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The case for Cook Inlet LNG importing
Chugach Electric Association files with the RCA a report on part two of Black and Veatch study into bolstering gas supplies Alan Bailey for Petroleum News
Anchorage based Chugach Electric Association has filed with the Regulatory Commission of Alaska a report from Black and Veatch on phase two of the consultancy's investigation into gas supply options for the electric utility in response to dwindling supplies of natural gas from the Cook Inlet basin.
In a letter to the commission accompanying the report Chugach Electric said that Black and Veatch had confirmed the viability of importing liquefied natural gas as a means of ensuring that Chugach Electric can continue to obtain sufficient gas to maintain its required power generation. However, while, as previously reported by Petroleum News, Chugach Electric has now come to an agreement with Harvest Alaska for Harvest to convert Marathon's mothballed LNG export facility at Nikiski into an LNG import facility, the Black and Veatch report assumed that the LNG would be imported using a floating LNG terminal. The report does, however, acknowledge that the conversion of the existing LNG import terminal would constitute a preferred alternative to the use of a floating terminal.
While phase one of the Black and Veatch study evaluated multiple options for addressing the projected shortfall in gas supplies for Chugach Electric, the study ultimately concluded that the importing of LNG was the preferred option. Phase two focused on the permitting and logistical requirements for LNG importing using a floating terminal. Chugach Electric told the commission that it projects a range of LNG import costs between $12 and $16, depending on several factors including terminal infrastructure investments, shipping costs and volumes of gas shipped.
Conversion of existing LNG terminal The utility told the commission that its own assessment had identified the onshore LNG terminal as the preferred import facility, given its historic record of accommodating vessels of similar size to those envisaged for importing LNG, its direct connectivity to the existing gas transmission pipeline system and its well maintained infrastructure. Hence the agreement with Harvest and Marathon to proceed with the conversion of the terminal to an import facility. However, the converted LNG terminal will require additional pipeline infrastructure for connections to the existing pipeline system, Chugach Electric told the commission.
The utility also told the commission that Black and Veatch had identified some new LNG export facilities under development in western Canada and Baja Mexico, the closest potential locations for exporting LNG to the Cook Inlet.
"Additionally, global LNG supplies and demand are both expected to grow, providing sufficient supply options to serve Chugach's projected gas supply demands over time," the utility wrote.
The utility told the commission that it anticipates making decisions in 2025 in support of the required timeline to begin importing LNG.
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