Alaska LNG Chief Wants Pipeline Built Early

The president of Alaska Gasline Development Corp (AGDC), which is pursuing the $39bn Alaska LNG project – an 800-mile gas pipeline from the North Slope to a 20mn mt/yr liquefaction terminal on the Kenai Peninsula – says a number of economic and environmental issues can be addressed by building part of the pipeline early.

Frank Richards, in a presentation February 4 to the AGDC board, said building the pipeline 500 miles from Port Thomson on the North Slope to Fairbanks, in the Alaska interior, could “put thousands of Alaskans back to work, clean our air, improve health and reduce energy bills.”

And getting the $5.9bn pipeline started early, he said, would help attract investor interest to the rest of the project, which is struggling to find commercial support.

Richards proposed to the board that Alaska LNG be transitioned from an integrated project sponsored by the state through the AGDC to one with three distinct parts: production on the North Slope, a gas treatment plant at Port Thomson on the North Slope and the pipeline, and the liquefaction terminal in Nikiski, on the Kenai Peninsula.

This non-integrated structure, Richards said in his presentation, would attract a broad range of potential investors by targeting specific asset classes and risk-return profiles.

“We are continuing to advance the structure and leadership of the project with a strategic party group consisting of North Slope producers, a major pipeline developer, LNG buyers and banks and financial corporations,” he said. “A likely lead party for each of the gas treatment plant and the pipeline have been identified.”

Richards would not reveal either of those lead parties.

Building part of the pipeline early would allow gas to be delivered to interior markets by 2025, ending the forced reliance on wood and diesel that has made the air quality around Fairbanks among the worst in the US.

And it would represent a $1.5bn economic stimulus over a two-year period, creating 1,400 direct jobs and another 20,000 indirect jobs.

Gas could be delivered to Fairbanks – and to other communities close to the mainline – at a cost of about $15/mn Btu, Richards said, but this would be reduced to less than $5/mn Btu once the full Alaska LNG project is sanctioned.

Alaska governor Mike Dunleavy is already on-board with the idea, and penned his support in an op-ed piece in the Anchorage Daily News on February 2, even before Richards made his presentation to the AGDC board.

“The good news is that, in addition to private funding, there is a strong possibility of federal funding,” Dunleavy wrote. “The new administration has announced plans for historic investment in job creation and economic recovery, and future spending legislation is expected to focus on clean energy infrastructure. The Point Thomson gas line would be a perfect candidate for these funds.”