Amid rumors of a major announcement from Alaska’s big three North Slope gas owners, ExxonMobil, BP and ConocoPhillips, involving a change in direction for TransCanada’s Alaska Pipeline Project that would take the line to tidewater for liquefied natural gas export to Asia, versus going through Canada to U.S. markets, the movers and shakers in Alaska’s oil and gas industry received invitations on Jan. 3 from those companies to a private noon luncheon on Jan. 5 with their chief executive officers — Rex Tillerson, ExxonMobil, Bob Dudley, BP, and Jim Mulva, ConocoPhillips.
Although there was no alignment on LNG announced at the event, it was the first time since the passage of the Alaska Gasline Inducement Act that the three gas owners publicly admitted they were taking a close look at moving North Slope gas to tidewater in Southcentral Alaska for export as LNG to Asia.
Plus, a PN source said there was “significant progress” made on the Point Thomson settlement in the private meeting held before the luncheon, a meeting that included only Alaska Gov. Sean Parnell, Tillerson, Dudley and Mulva.
After the 1 hour and 40 minute meeting between the four chief executives, their staffs were invited into the room, including Alaska senior management for the oil companies and state commissioners and directors.
The four chief executives immediately explained the results of their meeting to their staffs so that there would be no misunderstandings.
The three oil company CEOs were in Alaska at the invitation of Parnell, who gave the first speech at the reception, followed by Mulva, Dudley and Tillerson. The topic: Southcentral LNG project.
There was no major announcement.
In a nutshell, the governor said the three companies had reported progress in discussing alignment on an instate route for the gas pipeline that would take the gas to tidewater in Southcentral Alaska where it would be liquefied for export by tanker.
He, Dudley and Tillerson also said TransCanada was involved in the discussions; and he told the three oil company CEOs that the state needs “metrics for progress.”
The governor also talked about the state tax changes that would be needed.
Mulva, too, mentioned Alaska’s production taxes, saying they were too high and unpredictable.
Progress has been made in the LNG discussion, he said, describing the meeting with the governor that morning as a key event for Alaska.
But, Mulva said, much more needs to be discussed.
Dudley acknowledged that there is a market for Alaska LNG in the Pacific Rim; a market, he said, that needs to be evaluated.
Tillerson, the most upbeat of the three CEOs, said ExxonMobil has done similar projects elsewhere in the world and was ready to do it in Alaska if “we can find the right alignment.”
“We succeed together or we fail together,” he said of the state and the industry.
He also said ExxonMobil is willing to accept the market risk, which is a risk that can’t be controlled.
All three company CEOs praised Parnell and his administration at the luncheon, which was hosted by Lynden with company executive Jim Jansen the master of ceremonies.
“I have looked the governor in the eye and I know he is earnest about wanting to be a partner” with industry in Alaska, Tillerson said. “I trust him.”
—Kay Cashman
Winegarner moves to Statoil
In mid-December, Jim Winegarner joined Statoil in Alaska as director of land, leaving his position with Brooks Range Petroleum Corp., where he has served as vice president of land since mid-2006. Winegarner has more than 30 years of experience in the oil and gas industry, mainly with ARCO and ConocoPhillips in Alaska.
Japan to get LNG from Norway via Northern Sea Route
This summer the world’s only Ice-1A winterized class LNG tanker will transport the first liquefied natural gas from northern Norway to Japan via the Northern Sea Route, per a Jan. 5 article in the Barents Observer that was based in part on a NRK report.
The gas will come from the Statoil-operated Snøhvit LNG project, the first offshore development in the Barents Sea and the first major development on the Norwegian continental shelf with no surface installations.
The project brings natural gas to land for liquefaction and export from the world’s northernmost LNG facility.
According to the Barents Observer, Norway-based Knutsen OAS Shipping received permission from Russian authorities to transport LNG in the tanker Ribera del Duero Knutsen from Snøhvit to the Bering Strait, a distance of more than 3,000 nautical miles along the Russian coast of the Arctic Ocean.
That part of the journey will take about two weeks; the last leg, from the Bering Sea to Japan, will take another two weeks, which in total is about half the time it takes via the usual route from Europe to Asia through the Suez Canal.
The Northern Sea Route is a shipping lane defined by Russian legislation from the Atlantic Ocean to the Pacific Ocean, from Murmansk on the Barents Sea, along Siberia, to the Bering Strait. The entire route lies in Arctic waters and mostly ice-free for two months per year, but open to vessel traffic from June to October when there is still significant open water.
The Ribera del Duero Knutsen, the article said, can make as many as three trips in that season.
Traffic along the Northern Sea Route has increased from four vessels in 2010 to 34 in the 2011 season.
According to the Observer’s report, Rosatom, the state-owned operator of Russia’s nuclear icebreaker fleet, cargo transport on the Northern Sea Route was expected to reach one million tons in 2012, but Rosatom said the potential is much higher.
What hampers use of the shipping lane is the lack of suitable vessels, the article said.
According to Synnøve Seglem in Knutsen OAS Shipping, there are several other companies with ice class LNG tankers that are interested in testing out the Northern Sea Route.
According to the Voice of Russia website, developing the Northern Sea Route has become one of Russia’s top priorities in the far north. In September at the International Arctic Forum, Russian Prime Minister Vladimir Putin said that Russia is developing the Northern Sea Route by expanding existing ports and building new Arctic ports; upgrading the transportation infrastructure in the region; and expanding the country’s icebreaker fleet.
See related Barents Observer map and article “Record long Arctic navigation season” online at http://bit.ly/x4ydV5.
—Kay Cashman
