BG Group did not submit an application under Gov. Sarah Palin’s Alaska Gasline Inducement Act to build a gas pipeline to move North Slope natural gas to market, but the company wants to stay in the game.
In a Nov. 29 letter to the governor, Martin Houston, executive vice president and managing director of BG Group, said BG “remains extremely interested” in participating in bringing Alaska gas to market.
“We remain staunch supporters of your efforts to launch a transparent and competitive process that guarantees access to pipeline capacity for Alaska’s new explorers,” Houston told the governor.
BG established “a large multi-discipline team” and spent “many hours” developing options with the intention of bidding under AGIA, he said, and believes “more than ever, that a major infrastructure project is economic and will be developed.”
“However, given the number of moving parts around all aspects of the project, there was still too much economic uncertainty for us at this stage,” Houston said.
BG does believe “there is potential for robust projects in which we would be keen to participate as the picture firms up.”
BG plans to share its work with the state, Houston said, and a Dec. 12 meeting with Deputy Commissioner of Natural Resources Marty Rutherford and her team is planned to share the results of BG’s work.
While “BG’s original bid consortium failed … it is my sincere desire that BG be considered a partner to the state, one that can add value to the process going forward,” he said.
BG believes LNG the way to go
Houston told the governor that based on the work it did, BG believes “that LNG should and will be part of the solution for the future development of Alaska’s natural gas resources.” Liquefied natural gas could be an anchor project or part of a larger highway project, he said.
In addition to providing in-state gas and revenues to the state, Houston said LNG would allow the state “to benefit from market diversification and the flexibility to target the highest value markets in any given time.”
David Keane, BG’s vice president policy and corporate affairs for North America, Caribbean and global LNG, told the Arctic Energy Summit Technology Conference in Anchorage in mid-October that BG believes LNG would be an effective way to monetize North Slope natural gas.
“LNG, I believe, is an industry that holds the key to the future evolution of gas markets worldwide and I believe Alaska can be a critical part of that world market,” Keane said.
BG is the largest supplier of LNG to the United States, and supplied almost 50 percent of LNG imported to the U.S. in 2006, he said.
BG believes LNG is the way to monetize Alaska’s gas because of changing world markets: Gas markets, traditionally regional, became global when long-distance shipment of LNG became viable, he said.
“In the early years of this decade the cost-price balance broke the so-called ‘tyranny of distance,’ making Middle Eastern LNG economically viable into the U.S. gas market,” Keane said, creating the potential that some of the world’s largest gas reserves could be linked to the world’s largest gas market, the United States (see story in Oct. 28, 2007, issue of Petroleum News at www.petroleumnews.com/pnads/597284068.shtml).
