Gasline Acceleration Plan

Alaska finds itself with an imminent gas crisis; new drilling in Cook Inlet could take many years to materialize if at all. It is time to put everything on the table and address Alaska’s gas needs, with limited resources but abundant determination, we will succeed.

The current integrated Alaska LNG construction schedule was developed with the primary focus on the LNG export facility.  While this was logical in the 2014-2016 timeframe when the schedule was developed, it pushed the pipeline construction to the back of the schedule, focusing instead on the long-lead LNG facility.

With the current gas shortage situation facing Alaska, we plan to reconfigure the schedule to prioritize the immediate needs of Alaska first.

The gasline construction can be accelerated with no detrimental impact to the LNG project.

 Phasing the Gasline to Address Alaska’s Needs

The currently approved gasline is a 42-inch, high-pressure pipeline, with eight compressor stations, enabling 3.3 Bcf/d to move down the line (LNG plant needs 2.7 Bcf/d; in-state allocation was 0.5 Bcf/d, fuel for compressors is about 0.1 Bcf/d). 

To address Alaska’s needs, the project can be greatly simplified without a negative impact to the LNG project.

• Unlike the LNG plant which needs all CO2 removed, the pipeline can handle up to four percent CO2 without the need for inhibitors, so during the initial pipeline-only phase gas can either be taken from Point Thomson or from Prudhoe Bay with a small CO2 removal plant.

• The pipeline alone can serve Alaska’s immediate needs; the eight compressor stations are not needed until the LNG project is ready.

• However, recognizing the LNG plant will be soon to follow, we will install the pipeline interconnects and above-ground valving to enable an easy future buildout of the full design; including the lateral line to Fairbanks which was not part of the current design.

• We would interconnect with the ENSTAR Beluga line, so would not need the Cook Inlet crossing, the Kenai Road reroute, and 40 miles of associated pipeline until the LNG facility is being constructed.

• The maximum flow rate needed for Alaska’s immediate needs would be about 350 MMcf/d (current average day demand in Alaska is about 250 MMcf/d; winter average-day peak is about 500 MMcf/d).

• The pipeline system for Alaska’s needs alone will cost about $9.5 Billion including contingencies.

  • With the focus on addressing Alaska’s needs first, and because the engineering work on the pipeline is largely done, the following tactical plan will address Alaska’s gas needs:

• Sign a Project Labor Agreement to enable sufficient Alaska labor to be trained for construction and enable contractors to factor the terms and conditions into the overall cost estimate. 

• Engage a qualified Engineering, Procurement, Construction (EPC) contractor to prepare the implementation plan and associated cost estimate for the pipeline.

• In coordination with AGDC and the State, begin structuring the federal loan guarantee to allow for a staged construction of the project components, starting with the gasline.

• Secure slots for the manufacture of steel and for space in a rolling mill for the pipeline fabrication. (Although these slots will have cancellation penalties if cancelled, they are long-lead items on the critical path; it is a relatively low risk activity because world demand for steel and pipeline gives value to the yard slots enabling the slots to be sold.)

• Finalize contracts for in-state demand.

• Complete financing and begin construction.

The pipeline alone can be constructed in a three-year construction window.

• The sooner we complete paperwork with AGDC, the sooner we can progress with development activities; the first 12 months after signing with AGDC will be used for paperwork with outside contractors and capital providers allowing us to target a limited notice to proceed in the fourth quarter of Year 1.

• With a start in the fourth quarter of Year 1 (2024), a practical three-year construction window will enable the gasline to be in–service in late 2028.

• New long-term revenue stream from the sale of Alaska’s 25% share of the gas.
• Provides low-cost energy to attract new businesses to Alaska and for existing businesses to expand.
• 20% of available revenue from state’s royalty share available for communities not accessible to the gasline.
• Alaskan industry benefits from lower cost of energy to develop and extend the life of existing operations.
• Cleaner energy means significant air quality improvements for Interior Alaska. 
• Much cheaper and cleaner source of fuel for the Alaska Marine Highway System vessels. 
• Revenue support for the Prudhoe Bay complex.
• Potential to re-open the existing LNG export facility in Nikiski. 
• Stimulates gas exploration in Cook Inlet given the larger markets through LNG export. 
• Generates up to $1 Billion/year in economic activity in Alaska Operations and Maintenance and PILT.
• Significantly reduces the cost of energy on full buildout.
   

• Experienced team with execution competency to develop large-scale, project-financed, natural gas infrastructure.

• The Alaska gasline is fully approved and ready for final execution.

• A highly skilled, Arctic pipeline workforce integrally involved in the project success.

• Impending Alaskan gas shortage requires a prioritization on Alaska’s needs.

• It’s time to transition the project to an execution team with a determination to address Alaska’s needs first, while advancing the full LNG project on a parallel path.