The Alaska Natural Gas Development Authority's board approved a plan Jan. 29 for a study of a 24-inch natural gas pipeline built parallel to the trans-Alaska oil pipeline from the North Slope as far as Glennallen, with a 20-inch spur pipeline to Valdez and a 16-inch pipeline to the Matanuska-Susitna Borough in Southcentral Alaska.
“We're putting this forward as a system proposal addressed mainly at meeting Alaskan needs for North Slope gas,” said Harold Heinze, executive director of the state gas authority. It would be a joint-study project that could involve any entity interested in becoming involved if the project is economic and moves forward, Heinze said.
If a project is built, the pipeline segments could cost $5 billion with an additional $3 billion estimated for a plant to manufacture liquefied natural gas, or LNG, in Valdez, according to materials presented to the authority's board. The pipeline could deliver North Slope gas to Southcentral Alaska for $2 per million British thermal unit (Btu) and to Valdez for $1.50 per million Btus, the board was told.
If those costs are realistic, LNG could be delivered to markets outside Alaska for less than $4 per million Btus, according to information given to the board.
The state development authority has considered the idea of a smaller “bullet line” built from the North Slope to southern Alaska as a possible alternative if a proposed large-diameter pipeline built through Interior Alaska to the Lower 48 is delayed. ANGDA, however, has focused most of its work to date on a spur pipeline to Southcentral Alaska from the large pipeline, assuming it would be built.
“There are two important virtues of an Alaska-only pipeline. One is that it doesn't go through Canada, where legal and constitutional issues involving First Nations could be a problem,” Heinze said.
“Second is that it would require only 1.25 billion cubic feet of gas per day and not the 4.5 billion cubic feet needed for the large pipeline. That volume of gas could be supplied from the state's royalty share of the gas and one of the three gas producers,” he said.
Heinze said the authority will ask Gov. Sarah Palin and the Legislature for $5 million to do the joint study, which could be completed in about one year. A 24-inch pipeline could move about 1.25 billion cubic of gas daily from the North Slope. The 20-inch spur to Valdez would move about 1 billion cubic feet to Valdez if a possible natural gas liquefaction plant is built there and a 16-inch spur to the Mat-Su could move 250 million cubic feet a day of gas to Southcentral Alaska, which would be sufficient for current consumer and industrial needs, Heinze said.
Cook Inlet basin gas fields are being depleted and a spur line to bring North Slope gas to Southcentral Alaska has been a major project for the state gas authority since it was created by a voter initiative in state elections in 2002.
Heinze said an LNG plant at Valdez would most likely be built by someone in the business of liquefying and selling LNG. One billion cubic feet of day per day is sufficient for production of about 7 million tons of LNG per year, he said.
That is about half the size of the project contemplated by a separate group promoting the LNG project, the Alaska Gasline Port Authority, and by Yukon Pacific Corp., a company that worked on an LNG project earlier.
In 1999 and 2000 an industry consortium led by ARCO Alaska Inc., and including BP Exploration (Alaska) Inc., Foothills Pipe Lines (now TransCanada) and Marubeni, a Japanese trading company, did a study of a pipeline to Valdez and an LNG project producing about 5 million tons per year. The industry group concluded the project was uneconomic.
Heinze said an important part of the joint study would be to consider a high-pressure pipeline that could carry natural gas liquids like propane along with the methane, the main component of the gas.
Propane could be an important source of fuel for rural Yukon River communities served from a small gas extraction plant built where the pipeline crosses the Yukon River, or in other Interior, Southcentral or coastal Alaska communities, Heinze said. Propane or other natural gas liquids, like ethane, could also be used in petrochemical plants, he said.
The pipeline project could cost about $5 billion, including about $4 billion to build 970 miles of buried pipe and another $1 billion to construct a gas conditioning plant on the North Slope.
Heinze said the gas conditioning plant could be built by the North Slope producers as an addition to the gas processing and compressor plants that are already operating in the Prudhoe Bay field. A gas liquefaction plant at Valdez could cost an additional $3 billion.
Tim Bradner can be reached at tim.bradner@alaskajournal.com.
