LNG Option for Alaska Pipeline Could be Blow to Alberta

With their initial open season, TransCanada Corp. and Exxon-Mobil are offering North Slope producers an option to support either an overland pipeline route that would go through Alberta or a line that would send the gas to Valdez to be converted into LNG.

A competing overland pipeline project from North Slope producers BP and ConocoPhillips will also be holding an open season this spring. Those companies have not indicated any intention of offering an LNG option, though both of them are players in the LNG world.

Many see the LNG option as a way producers might hedge their bets against the currently gas-saturated North American market.

The possibility that Alberta might be bypassed is bad news for its petrochemical industry, which was hoping to use some of the liquids in the Alaska gas stream for feedstock, reported the Calgary Herald.

Additionally, TransCanada and Exxon-Mobil have revised the cost estimate for the overland option, which would entail shipping 4.5 bcf/day to pipelines serving the Lower 48. They now say building that pipeline would cost between $32 and $41 billion.

The 3 bcf/day LNG option would cost between $20 and $26 billion, say the partners.

Return to February 2010 Western Energy News

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