Parnell and Sullivan promote Alaska LNG in Asia

Gov. Sean Parnell and state Natural Resources Commissioner Dan Sullivan have been in Japan and Korea in the last two weeks, drumming up interest in a large Alaska liquefied natural gas project.

North Slope producers and TransCanada Corp., a gas pipeline company, are due to submit a progress report to Parnell Sept. 30 on their work on a gas pipeline and LNG project.

In a related development, a spokesman for TransCanada says the company, which has teamed up with the North Slope producers on LNG, is “encouraged” by the results from its recent solicitation of interest. Under terms of a state contract, TransCanada recently solicited market interest in a gas project although expressions of interest were nonbinding.

TransCanada cannot reveal the identity of firms that expressed interest, however.

Parnell was in Japan conducting an economic trade mission with energy officials in Japan and Korea with a focus on promoting Alaska’s gas in Pacific Rim markets.

“We look forward to capitalizing on the enormous potential that exists for Alaska’s North Slope natural gas in our state and in Pacific Rim nations,” Parnell said in a statement issued in Asia. “This is a great opportunity to strengthen existing relationships and build new ones that will grow economic opportunity with Japan and South Korea.”

Parnell met with the CEO of Korea Gas Corp., or KOGAS, to discuss Alaska’s longtime role as a reliable exporter of LNG to Asia from Kenai, and the state’s plan boost those exports with a major Alaska gas pipeline to tidewater.

Separately, the Korea Chamber of Commerce and Industry arranged for meetings between Parnell and executives from several Korean companies including Samsung C&T, STX Energy, Daesung Industrial Co., Ltd., Korea Midland Power Co., GS Global Co., LG International Corp., Hyundai Heavy Industries, and Korea Kumho Petrochemical Co., Ltd.

Parnell said there was significant progress being made on an all-Alaska gas pipeline to tidewater and the investment potential for these companies in Alaska.

In his visit to Korea prior to Parnell’s arrival, Sullivan met with senior government officials as well as executives with KOGAS and Korean National Gas Corp, or KNOC.

Sullivan had also been invited to speak Sept. 19 at the LNG Producer-Consumer Conference, one of the world’s major LNG conferences, and separately at a special briefing Sullivan gave organized by the U.S. Embassy in Tokyo.

Six hundred people had been registered to attend the Producer-Consumer Conferenc but Sullivan said the actual count was closer to 1,000.

The Asia LNG managers for BP and ExxonMobil, two major North Slope producers, were at the LNG conference along with government officials and companies promoting competing LNG projects, which gave Sullivan a chance to listen to competitors’ pitches.

About 70 invited industry and government officials attended the separate embassy briefing by Sullivan, which lasted for three hours.

Sullivan said his private, individual meetings with officials and industry executives were basically to lay the groundwork for Parnell, who followed him.

“He was there to meet with the ministers and CEOs,” Sullivan said, after the commissioner’s sessions with lower-level officials and managers.

Sullivan said he hit strongly on Alaska’s 40-plus years of reliability in serving Asian customers with LNG shipments from Kenai, and said he wasn’t shy about contrasting that with the spotty record of competitors like Russia, which has used gas supply as a political lever.

“I was pretty blunt. They have a crummy reputation for reliability. If they don’t like you, they cut you off,” Sullivan said.

Similarly, there was a buzz at the LNG conference about projects at Kitimat, B.C., but Sullivan had the chance to point out that the development of shale gas on which the projects depended has yet to happen on a major scale and that First Nations issues affecting the pipelines needed for the plants have yet to be resolved.

Alaska’s advantage is that the gas resource is known and secure. “There is zero resource risk. The infrastructure for production is in place. There is political stability. There’s no other place that offers those things except northern Alaska,” Sullivan said.

In terms of TransCanada’s solicitation of interest, company spokesman Shawn Howard said there was interest from potential shippers and “major players from a broad range of industry sectors and geographic locations,” including North America and Asia. He declined to name them, citing confidentiality.

He wouldn’t say if preference was shown for a project that serve North America markets or for one that would allow for liquefied natural gas exports overseas.

The non-binding solicitation ended Sept. 14. The expressions of interest are just that: not firm commitments to any one project.

Howard says TransCanada continues to work with the North Slope’s major players to evaluate options for bringing Alaska gas to market.

In 2010 TransCanada and ExxonMobil, its partner, conducted an open season for an earlier plan to build an all-land pipeline to Alberta, for delivering Alaska gas ultimately to Lower 48 markets.

The development of inexpensive shale gas had disrupted that plan, however, and attention has now turned to a pipeline to southern Alaska and an LNG terminal at a south Alaska port.

11/11/2016 - 1:23pm