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ExxonMobil filed Alaska LNG Project resources reports first drafts

$45 billion Alaska LNG FERC approval in progress

The major companies ExxonMobil from USA, BP from UK, ConocoPhillips from USA and the midstream specialist TranCanada submitted the first drafts of so called Resources Reports as part of the environmental and project designed reports to be filed in for the Federal Energy Regulatory Commission (FERC) approval required for their giant Alaska liquefied natural gas (LNG) export project from USA.

In a context where most of the international oil companies (IOCs), and especially BP and ConocoPhillips, are assessing the profitability of their projects, the initiative of the Alaska LNG project sponsors to go ahead in filing in these Resources Reports first drafts reflect their confidence in the sustainability of the natural gas market in the long term.

ExxonMobil_BP_ConocoPhillips_TransCanada_Nikiski_Kenai-Peninsula_Alaska-LNG_Project_MapThis decision shows how much such giant project is first driven by geo-strategic parameters before daily oil and gas prices.

As many other LNG export projects in USA, the main targeted market is Asia and especially northeast Asia.

So far these US-based projects were in competition to supply Asia markets with Australia, East Africa and Russia with some critical concentration for the renewal of long term supply agreements around 2018 and 2019.

In this perspective all these countries were racing to ramp up multi-billion US dollars projects to be able to deliver on time.

After the hard experiences made in Australia on current projects, this continent-country put itself off-track of the competition for the time being.

East African countries such as Mozambique and Tanzania are struggling with local content regulations and political issues to share revenues that have not collected yet, thus delaying all projects developments in this very promising region.

Russia is stocked by its foreign policy and consecutive financial sanctions with ExxonMobil and BP being among the first foreign companies to suffer from this situation.

Even if a major agreement was signed between Gazprom and Sinopec to return pipelines to east and supply China with Russian gas, this giant project will also take time and will never be sufficient to meet Asia demand opening doors to ExxonMobil, BP, ConocoPhillips and TranCanada to step in with their Alaska LNG project.

ExxonMobil increases Alaska LNG project capacity

Therefore the last twelve months have in fact removed some of the major rock blocks for ExxonMobil, BP, ConocoPhillips and TranCanada on their road to develop their Alaska LNG project.

Estimated to require between $45 and $65 billion capital expenditure, this amount may look provocative in the actual context of restrictions, but if we compare the Alaska LNG project investment with the sum of the LNG projects capital expenditure which have been frozen or postponed for the reasons mentioned above, it appears very reasonable in addition with a minimum of risks.

TransCanada_Alaska_PipelineTo be supplied from the Alaska North Slope gas fields operated by ExxonMobil, BP and ConocoPhillips, the Alaska LNG project includes a 1200 kilometers pipeline to transport the natural gas to the selected site of Nikiski in the Cook inlet, 100 kilometers southwest of Anchorage.

With a capacity of 3.5 billion cubic feet per day (cf/d) of gas, this pipeline will supply the Nikiski LNG plant with a capacity of 2.5 billion cf/d considering the gas to be consumed in the transportation and liquefaction process.

At the current pre-front end engineering and design (pre-FEED) stage, the Alaska LNG plant capacity has been revised upward from the original 15 million tonne per year (t/y) to 20 million t/y.

With a pre-FEED to be completed by 2016, ExxonMobil, BP, ConocoPhillips and TranCanada are targeting the ship the first gas from Alaska LNG project to Asia by 2021.

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