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Frustration builds in Alaska over pipeline as Exxon touts plans

Margaret Kriz Hobson, E&E EnergyWire, June 24 2013

Frustration builds in Alaska over pipeline as Exxon touts plans

At a time when Alaska appears to be taking a back seat to other international liquefied natural gas export projects, Gov. Sean Parnell (R) last week expressed disappointment that Exxon Mobil Corp. and three other firms aren't making a long-term financial commitment to building an 800-mile natural gas pipeline in Alaska.

Exxon Mobil and its partners BP Alaska, ConocoPhillips Alaska and TransCanada Corp. laid out summer field work plans Friday for their tentative proposal to build a natural gas pipeline from the North Slope to an export facility in south-central Alaska.

The companies didn't specify a budget for the summer science and environmental studies. But they estimated that the work they've conducted since March 2012, plus this summer's field work, will total between $80 million and $100 million.

Parnell praised the companies for continuing to move forward on the Alaska LNG pipeline. But he said he's "concerned that these spending commitments do not go beyond the end of this year."

"The [industry's] announcement simply does not reflect that the companies have budgeted or allocated hundreds of millions of dollars ... which is what they have previously indicated is required for this phase of the project," Parnell said in a statement.

"In short, the companies are making progress, but not moving as quickly as Alaskans expect," he added.

Though the summer work is only a small step forward, it shows the industry's continued interest in the Alaska pipeline project, said Larry Persily, federal coordinator for Alaska Natural Gas Transportation Projects.

"While they're doing some environmental work, they're also working internally between the companies to see if this is really something they want to put $40 billion to $60 billion into," he said. "They're watching where the market is going and seeing what kind of fiscal deal can they negotiate with the state."

Alaska is eager to commercialize the 34 trillion cubic feet of natural gas available on its North Slope, roughly a tenth of all U.S. natural gas reserves. However, the state has faced a history of problems in seeking to transport the gas from the frozen north to the world's markets (EnergyWire, May 22).

Early last year, TransCanada and the three energy giants joined forces on the most recent project, which would include a 42-inch gas pipeline, a North Slope gas treatment plant, a liquefaction plant in south-central Alaska and at least five take-off points for in-state gas delivery.

But Exxon is also aggressively pursuing several other non-Alaskan LNG pipeline projects.

Last week, Exxon filed an application with the Canadian government to build an LNG facility on the British Columbia coast that would export 30 million metric tons of gas per year. The company said it could begin shipments as early as 2021.

Exxon is also waiting for the U.S. Energy Department to sign off on a proposal to build a $10 billion LNG facility on the Texas Gulf Coast (EnergyWire, May 13).

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