November 25, 2022 [Guardian] – Cost and market outlook for a proposed 800-mi liquefied natural gas pipeline and processing complex in Alaska appear more promising, according to a new economic analysis, which also cites a potential boost from the just-enacted federal Infrastructure Investment and Jobs Act.
Energy market research firm Wood Mackenzie, working for the Alaska Gasline Development Corp., lowered its estimated cost for the Alaska LNG project from $45 billion to $38.7 billion, citing a reduction in expected construction costs, projected rise in global LNG demand and a new finance plan with 70% debt financing and third-party tolling.
An 80% federal loan guarantee allowed by the infrastructure act, worth about $26 billion, would help de-risk the project, the analysis notes.
The research firm now has lowered the project’s estimated cost supply to Asia to $6.70/MMBtu, down about 43% from the $11.70/MMBtu cost supply it projected in its previous 2016 analysis. That lower figure to deliver a market-rate return would make gas from the project competitive in Asian markets with LNG from the Gulf of Mexico, according to Wood Mackenzie.
Alaska Gasline Development is the state public corporation tasked to pursue development of Alaska’s North Slope natural gas. The Alaska LNG plan calls for construction of a $9.2-billion gas treatment plant in the North Slope region, an 800-mile pipeline for $12.7 billion and a $16.8-billion liquefaction facility in Nikiski, southwest of Anchorage, to condense gas for transport. State officials say design and construction of the project could support 10,000 jobs.
The 42-in. dia pipeline would have a 3.3-billion-cu-ft daily capacity to move gas from Prudhoe Bay and Point Thomson, the state company says. ExxonMobil, Hilcorp Energy and ConocoPhillips have stakes in the area’s gas supply.
Alaska officials have long sought to develop a North Slope natural gas pipeline. Alaska Gasline Development took over the effort in 2010.
“We are closer now, more than ever, to realizing the decades-old dream of bringing our natural gas off the North Slope for the benefit of Alaskans and worldwide markets,” Alaska Gov. Mike Dunleavy (R) said in a statement.
The project was approved in 2020 by the Federal Energy Regulatory Commission, with its environmental impact statement adopted also by the US Energy Dept., with those approval challenged by environmental groups in the federal appeals court in Washington, DC.
DOE now has a supplemental environmental review underway to calculate the project’s expected greenhouse gas emissions impact.
The Alaska LNG Project is a proposed liquefied natural gas export project to be constructed in Nikiski, an industrial town located on Alaska’s Kenai Peninsula, south-west of Anchorage. It is touted to be among the world’s biggest natural gas development projects.
The project will include the construction of an LNG plant, storage and shipping terminal, an 800-mile (1,287km) long pipeline from the North Slope to the LNG facility, and a gas treatment plant. It is currently in the pre-front-end engineering and design (pre-FEED) phase that is expected to be completed by late 2015 at an estimated cost of $500m.
ExxonMobil, ConocoPhillips, BP, TransCanada, and the state of Alaska, which is represented by the Department of Natural Resources, Department of Revenue and the Alaska Gasline Development Corporation (AGDC), are sponsoring the project.
In addition to providing access to natural gas to Alaskan people, the project will earn massive revenues for the state. It is also expected to generate between 9,000 and 15,000 jobs in the initial phases of construction and design, and additional 1,000 jobs during operation.
Point Thomson Project
Point Thomson field, located approximately 60 miles east of Prudhoe Bay on the coast of the Beaufort sea, is estimated to hold 25% of the total estimated gas resources in Alaska’s North Slope area.
A pipeline is planned to be constructed connecting the liquefaction facility to the gas treatment plant. The 42in-diameter pipeline will have multiple compressor stations along its route and a minimum of five off-take points that will deliver gas to Alaska. It is estimated to carry up to 3.5bcf of natural gas a day.
Alaska Gasline Development Corporation (AGDC) will work in consultation with the state, local communities and the public in order to identify the most viable locations for the off-take points.
Details of the Alaska LNG gas treatment plant
The proposed gas treatment plant will have three or more amine processing or treating train modules with compression, dehydration and chilling capabilities. It will have a processing capacity of 3bcf of natural gas a day.
The processing will involve enhancing the gas quality before transporting it to the liquefaction facility. The carbon dioxide obtained during the process will be captured and compressed for the purpose of reinjection.
Details of the LNG liquefaction and storage facilities
The liquefaction facility will have a production capacity of 20 million tonnes a year (mtpa) of LNG and process 2.5 billion cubic feet (bcf) of gas a day. It will target the growing Asia Pacific LNG market.
It will be constructed in Nikiski on land that is currently used for industrial, commercial and residential purposes. More than 200 acres of land has already been acquired for the project.
The plant will consist of three LNG trains with a maximum capacity of 20mtpa and a conditioning facility. Gas at the plant will be cooled and condensed to 1/600th of its original volume.
The LNG storage facility will comprise two tanks having a capacity of 160,000m³ each. The terminal will feature a loading jetty and two berths.
Natural gas supply for the Alaska LNG project
“It is expected to generate between 9,000 and 15,000 jobs in the initial phases of construction and design, and additional 1,000 jobs during operation.”
The LNG project will be located near the Prudhoe Bay and Point Thomson fields that are expected to supply approximately 3.5bcf of natural gas a day. The Prudhoe Bay field will account for 75% of this supply, while the remaining 25% will be supplied by the Point Thomson field.
Transmission lines will be constructed to connect the gas treatment plant to the producing fields lying on the Northern Slope.
LNG export from the Alaskan project
The proposed project has been granted permission to export approximately 929bcf/y of liquefied natural gas by vessels for a 30-year term that will begin either on the date of first export or 12 years from the date the authorization is issued (21 November 2026), whichever occurs first.
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