New Alaska Natural Gas Pipeline And LNG Project

Of great interest to Mogel & Sweet is the announced joint venture project by ExxonMobil, ConocoPhillips and BP to commercialize the 35 trillion cubic feet of discovered natural gas in the North Slope of Alaska. The project would differ from the ExxonMobil/TransCanada proposal (pending at FERC) to build a natural gas pipeline from the North Slope southward and then east to Calgary. In contrast, the joint venture project would employ a pipeline to bring natural gas southwest to central Alaska for instate consumption, with additional volumes to be transported to a tidewater location to be liquefied, and exported as LNG to Asia.

In a press release, the Companies stated:

As a result of the rapidly evolving global market, large-scale ... LNG exports... will be assessed as an alternative to gas line exports through Alberta [Canada]. In addition to broadening market access, a south-central Alaska LNG approach could more closely align with in-state energy demands and needs.

As the three sponsors recognized, "commercializing Alaska natural gas resources will not be easy." This is especially so given today's low natural gas prices. Finally, it is not clear how the proposal will fit within the AGIA statutory framework (on which Bill Mogel testified before the Alaska Legislature as its counsel) that selected the TransCanada pipeline as the preferred project to transport North Slope volumes.