A long way for not much

When it comes to moving to market the North Slope’s 35 trillion cubic feet of proven, and stranded, natural gas reserves, Alaska finds itself all dressed up with nowhere to go.

After years of effort – not to mention the expenditure of hundreds of millions of dollars – construction of the Alaska LNG Project has been approved by the Federal Energy Regulatory Commission.

The $43 billion project – which requires other approvals before construction could begin – would move the gas south through an 807-mile, 42-inch pipeline to a gas liquefaction facility at Nikiski for shipment to the Pacific Rim.

It is a milestone, of sorts. The problem? There is little demand for Alaska’s gas. Prices have been hard-hit by a gas glut caused by the coronavirus pandemic. Buyers and investors are not lining up for a piece of the Alaska LNG action.

It may stay that way for some time. Alaska would find itself competing in the packed market with other liquefied natural gas giants such as Qatar, Australia, Russia and Papua New Guinea.

The Alaska Gasline Development Corp., which leads AK LNG, says it is looking for private entity to take over the massive project, and, if one cannot be found, it suggests selling off the project’s assets and shutting it down. Gov. Mike Dunleavy for years has advocated the state give up its pipeline leadership role and hand it over to private interests.

Glutted markets. Lousy gas prices. Little investor interest. It seems Alaska has come a long, expensive way for not much.

2 Responses to A long way for not much

  1. Marlin Savage May 22, 2020 at 7:47 am

    The world is awash in cheap Natural Gas and Countries are still drilling. In addition to natural gas, according to the U.S. Department of Energy, the world’s methane gas hydrates could be as vast as 250,000 to 700,000 trillion cu ft. According to the UN Environmental Programme, the world’s reserves of gas hydrates could be as large as 3,000 to 30,000 trillion cubic meters.

    For an Alaska Gas Line to be feasible, it would have to sell for TEN times today’s price at tidewater to barely break even. Doesn’t pencil out any way You look at it. “Planning” the gas line has been a money maker for some politically connected individuals……..

    There is a vast amount of natural gas in Cook Inlet and other areas of Alaska(especially when the legislature is in session in Juneau). The North Slope gas may be profitable if shipped over the pole in LNG tankers. As an aside, last I knew, if the gas line goes by Anchorage, Cook Inlet gas will be priced at the North Slope delivered rate which will be much higher than the present price.

    Reply
  2. Jack May 22, 2020 at 7:51 am

    Gee, can’t we thank and give a big round of applause to that ineffectual and ruinous ex-governor Walker for that expensive(as I remember the initial strategic planning committee boondoggle costs) for that pipeline that was never going to be. Alaskans suffered at least a 50% or more reduction in their PFD so he could fund his folly i.e. a pipe line dream that never saw the blue flame in the end.

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