Alaska LNG export consortium advances with federal DOE approval

HOUSTON (ICIS)–The proposed large-scale Alaskan liquefied natural gas (LNG) export venture is seeking authorisation from the US Department of Energy (DOE) to export up to 20m tonnes/year over a 30-year period, according to one of its lead proponents, US-based energy major ExxonMobil.

The move advances the plan for the liquefaction project long awaited by the state of Alaska in order to bring in stranded North Slope gas resources through the state’s interior, as well as enable three main Alaskan gas producers to monetise the gas to premium LNG buyers’ markets in northeast Asia.

The consortium consists of ExxonMobil; UK-based BP and US-based ConocoPhillips; Canadian pipeline developer TransCanada; and the state of Alaska, through an entity known as the Alaska Gasline Development Corporation. 

The proposed three-train, 20m tonnes/year facility would be located near Nikiski in south-central Alaska at an undisclosed site. Besides building a greenfield facility, the project requires an 800-mile (1,287km) pipeline connecting to the massive North Slope reserves near Prudhoe Bay. The project already holds about 200 acres (81ha) around its proposed site, about half of its planned total acreage. 

Initial cost estimates spanned between $45bn-65bn, which would be one of the most expensive liquefaction plants to date.

Alaska’s North Slope reserves are estimated to hold at least 45.2 trillion cubic feet (tcf) of possible reserves, according to the economic consultancy NERA, which prepared a study for the project’s free trade agreement (FTA) and non-FTA application. 

In order to help alleviate gas demand in Alaska’s remote interior, five take-off points are planned for the project’s in-state delivery.

The project applied to the DOE for export approval to FTA and non-FTA nations. While FTA authorisation is granted nearly automatically, the DOE has taken longer to approve non-FTA export applications given the backlog of proposed projects in the US. The agency has proposed to abolish its proposed queue and instead grant preferential review of projects that have completed full permitting through its sister agency, Federal Energy Regulatory Commission (FERC).

However, the Alaska LNG developers are asking the federal agency to be exempted from the proposed changes to the non-FTA order, given that the project is distinct from the proposals in the lower 48 states, according to its DOE filing obtained by ICIS dated 18 July.

Exporting LNG from the US, specifically to non-FTA countries, has been a contentious issue among petrochemical producers.

Companies such as ExxonMobil and Chevron, which owns 50% of Chevron Phillips Chemical (CP Chem), have backed exports, citing a want for free trade across the globe.

Meanwhile, petrochemical makers such as Dow Chemical, Huntsman and Eastman Chemical have asked the DOE to use caution in regard to approving more export permits, saying that exporting more low-cost natural gas will erode the manufacturing advantage the US currently enjoys over much of the world thanks to the advent of shale gas.

Alaska has the sole existing US liquefaction facility, the 1.5m tonnes/year Kenai plant owned and operated by ConocoPhillips. Kenai has been mothballed at various periods given the declining feedgas supply in Cook Inlet, but was recently restarted in April this year for limited summer production. However, the single-train, aging facility, which first began producing in 1967, is not likely going to be utilised in Alaska’s new, large-scale export scheme.

The project is now expected begin the pre-front end engineering and design (pre-FEED) phase, which is expected to be completed in 2016. The FEED stage could take as long as two years, which means construction would not begin until the end of the decade, depending on the final investment decision. First LNG could be expected sometime in the 2020 decade.

The Alaska LNG project expects the project will begin FERC pre-filing this year, according to its DOE application.