ConocoPhillips | Northwest Coast Energy News

LNG carrier anchored in Homer, Alaska, with engine trouble: USCG

The United States Coast Guard says it is monitoring repairs aboard the liquid natural gas carrier Excel in Homer, Alaska, Friday, May 1.

According to a news release from Coast Guard Sector Anchorage, USCG issued an order for the vessel to remain anchored in Kachemak Bay near Homer after the 908-foot, Belgium-flagged vessel experienced a loss of propulsion due to a failed engineering gasket while inbound to Cook Inlet Monday.

The Excel was bound for the existing LNG facility, the Kenai LNG Plant, located in Nikiski on the Kenai Peninsula, in Alaska. The state of Alaska is planning to expand the LNG facilities there, and that site is a potential rival for British Columbia’s LNG export plans.

The Coast Guard release says:

The Excel was examined by Coast Guard inspectors from Marine Safety Detachment Homer, Tuesday, who conducted a Port State Control annual exam and verified the engineering gasket was replaced.

While preparing to get underway Wednesday, the vessel experienced an automated engineering casualty and canceled its voyage until a Bureau Veritas (BV) classification surveyor could arrive and verify the engineering casualty was fully resolved. After arriving aboard the vessel, the class surveyor directed the vessel’s crew to test the automated engineering system and deduced that the casualty was a product of a faulty engine order telegraph; a device used on ships for the pilot on the bridge to order engineers in the engine room to power the vessel at a certain desired speed. Coast Guard Sector Anchorage issued another order for the vessel to remain in Kachemak Bay.

Friday, the vessel was allowed to continue sailing to her destination at the ConocoPhilips LNG plant in Nikiski after additional safety measures were implemented. As part of the safety measures, the tug Stellar Wind escorted the vessel from Kachemack Bay to Nikiski and a second tug, the Glacier Wind, stood by in Nikiski to assist with docking operations.

The Excel completed her voyage and safely moored at the ConocoPhilips pier in Nikiski at approximately noon Friday where it remains until permanent repairs are verified by the class surveyor and Coast Guard inspectors.

“Ensuring safe navigation in Western Alaska, particularly in Cook Inlet, is one of my highest priorities,” said Capt. Paul Mehler III. “Our crews worked closely with the Southwest Alaska Pilots Association, the class surveyor and towing vessel industry to coordinate a safe and secure transit of the Excel from Kachemak Bay to Nikiski. The weather was also in our favor with clear skies, light winds, and steady ebb tide during the transit in Cook Inlet.”

Kenai LNG — The Kenai Alaska LNG plant (ConocoPhillips)

The LNG export plant at Nikiski was built in 1969 by Phillips Petroleum and Marathon Oil. Phillips later merged with Conoco and subsequently purchased Marathon’s 30 per cent share. The Nikiski plant sent LNG shipments to Japan from 1969 to 2010 under long-term contracts with Tokyo Gas and Tokyo Electric, when the contracts expired.

In 2011 ConocoPhillips announced that it would be ceasing LNG exports from Kenai and preserving the plant for potential future use.

With the LNG rush, market conditions changed and the the plant resumed making LNG in early 2012 and exported four cargoes to Asian customers over the course of that year.

In March 2013, the export licence expired and the LNG plant was put on standby. As interest in LNG grew, and at the urging of the state of Alaska, in December 2013 ConocoPhillips Alaska applied to resume LNG exports and the U.S. Department of Energy approved the resumption in April, 2014. ConocoPhillips says it received authorization to export a total of 40 BCF of liquefied natural gas over a two-year period from 2014 through 2016.

The Alaska LNG project is “a proposed $45 to $65 billion liquefied natural gas export project – it would be the largest single investment in Alaska history. The project has the potential to create between 9,000 and 15,000 jobs during the design and construction phases; plus approximately 1,000 jobs for continued operations. In addition to generating billions of dollars in revenue for Alaska, the project will provide access to natural gas for Alaskans.” The project’s participants are the Alaska Gasline Development Corporation (AGDC) and affiliates of TransCanada, BP, ConocoPhillips, and ExxonMobil.

Related
First of six LNG shipments delivered at Nikiski
Alaska Journal of Commerce, May 2014

Alaska LNG fact sheet. (PDF)

Kenai LNG fact sheet (PDF)

Four energy giants update multi-billion dollar Alaska LNG development plans

An alliance of four energy companies has updated plans for a multi-billion dollar, ten-year liquefied natural gas megaproject that would take gas from Alaska’s North Slope for shipment to Asia through the oil port at Valdez.

Three of the companies, Exxon Mobile, ConocoPhillips and BP already have operations on the North Slope. TransCanada,which is already planning to build a gas pipeline for the Kitimat Shell project, would be the fourth partner and also work on the pipeline.

The four companies filed a letter on October 1 with Alaska Governor Sean Parnell outlining the plans, The governor’s office released the letter today.

The companies told Gov. Parnell that their efforts would result in “a megaproject of unprecedented scale and challenge; up to 1.7 million tons of steel, a peak construction workforce of up to 15,000, a permanent workforce of over 1,000 in Alaska, and an estimated total cost in today’s dollars of $45 to $65+ billion.”

The letter goes on to say that TransCanada’s recently completed non-binding solicitation of
interest in the project and that company “has publicly reported interest from potential shippers and major players from a broad range of industry sectors and geographic locations.” (An expression of interest, of course, doesn’t mean that buyers will actually sign contracts, as the Kitimat LNG partners are finding out)

It appears from the letter that the North Slope producers are, in the long term, worried about diminishing oil reserves and are now, like energy companies around the world, looking at cashing in on the natural gas boom.

This opportunity is challenged by its cost, scale, long project lead times, and reliance upon interdependent oil and gas operations with declining production. The facilities currently used for producing oil need to be available over the long-term for producing the associated gas for an LNG project. For these reasons, a healthy, long-term oil business, underpinned by a competitive fiscal framework and LNG project fiscal terms that also address AGIA issues [an Alaska state agency], is required to monetize North Slope natural gas resources. The producers look forward to working with the State to secure fiscal terms necessary to support the unprecedented commitments required for a project of this scope and magnitude and bring the benefits of North Slope gas development to Alaska.

Over the past few months, the partners have, according to the letter:

•Developing a design basis for the pipeline, including areas of continuous and discontinuous permafrost
•Investigating multiple ways to remove and dispose of CO2 and other contaminants
•Assessing use of existing and addition of new Prudhoe Bay field facilities
•Mapping multiple pipeline routing variations
•Assessing multiple pipeline sizes
•Providing for at least five in-state gas off-take points
•Completing preliminary geohazard and marine analysis of 22 LNG site locations
•Developing a design basis for the required LNG tanker fleet
•Evaluating multiple LNG process design alternatives
•Confirming a range of gas blends from the Prudhoe Bay and Point Thomson fields can generate a marketable LNG product

The letter concludes:

Our next steps are to complete the concept selection phase and work with the State to make meaningful progress on the items detailed above. This work is critical as we consider decisions to progress the next phases of an LNG development project.

Alaska’s North Slope natural gas resources must compete in the global energy markets in order to deliver state revenues, in-state energy supplies, new job opportunities and other economic benefits to Alaskans. While North Slope gas commercialization is challenging, working together, we can maintain the momentum toward our shared vision for Alaska. We will continue to keep you advised of our progress and stand committed to work with the State to responsibly develop its considerable resources.

Alaska LNG fact sheet — A fact sheet on the Alaska LNG project sent to the state governor by the project partners.

LNG partners letter to Alaska governor (PDF)

Alaska governor meets with three energy CEOs to push North Slope LNG exports to Asia

Alaska Governor Governor Sean Parnell met with the chief executive officers from BP, ConocoPhillips and Exxon Mobil on January 5, 2012, to discuss alignment between the three companies on commercializing the North Slope’s vast natural gas reserves.

A news release from the governor’s office says Parnell asked “the three companies – the major lease holders for natural gas reserves on the North Slope – to work together on developing a liquefied natural gas (LNG) project that focuses on exporting Alaska North Slope gas to Asia’s growing markets.”

The release says that governor is targeting LNG exports to Asia to serve the growing demand for natural gas. That would make an Alaska LNG export terminal a rival to the three projects at Kitimat and another proposed project in Oregon.

Parnell and the CEOs – Bob Dudley of BP, Jim Mulva of ConocoPhillips and Rex Tillerson of Exxon Mobil – met for two hours. During the meeting, the governor’s release says, the CEOs briefed the governor on the extensive work they’ve been doing in response to his request. After meeting with the governor, the three CEOs briefed members of the Alaska state legislature.

Alaska governor meets with Energy CEOs — Governor Sean Parnell met in Anchorage Jan. 5, 2012, with the chief executive officers from BP, ConocoPhillips and Exxon Mobil to discuss alignment between the three companies on commercializing the North Slope’s natural gas reserves.(Alaska governor's office)

“I appreciate the willingness of the chief executives to come to Alaska to discuss the important topic of commercializing North Slope gas,” Parnell said. “For a gas project to advance, all three companies need to be aligned behind it. This meeting is an important step, but much work remains.”

The Associated Press reports that Parnell wants the companies to unite under the framework of the Alaska Gasline Inducement Act, which gave TransCanada Corp. an exclusive state license to build a pipeline and up to $500 million in state incentives.

AP says TransCanada has been working with Exxon Mobil to advance the project but has yet to announce any agreements with potential shippers.

TransCanada has focused most of its attention on a pipeline that would deliver gas to North American markets through Alberta to Canada and the Lower 48 states. TransCanada has also proposed a smaller pipeline that would allow for liquefied natural gas exports through a terminal at the oil export port of Valdez. A rival project, a joint effort of BP and ConocoPhillips that also would have gone through Canada, folded last year.

The Alaska Journal of Commerce reports BP and ConocoPhillips believe a major liquefied natural gas project is the best option for marketing North Slope gas, quoting the chief executive officers of the two companies Robert Dudley of BP and James Mulva of ConocoPhillips.

“Given the outlook with shale gas in the Lower 48, it looks like LNG has the best potential. We’re not saying the pipeline (to Canada) is impossible,” but a pipeline to southern Alaska to an LNG plant appears to have the best prospects, BP CEO Dudley told reporters following the meetings with Parnell and legislators.
ConocoPhillips’ Mulva agreed with Dudley. “We believe LNG is the best alternative for North Slope gas, far better than any alternatives,” Mulva said.

Alaska pipeline development doesn’t bode well for NWT project: Alberta Oil

Alberta Oil Magazine

Darren Campbell column

Alaska pipeline development doesn’t bode well for NWT project

As everyone returns to the office after the Victoria Day long weekend, supporters of the star-crossed Mackenzie Gas Project (MGP) are left to wonder what the future holds for the $16.2 billion proposed pipeline scheme now that BP plc and ConocoPhillips have announced they are dropping out of the race to build an Alaska natural gas pipeline.

What does a couple of Big Oil companies giving up on their plans to build a pipeline have to do with the fortunes of a project proposing to ship natural gas from the Northwest Territories’ Mackenzie Valley to southern markets?

Time for Alaska, Big Oil to lay gas line cards on the table : Anchorage Daily News

Anchorage Daily News

Column by Paul Jenkins

Time for Alaska, Big Oil to lay gas line cards on the table

It is time for TransCanada, Exxon and the state to lay their cards on the table; time to tell Alaskans whether their natural gas pipeline project is deader than Donald Trump’s presidential campaign.

To almost nobody’s surprise, BP and Conoco Phillips yanked the plug on their Denali gas line project, an effort to build a $35 billion, large-diameter natural gas pipeline from Alaska’s North Slope to points south. Who could blame them? The companies said that after more than three years and $165 million they could not drum up enough binding “ship-or-pay” agreements to secure financing.

BP, ConocoPhillips Halt Proposed $35 Billion Alaska Gas-Pipeline Project: Bloomberg

Bloomberg

BP, ConocoPhillips Halt Proposed $35 Billion Alaska Gas-Pipeline Project

BP Plc and ConocoPhillips dropped plans for a $35 billion Alaska natural-gas pipeline, once proposed to be the largest private construction project in U.S. history, because they didn’t get enough customer interest.

The companies will withdraw an application seeking federal approval to build a pipeline to bring gas from Alaska’s North Slope to U.S. and Canadian markets, according to a statement today…

Halting Denali leaves one competing pipeline proposal, backed by TransCanada Corp. (TRP) and Exxon Mobil Corp. (XOM), to bring 4.5 billion cubic feet of gas a day from Alaska’s North Slope…

The two pipeline projects are not the only ways to sell North Slope gas, said Steve Rinehart, a spokesman for BP Alaska. Other options include liquefying the gas for transport to other markets by tanker, he said.