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ExxonMobil, ConocoPhillips, BP and TransCanada mull over giant Alaska LNG project

Majors work on alternatives to export North Slope gas 

In October 2012, the major companies operating in Alaska, ExxonMobil, ConocoPhillips, BP and TransCanada submitted to the Alaska administration their first report for an Alaska liquefied natural gas (LNG) export project.

Estimated to cost $45 billion to $65 billion capital expenditure, Alaska LNG should be one of the largest LNG project in the world.

With the exponential development of the shale gas in USA leading this country to switch from net importer to potential exporter of natural gas, all the projects of giant pipelines to export gas from Alaska or Canada to northern States of USA are reconsidered.

In the meantime, all the companies made massive investment upstream in Alaska to explore and develop the giant North Slope field.

The North Slope is estimated to hold 35 trillion cubic feet (tcf) of natural gas proven reserves and more than 200 tcf of probable reserves which could technically be converted into proven reserves.

This  natural gas could provide the State of Alaska with $20 billion revenues per year.

If the domestic market in USA cannot consume this  natural gas anymore, Alaska need to find alternative export opportunities with Asia.

According to the International Energy Agency (IEA), Asia demand for  natural gas should increase by 17% in 2017 compared with 2011.

The biggest consumers should be Japan, China, India and South Korea.

In this context, working on a giant Alaska LNG project makes sense for the major companies ExxonMobil, ConocoPhillips,  BP who pumped $ billion in capital expenditure to explore and develop these Arctic resources.

Same interest prevails for TransCanada which sees all its promising midstream projects being stalled at this moment in waiting to shift export routes from south to west.

First cost estimate gives Alaska LNG around $65 billion

For six months, more than 200 employees from ExxonMobilConocoPhillips, BP and TransCanada were mobilized to draft the Alaska LNG project regarding the technical, commercial, financial, management aspects and possible time frame.

The conclusions of this team work has been submitted to the Alaska administration.

The Alaska LNG project should include:

 – 1,200 kilometers (800 miles) large diameter export pipeline from the North Slope to South central Alaska where more than 20 potential sites are currently evaluated.

 – Gas treatment plant to remove carbon dioxide, condensate and impurities

 – liquefaction facilities with series of LNG trains with a capacity of 15 to 18 million t/y of LNG

 –LNG storage tank farm

 – Export terminal facilities

 – 15 to 20 LNG carriers

Within the Alaska LNG team working on the project, the majors are sharing the tasks:

 ExxonMobil leads the technical studies

 – ConocoPhillips works on the LNG facilities

 –  BP looks after the upstream part on the  natural gas production field. 

From time frame perspective and in the light of previous projects of that size such as Chevron Gorgon LNG in Australia, such project may take 10 years to come on stream.

From this preliminary study, the pre-front end engineering and design (pre-FEED) should take 18 months, the front end engineering and design (FEED) should take two years, so that the final investment decision (FID) could be made in 2016.

In these conditions,ExxonMobil, ConocoPhillips,  BP and TransCanada could expect to see the Alaska LNG project to ship its first vessel to Asia in 2021 or 2022.

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