Natural gas pipeline project moves forward: Gas Pipeline adn.com
To hear tell from TCPL's Tony Palmer and Alaska Governor Sean Parnell, a "significant milestone" has been passed in the construction of an Alaska Highway Natural Gas Pipeline, with the ending of TC's Open Season, where bids were solicited from potential shippers on the pipeline. According to Palmer, they've recieved bids for "significant volumes."
Mind you, the project remains something of a political football, with Parnell's political opponent Bill Walker taking shots at the announcement and further criticizing the parties for failing to release the bids to the public.
I seriously doubt that releasing those bids would change much anyway. Most are anticipated to be conditional on establishing more "fiscal certainty" with the State of Alaska on royalties and taxes, so that just opens a different political can of worms. However, the odds are pretty good that since bids are in, the government can quietly start discussing terms with the shippers in conjunction with the pipeline proponents.
Denali's Open Season closes on October 4, and it will be interesting to hear the announcements that come in the wake of THAT.
Saturday, July 31, 2010
Tuesday, July 20, 2010
Move along folks... nothing to see here...
BP asset sale doesn't include Alaska stake - Anchorage Daily News
As has been widely rumored, BP has sold a significant chunk of assets to Apache, including gas assets in Western Canada and 10 fields in the Permain Basin in Texas. What did NOT happen was the rumored sale of BP's Alaska fields.
Soooo, BP's Alaska gas assets remain in play, and BP remains an Alaska pipeline player. For now. I really wish I could be a fly on the wall when in the meetings where they figure out how much gas they want to ship on TCAlaska's line...
As has been widely rumored, BP has sold a significant chunk of assets to Apache, including gas assets in Western Canada and 10 fields in the Permain Basin in Texas. What did NOT happen was the rumored sale of BP's Alaska fields.
Soooo, BP's Alaska gas assets remain in play, and BP remains an Alaska pipeline player. For now. I really wish I could be a fly on the wall when in the meetings where they figure out how much gas they want to ship on TCAlaska's line...
Monday, July 19, 2010
Hint, hint...
Feds need to expand Arctic sovereignty efforts: premier - Vancouver Sun
NWT Premier Floyd Roland took the opportunity to promote the MVP project at the annual gathering of the western Canadian premiers. Among its other benefits, it will improve Canada's claims of northern sovereignty.
This is true, of course, and the economic benefits are important, but where Roland begins to "jump the shark", if you will, is when he raises the spectre of an Alaska Highway project taking the lead. He raises the threat for an obvious reason: he wants Canada's federal government to support the MVP the same way that the US government has supported the Alaska project.
That the Alaska project will pull ahead is unlikely; the MVP is considerably further along in the permitting process (and in fact will get the final word from the National Energy Board within the next two months), so this feels a bit like an empty threat.
NWT Premier Floyd Roland took the opportunity to promote the MVP project at the annual gathering of the western Canadian premiers. Among its other benefits, it will improve Canada's claims of northern sovereignty.
This is true, of course, and the economic benefits are important, but where Roland begins to "jump the shark", if you will, is when he raises the spectre of an Alaska Highway project taking the lead. He raises the threat for an obvious reason: he wants Canada's federal government to support the MVP the same way that the US government has supported the Alaska project.
That the Alaska project will pull ahead is unlikely; the MVP is considerably further along in the permitting process (and in fact will get the final word from the National Energy Board within the next two months), so this feels a bit like an empty threat.
Wednesday, July 14, 2010
There's no such thing as an "All-Alaska" gas project...
Walker fights to open gas pipeline files - Anchorage Daily News
Yes, this item goes back a couple of weeks now, but indulge me for a minute.
It's inevitable that when you're talking about the kind of money that gas sales could provide for the state of Alaska, that projects can become political footballs. The Republicans are holding their primaries for this November's gubneratorial elections, and current GOP Gov Sean Parnell is being pressured to release TCPL's Open Season results before the August primary. Challenger Bill Walker believes that the entire AGIA process has been a bust, and thinks that TCPL's shipping commitments will bear that out. He then goes on to accuse Parnell of "hiding" this, and promises that as Alaska Governor, he'll make sure an "All-Alaska" pipeline project gets built that will pipe gas to Valdez, liquify it, and send it out on ships. After all, that works for oil, right?
I have no dog in the hunt whatsoever, but I can smell the political BS when I come across it. Let's remember that Sarah Palin herself suggested she favored the "All-Alaska" project, at least before she made it into office. It's a convenient, populist platform that plays into the deeply patriotic feelings of the Alaskan population. The trouble is, it won't work.
Why not? First off, the numbers are questionable. We're still looking at upwards of $20 billion to build a line down to Valdez and establish the liquifaction plants. Once they're built, those plants will need huge amounts of energy that will likely come from burning off some of the gas. I'm not an engineer, and if anyone knows better I welcome a correction, but I'm guessing that will take upwards of 20% of the product off the table right away. Even beyond that, the capacity to ship will be down compared to a pipeline into Canada.
Once that gas makes it on to a ship, there are issues, too. The Jones Act prohibits ships built outside the US from shipping between two American ports. The most likely port for the ships to sail to? Kitimat, BC. Where the gas will ship through Canada anyway.
The second issue? There's really no such thing as an "All-Alaska" gas project, because at the end of the day, most of that gas has to ship OUT of Alaska to find a market. The vast majority of the gas has to leave the state, whether it be on a pipeline into Canada, or on an LNG tanker going who-knows-where. And setting aside the technical issues and the economics, LNG is a much more "fluid" market (pardon the pun) than piped gas. If you have a customer in, say, Japan who finds a cheaper supply of LNG than yours (and given that $20 bln in capital costs, that might not be hard), you'll need to find a new place to send those ships.
I understand that the "All-Alaska" line sounds good in Alaska. Particularly for people who have a vested interest in Valdez, which stands to lose jobs and money as the oil supply declines. But wanting something doesn't make it a good idea.
Yes, this item goes back a couple of weeks now, but indulge me for a minute.
It's inevitable that when you're talking about the kind of money that gas sales could provide for the state of Alaska, that projects can become political footballs. The Republicans are holding their primaries for this November's gubneratorial elections, and current GOP Gov Sean Parnell is being pressured to release TCPL's Open Season results before the August primary. Challenger Bill Walker believes that the entire AGIA process has been a bust, and thinks that TCPL's shipping commitments will bear that out. He then goes on to accuse Parnell of "hiding" this, and promises that as Alaska Governor, he'll make sure an "All-Alaska" pipeline project gets built that will pipe gas to Valdez, liquify it, and send it out on ships. After all, that works for oil, right?
I have no dog in the hunt whatsoever, but I can smell the political BS when I come across it. Let's remember that Sarah Palin herself suggested she favored the "All-Alaska" project, at least before she made it into office. It's a convenient, populist platform that plays into the deeply patriotic feelings of the Alaskan population. The trouble is, it won't work.
Why not? First off, the numbers are questionable. We're still looking at upwards of $20 billion to build a line down to Valdez and establish the liquifaction plants. Once they're built, those plants will need huge amounts of energy that will likely come from burning off some of the gas. I'm not an engineer, and if anyone knows better I welcome a correction, but I'm guessing that will take upwards of 20% of the product off the table right away. Even beyond that, the capacity to ship will be down compared to a pipeline into Canada.
Once that gas makes it on to a ship, there are issues, too. The Jones Act prohibits ships built outside the US from shipping between two American ports. The most likely port for the ships to sail to? Kitimat, BC. Where the gas will ship through Canada anyway.
The second issue? There's really no such thing as an "All-Alaska" gas project, because at the end of the day, most of that gas has to ship OUT of Alaska to find a market. The vast majority of the gas has to leave the state, whether it be on a pipeline into Canada, or on an LNG tanker going who-knows-where. And setting aside the technical issues and the economics, LNG is a much more "fluid" market (pardon the pun) than piped gas. If you have a customer in, say, Japan who finds a cheaper supply of LNG than yours (and given that $20 bln in capital costs, that might not be hard), you'll need to find a new place to send those ships.
I understand that the "All-Alaska" line sounds good in Alaska. Particularly for people who have a vested interest in Valdez, which stands to lose jobs and money as the oil supply declines. But wanting something doesn't make it a good idea.
Monday, July 12, 2010
Shakeup on the North Slope?
Fairbanks Daily News-Miner - Interior Alaska politicians have mixed reactions to BP sale rumors - Fairbanks Daily News-Miner
A bit of a roundabout trip for this development, as the piece I cite is actually a reaction to a report in London's Sunday Times that BP is in talks to sell its stake in Prudhoe Bay to Apache. But, since this is the piece where I actually read the news (and since the Sunday Times charges for its subscriptions), we'll go with this one.
For those who don't know, Amoco Petroleum was one of the pioneers on Alaska's North Slope, possibly its most important one. Amoco was bought out by BP long ago, but much of Amoco's value was in its North Slope position. BP selling its North Slope stake is akin to the White House announcing that the Library of Congress had been outsourced to Google.
The News-Miner piece has a quaint feel to it; State Representative Jay Ramras suggests this sale means the state needs to reform O&G taxes to encourage investment, which conveniently ignores the little issue of BP needing all the cash it can get its hands on these days.
As for pipeline implications, I'm going out on a limb to say that if this report is accurate, and the deal is actually concluded, that it effectively kills Denali. Why? Because BP has no reason to build a pipeline it won't be shipping its own gas on, and Apache doesn't have the clout to pick up the torch on a massive (and expensive) project that was already swimming against the current.
Tell me I'm wrong.
A bit of a roundabout trip for this development, as the piece I cite is actually a reaction to a report in London's Sunday Times that BP is in talks to sell its stake in Prudhoe Bay to Apache. But, since this is the piece where I actually read the news (and since the Sunday Times charges for its subscriptions), we'll go with this one.
For those who don't know, Amoco Petroleum was one of the pioneers on Alaska's North Slope, possibly its most important one. Amoco was bought out by BP long ago, but much of Amoco's value was in its North Slope position. BP selling its North Slope stake is akin to the White House announcing that the Library of Congress had been outsourced to Google.
The News-Miner piece has a quaint feel to it; State Representative Jay Ramras suggests this sale means the state needs to reform O&G taxes to encourage investment, which conveniently ignores the little issue of BP needing all the cash it can get its hands on these days.
As for pipeline implications, I'm going out on a limb to say that if this report is accurate, and the deal is actually concluded, that it effectively kills Denali. Why? Because BP has no reason to build a pipeline it won't be shipping its own gas on, and Apache doesn't have the clout to pick up the torch on a massive (and expensive) project that was already swimming against the current.
Tell me I'm wrong.
Tuesday, July 6, 2010
Couldn't have said it better...
Mackenzie a must-do - Financial Post
Canadian finance journalist Diane Francis nicely summarizes why the MVP "must" proceed, and I largely agree whole-heartedly. I take a little issue with her assertion that this project is the only way to achieve sustainable economic development in Canada's north, but it's certainly the best prospect we'll have for a while.
Canadian finance journalist Diane Francis nicely summarizes why the MVP "must" proceed, and I largely agree whole-heartedly. I take a little issue with her assertion that this project is the only way to achieve sustainable economic development in Canada's north, but it's certainly the best prospect we'll have for a while.
Sunday, July 4, 2010
Alaska pipeline rivals not in direct talks, outgoing TransCanada CEO says - Brandon Sun
Alaska pipeline rivals not in direct talks, outgoing TransCanada CEO says - Brandon Sun
Not so fast, I guess. According to Hal Kvisle (who retired as TCPL's CEO this week), there have been no "direct talks" about a merger of his Alaska Highway Pipeline project and that of Denali proponents BP and ConocoPhilips.
Kvisle said that any contact has strictly been related to possible shipping volumes on their line. Since TCPL (or "TCAlaska", if you will) is conducting its Open Season to obtain shipping commitments right now, this is entirely appropriate, and--at least in theory--should have no bearing on how the projects might work together in the future.
In practice? Well, that may be another story. For one thing, if sensitive talks were in progress, I'm thinking Kvisle would deny it regardless. And for another, if BP and their partner are developing cold feet, then they might be making a larger shipping commitment.
This whole thing might look a little odd to those outside the industry. Here we have shippers aligned with competing projects (ExxonMobil is working with TCAlaska, and BP and ConocoPhilips are pushing the Denali project); it would seem that these competitors would go out of their way to discredit the competing project by "under-committing" to the competitor. The truth is, though, that this has been the way they've done business in the oil and gas industry for decades. The other thing to remember is that if BP committed to ship a considerably larger volume of gas on its own line than it would on TC's, it would definitely raise some eyebrows.
Not so fast, I guess. According to Hal Kvisle (who retired as TCPL's CEO this week), there have been no "direct talks" about a merger of his Alaska Highway Pipeline project and that of Denali proponents BP and ConocoPhilips.
Kvisle said that any contact has strictly been related to possible shipping volumes on their line. Since TCPL (or "TCAlaska", if you will) is conducting its Open Season to obtain shipping commitments right now, this is entirely appropriate, and--at least in theory--should have no bearing on how the projects might work together in the future.
In practice? Well, that may be another story. For one thing, if sensitive talks were in progress, I'm thinking Kvisle would deny it regardless. And for another, if BP and their partner are developing cold feet, then they might be making a larger shipping commitment.
This whole thing might look a little odd to those outside the industry. Here we have shippers aligned with competing projects (ExxonMobil is working with TCAlaska, and BP and ConocoPhilips are pushing the Denali project); it would seem that these competitors would go out of their way to discredit the competing project by "under-committing" to the competitor. The truth is, though, that this has been the way they've done business in the oil and gas industry for decades. The other thing to remember is that if BP committed to ship a considerably larger volume of gas on its own line than it would on TC's, it would definitely raise some eyebrows.
Friday, July 2, 2010
Denali: The Death-Watch Begins
Talks Begin to Join Pipeline Projects - Houston Chronicle via Alaska Highway Pipeline blog
Kudos to AK Engineer in picking this item up from the Houston Chronicle. It's a big one.
To me, the Denali project was something of a red herring from the beginning; more of an effort to discredit the AGIA process than a serious project. That there is now a quiet public acknowledgement that Denali's proponents (ConocoPhilips and BP) are now seeking to merge their project with TCPL's is significant.
This is actually very, very good news. Everyone knew that there was no way both projects would be built, and Denali was the dark horse from the outset. It diverted attention and resources, and perhaps even some credibility, from TCPL's AGIA-sanctioned project. A single project that enjoys the support of ALL the North Slope producers stands a much better chance of proceeding to construction.
The timing of this announcement is significant, too. There's still over a month on TCPL's Open Season; if the Denali proponents are quietly shifting support, it will be somewhat less of a surprise when the nominations close and they are both found to have "thrown in" with their competitor.
None of this is a huge surprise. I noted myself that BP's difficulties in the Gulf of Mexico could ultimately hamper its ability to remain in the Denali project. I think I'll engage in a little wild speculation here and suggest that the Obama administration may have applied a little political pressure on BP to move this way.
Kudos to AK Engineer in picking this item up from the Houston Chronicle. It's a big one.
To me, the Denali project was something of a red herring from the beginning; more of an effort to discredit the AGIA process than a serious project. That there is now a quiet public acknowledgement that Denali's proponents (ConocoPhilips and BP) are now seeking to merge their project with TCPL's is significant.
This is actually very, very good news. Everyone knew that there was no way both projects would be built, and Denali was the dark horse from the outset. It diverted attention and resources, and perhaps even some credibility, from TCPL's AGIA-sanctioned project. A single project that enjoys the support of ALL the North Slope producers stands a much better chance of proceeding to construction.
The timing of this announcement is significant, too. There's still over a month on TCPL's Open Season; if the Denali proponents are quietly shifting support, it will be somewhat less of a surprise when the nominations close and they are both found to have "thrown in" with their competitor.
None of this is a huge surprise. I noted myself that BP's difficulties in the Gulf of Mexico could ultimately hamper its ability to remain in the Denali project. I think I'll engage in a little wild speculation here and suggest that the Obama administration may have applied a little political pressure on BP to move this way.
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