way for oil and gas industry, say experts at COGA energy summit
The pain isn’t over for the oil and gas industry, according to speakers at the Rocky Mountain Energy Summit, the Colorado Oil & Gas Association’s annual industry conference underway this week.
 
Fuel FixOil is falling, but Eagle Ford, Bakken output on the rise
Oil prices are tumbling this year, but production from the Eagle Ford Shale and Bakken formation increased slightly between June and July, according to Bentek Energy. Average oil production in the Eagle Ford in South Texas was 1.6 million barrels per day in July, up by about 10,000 daily barrels over June production.
 
KGBTLow oil prices haven't hurt the Texas economy — yet
Just one short year ago, Texas drilling country rumbled with activity and high expectations that the good times would last a long while. So much for that. Amid a plunge in oil prices, the bonanza has paused at the very least, wiping out thousands of jobs in the oilfields and communities dependent on them.
 
The OklahomanBudgets for oil drilling likely to decline again in 2016, according to experts at Oklahoma conference
The double dip of low oil prices over the past two months likely will lead to more severe cuts in drilling activity next year, speakers said Tuesday at the Pipeline and Energy Expo in Tulsa. "We've been thinking for three or four months that 2016 budgets would be smaller than 2015. Now we think they will be even smaller," said Skip York, vice president of integrated energy at Wood Mackenzie.
 
Monroe News StarRevenue lost: Severance tax gives producers big break
The state of Louisiana may have missed out on some $1.1 billion in severance tax collections over the past five years as the result of a continuing state exemption that provides horizontal well operators substantial breaks or, in some cases, what amounts to a free pass.
 
The AdvocateLegislative Auditor: Louisiana missing out on hundreds of millions of dollars from oil and gas incentive
Louisiana has forgone hundreds of millions of dollars in taxes every year recently to spur the use of an oil and gas drilling technique that was being improved when the subsidy was created two decades ago but is commonplace now, a legislative audit says.
 
The Plain DealerOzone alert: smog battle heats up again, manufacturers say cleaner air will kill them
Another battle about ozone is beginning. The air waves and blogosphere will soon be thick with warnings about lost jobs versus lost lives as the health and manufacturing industries engage in another round of fighting about lowering the amount of ozone in the air you breathe.
 
The VindicatorFrackFree Mahoning Valley hosts town hall meeting on frackingThursday night
FrackFree Mahoning Valley will have a town hall-style meeting from 7 to 9 p.m. Thursday at the First Universalist Church of Youngstown, 1105 Elm St., to discuss the impact of fracking.
 
UPINorth Dakota plans more wind power capacity
In parallel with the White House, North Dakota said it was planning to connect a 43-turbine wind farm to the grid as part of an "all of the above" strategy. North Dakota Lt. Gov. Drew Wrigley was on hand for a ceremony to celebrate the upcoming completion of the Thunder Spirit wind farm, a 43-turbine wind farm with a maximum capacity of 107 megawatts of power.
 
WOWK-TVWest Virginia oil and gas safety panel to meet Wednesday
A panel appointed by Gov. Earl Ray Tomblin is holding its second meeting to study safety within the oil and natural gas industry. The Oil and Natural Gas Industry Safety Commission plans to meet Wednesday at the West Virginia state office building in Fairmont.
 
The Sanford HeraldFracking restrictions challenged
Proposed changes to a local ordinance would restrict hydraulic fracturing and other mining activities in parts of Lee County, but not everyone is convinced they would be legal — namely the former chair of the N.C. Mining and Energy Commission.
 
The Journal PressSupervisors to hold public hearing next week on fracking rules
The King George Board of Supervisors will take public comment at a 6 p.m. meeting onSept. 1 on proposals to tighten rules for oil and gas drilling in the county zoning ordinance and the Comprehensive Plan pertaining to fracking.
 
StateImpact PennsylvaniaMarcellus Shale drillers fined for methane migration
State environmental regulators say three natural gas drillers contaminated 17 separate drinking water wells in north central Pennsylvania and together the companies have paid close to $375,000 in fines. The Department of Environmental Protection blamed well construction for methane migrating into drinking water supplies.
 
Reading Eagle: David Rusk: Gov. Wolf's Property Tax Reform Plan Would Help More than GOP Proposal
At the entrance to the Martin Luther King, Jr. Memorial in Washington, D.C., is carved one of Dr. King's most famous themes: "The arc of the moral universe is long, but it bends toward justice." Gov. Tom Wolf's proposals to reform property taxes and state school funding would bend that arc a bit further toward justice in Pennsylvania.

 

 

 

 

 

 

Categories:

8-25-15 Here Is An Alaska LNG "Wake Up Call" From LNG Expert Ray Latchem

25 August 2015 9:47am

An Expert Speaks: "Alaska's In-State LNG Project"

We Urge All Alaskans To Read The In State Natural Gas Opinion Piece Below; It Is Written By One of America's (and Alaska's) Most Experienced Community LNG Operators.  (Normally, we are addressing Alaska's gas export project: Ak-LNG.  Today, we look at an Alaska intrastate project.) 

Vancouver Sun by Vaughn Palmer.  Louisiana beats British Columbia and Alaska on LNG Export Projects

We do not support a government subsidized natural gas utility and believe the model being employed by Alaska to serve Fairbanks is deeply flawed (See archived history by entering into right column "search", "Commentary, Fairbanks Natural Gas​".)  But we also believe that if there is to be a subsidized project, it should minimize making critical mistakes.  And, its formation should not grow from political influence and decision-making.  Furthermore, influence leaders should not be dissolving the independence of the Alaska Industrial Development and Export Authority (AIDEA)​ by giving it political instructions (i.e. where to buy the gas, etc.).

If Alaska decision makers fail to listen to Latchem, some very poor decisions could harm electricity and natural gas consumers from Homer to Anchorage to Mat-Su to Fairbanks.

Lastly, would a prudent investor be considering a multi-hundred-million-dollar government investment at a time of stock market volatility, when the State's investment outlook is negative, when the State is not balancing its budget and when the government has no plan for balancing the budget? 

If it does decide to imprudently pursue the Fairbanks gas utility subsidy, it had better listen to experts like Latchem, then make the decision based on real numbers and sharp pencils...before choosing and pursuing the most economical path.

-dh

Ray Latchem, LNG, Alaska, IEP, Fairbanks, Point McKenzie, Oklahoma, Spectrum, Photo by Dave HarbourADN Op-Ed by Ray Latchem (NGP Photo) All Alaskans should pay attention now to a decision that is about to be made regarding the sources of energy for heating homes and businesses.

In 2013, Gov. Sean Parnell introduced and the Legislature passed SB 23, a measure that would provide a substantial subsidy ($57 million in grants and $200 million in low interest loans and bond funding) for the development of a natural gas liquefaction plant in Prudhoe Bay and a gas distribution system in Fairbanks. My company, Spectrum LNG, began developing a parallel LNG project the year before so we were disappointed that the state of Alaska would try to develop a competing LNG plant. A little over a year later we sold our development to the state's Alaska Industrial Development and Export Authority (AIDEA) and it adopted it as its own. AIDEA selected a different developer to finish the project.

For too many reasons to fit into this commentary, AIDEA terminated its agreement with the chosen developer in 2015. The Legislature also amended SB 23 to permit the funds to be used for an LNG plant in locations other than Prudhoe Bay. This allowed AIDEA to seek new proposals from potential developers that would include Cook Inlet operators.

This brings me to the point of this commentary: Only a small group of special interests will benefit from Fairbanks getting its natural gas from Cook Inlet. The result: Anchorage and Fairbanks will pay a very high price -- too high a price -- and here is why. 

Imagine that the Cook Inlet basin is a glass of iced tea. For years Anchorage, Japan (through the Kenai LNG plant), the fertilizer industry and a very small Fairbanks market, all had straws in this glass. As the level in the tea glass fell, the price began to rise. At some point the fertilizer plant couldn’t compete with other fertilizer plants in the world that were located next to cheaper gas, so it shut down. The next victim was the LNG plant that had been supplying Japan for close to 40 years. Only Southcentral Alaska and a small straw for Fairbanks remained. To its credit, Anchorage developed contingencies that included the importation of fuel for home heating and generation of electricity. The majority of Fairbanks citizens continued to suffer from the run-up in oil prices because they were and continue to be largely reliant on oil.

An expensive new straw

It takes relatively large companies to explore for natural gas in high-expense areas like Cook Inlet. So it costs a lot to develop the glass of iced tea in this analogy. But when the level in the glass nears the bottom, the big guys lose interest and sell their remaining interests to smaller companies. Today, even though Cook Inlet gas prices are two to three times as high as Lower 48 prices, there are no major oil and gas companies exploring or developing. The opposite is occurring. The big players are leaving. Marathon left after the RCA decided it would meddle in their affairs. ConocoPhillips just announced its remaining Cook Inlet assets are for sale. The departure of major Cook Inlet producers has to worry both Enstar and the Southcentral electric utilities responsible for heating and lighting the most populous part of Alaska.

Absence of major producers creates opportunities for second-tier companies like Hilcorp that are proficient and efficient at squeezing more ice tea out of the glass at lower operating costs than the majors. And given the higher prices for gas now -- along with exploration tax credit incentives -- a few smaller, more nimble explorers have arrived. They are pursuing a chance to develop production from small potential reserves that the majors passed over, but which could pay up to three times what they sell gas for in the Lower 48. The majors know that if they developed more Cook Inlet production, it would cause the price to correct and more closely resemble Lower 48 pricing. The second-tier companies take the risk that the prices will remain high long enough for them to make a good return on their investment.

The second-tier companies are now hoping to prolong the high prices by shoring up the demand side of the price equation. If they are successful in getting another straw from Fairbanks into their glass of iced tea, they can continue to enjoy selling gas for two to three times the highest price in North America. The new straw from Fairbanks will be the LNG plant that the state itself is going to pay for.

Wake-up call

This is a wakeup call to the citizens of Southcentral Alaska and their legislative delegations. In the middle of the state’s largest budget deficit, you are considering spending millions of dollars that might lower Fairbanks’ energy price slightly, but will cost Anchorage many times that savings by shoring up already ridiculously high Cook Inlet prices.

There is an attractive alternative. Spend the state’s money tapping a new gas supply that doesn’t compete with Southcentral Alaska. In fact the new supply is not so new, but is proven and developed, and one of the largest reservoirs in the world. And there are no other straws in that huge glass. Even if other straws get added later, they likely will not cause an increase in price since they will have to compete in the world market.

Since before the trans-Alaska oil pipeline was built, many looked for the development of a gas line. While a lot of gas line proponents were looking for short-term construction opportunities, the long-term thinkers were looking for a way to monetize all that stranded gas. Alaska doesn’t have to build a pipeline to get at least some of that ocean of gas to market, for in-state use. The stage is already set for the construction of a small-scale LNG plant in Prudhoe Bay that will bring much cheaper energy to the Interior, as intended by SB 23 (i.e. cheaper than if it were purchased from Cook Inlet).

But there is an effort being made to shift this new straw from Prudhoe Bay to Cook Inlet. If consumers from Fairbanks to Southcentral do not become involved in this issue, special interests will profit at their expense for years to come. If the state had not subsidized this development, the private sector would be hard-pressed to build an LNG plant in Cook Inlet to supply the Interior against a Prudhoe Bay based supply. If Spectrum LNG didn’t believe this, we would have already built on our own Cook Inlet location. But since there is a lot of state money involved that requires no return, special interests only have to steer this investment toward Cook Inlet to accomplish their goal, without putting their own money at risk.

North to the future

By way of disclosure, our company Spectrum LNG is an LNG developer and producer. We are participating in AIDEA’s second effort to secure additional LNG supplies for the Interior energy project. Our principals and investors were the original developers of Fairbanks Natural Gas, LLC and its associated small scale LNG plant at Point Mackenzie. We own another LNG plant site adjacent to the existing plant and can develop a new larger plant at this site, but it would require a Cook Inlet based supply of gas. It would have lower construction and operating costs, as well as a cheaper truck transport to Fairbanks. Though we would benefit from our decades of Alaska LNG experience and ownership of our Cook Inlet site, we urge consumers to look carefully at what they will lose if the politicians and special interests succeed in omitting the North Slope gas option.

The bottom line is that Southcentral consumers would be better served by the state not building an LNG plant at all -- especially in their own Cook Inlet supply area. The people of the Interior will be best served by the state subsidizing a plant being built in Prudhoe Bay where the gas supply is cheap and abundant, in spite of the higher construction and operating cost.

It’s difficult to consider an LNG project absent Golden Valley Electric Association as the largest potential customer. Golden Valley is in a position to expedite the arrival of more natural gas to Fairbanks by simply agreeing to use the fuel for power generation in North Pole. This is not an original idea. GVEA themselves negotiated a 15-year natural gas purchase agreement with BP Alaska contemplating such a plan. Should GVEA decide to implement its plan to take Prudhoe Bay gas south to North Pole, the rest of Alaska will benefit.

From a public policy standpoint, it’s difficult to pass on a project that can finally tap into Alaska’s largest gas reserves and do so in a manner that provides economic benefit to all Alaskans.

Ray Latchem is president of Spectrum LNG, a privately held liquid natural gas producer based in Tulsa, Okla., which has built projects in Alaska from Prudhoe Bay to Point Mackenzie.


PETROLEUM NEWS -- SAExploration seismic programs approved - 08/16/2015 (Login to read Full story) SAExploration has received approval from the Alaska Department of Natural Resources, Division of Oil and Gas, for two seismic surveys, both on state land and waters in the Beaufort Sea, one in the vicinity of the Colville River Delta and one within the Prudhoe Bay area. The permits, both marine-base....

Categories:

8-24-15

24 August 2015 3:37pm

TransCanada's Energy East pipeline clears another hurdle

TransCanada Corp. has resolved a dispute with three major Canadian natural gas distributors over its proposed $12-billion Energy East pipeline ...

8-22-15

22 August 2015 2:50pm

ADN by Erica Martinson.  So far, Alaska’s three-member congressional delegation has been relegated to the sidelines when it comes to planning for President Barack Obama’s upcoming visit to the state. 

 

 

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