2012 McDowell Group White Paper

1,693 views

Published on

Published in: Business, Travel
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
1,693
On SlideShare
0
From Embeds
0
Number of Embeds
614
Actions
Shares
0
Downloads
8
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

2012 McDowell Group White Paper

  1. 1. Comparison of CurrentAlaska Gas Pipeline Proposals WHITE PAPER Prepared for: Alaska Gasline Port Authority January 2012
  2. 2. Comparison of CurrentAlaska Gas Pipeline Proposals WHITE PAPER Prepared for: Alaska Gasline Port Authority PREPARED BY: Juneau Anchorage January 2012
  3. 3. Introduction & MethodologyAlaska’s abundant natural On and offshore (tcf) !those - -9 tcf). " .# electrical power resently $ %additional sites in Cook Inlet and northern Alaska, i ilcompany operations currently produce and re- /Bay. & In the absence of a markets, t to in-state, domestic, or international markets.three blic.of the proposals feature -diameter pipelines and the third proposes a small- -diameter pipeline proposals are the All Alaska Gas Pipeline, proposed by the Alaska Gasline Port Authority(AGPA), and the Alaska Pipeline Project, -diameter pipeline project, known asthe “bullet line.” mic and fiscal benefits to Alaska from each of these threepipeline proposals. Information from publicl ed by projectproponents as well as other sources, were compiled . Economic and fiscal benefitslinked with both construction and operation of the proposed lines were considered. arereferenced to theeconomic impact analysis o economic and fiscal benefits in a matri ! " - -project/recent- . # - $ Gas report % - An Analysis for & AGDC responds Alaska Dispatch. Comparison of Current Alaska Gas Pipeline Proposals 1
  4. 4. Alaska Pipeline Project is a project headed by roject -mile, -inch diameter pipeline with from Prudhoe Bay - laska-bor -inch diameter pipeline inPrudhoe Bay. A on the pip within Alaska for in- connect to option to route the pipeline from Prudhoe Bay thethis time, the companies areAlaskaALASKA GASLINE INDUCEMENT ACT the Alaska Gasline Inducement Act (AGIA) -million in pre-establiswas determined to be the only applicationAll Alaska Gas Pipeline the Fairbanks ( - -inch diameter plans include -state consumptmarkets. - -state consumption. .whether or not both parties or an arbitrator determines the project is uneconomic, tate toI , for a period -of-way ( statute: Comparison of Current Alaska Gas Pipeline Proposals
  5. 5. from th and a ) has noted that prior -of-way and permits will shorten the timeline.Alaska Stand Alone Pipeline (AGDC) corporation, a , and construction of a -inch (the so-called “bullet line”) -mile pipeline, called the Alaska would run from Prudhoe Bay to Cook Inletcubic feet per day (mcf/d), with potential to add capacity with compression at a later date. In order to complycapacity. Off-takes -stateconsumption may .* -of- -diameter -th , construction of a small- -in order to fulfill initial contracts, a pipeline PP, will need to sof the Prudhoe Bay fields projected -year life of peline.and fields. ) * !+ Comparison of Current Alaska Gas Pipeline Proposals
  6. 6. Comparison of Gasline ProposalsAlaska public sector i line centers on creation of a stable and more affordable is predicted to ( ) re !! !" A report for the Office of the Federal Coordinator for Alaska (OFC) as the - !# tate to shift in tateGas for Alaska Communities and electricity prices, especially in rural areas, are often inordinately Bethel diesel) costs to . !$ !% . Whether or not this n a recentassessment identified more . !& AGDC states that a “ !! y Open- – . !" AGPA, “ - termin .” !# !$ - (Medium Case). !% . !& - Comparison of Current Alaska Gas Pipeline Proposals 4
  7. 7. !( When current supp is intended to also off- dedicated to in-state consumption -take points, AGPA intends to Alaska communities and military bases that may be reached by pipeline, !) by the Alaska Gasline Inducement Act (AGIA) to -takes for in- -takelocations for the APP include ea/ !*PROJECTED PRICES and Alone Pipeline project proposal includesFairbanks to an un- ($inflation). un- - onsumers than a smaller-diameter line because of lower tariffs. "+$4.19/MMBtu for predicted /MMBtu for the APP. "! -up of theAll Alaska Gas Pip . "" A base case model in the same study predicts that natural "#State Revenuesto comprise 91 percent of Alaska’s total annual unrestricted - !( AGDC Alaska Dispatch. !) !* In- "+White, Bill. . Office of the Federal Coordinator . . "! "" - "# - "$ "% ! Comparison of Current Alaska Gas Pipeline Proposals
  8. 8. state at some time in the futureyears or more.OFC, the APP wou -year life). a total ofProject Costs - -diameter pipelines, projected construction costs for the“bullet line” would be lower than for the others -point ofand the AGPA proposa to $Project OwnershipJob Creation that will rconsiderable -Indirect employment estimates f - It has recently been noted that construction of Oil Pipeline created , and total, jobs. ") "& "( - ") - Alaska. Comparison of Current Alaska Gas Pipeline Proposals
  9. 9. to support projectMarkets - -of- - -of- -state consumption. "* #+Next StepsALL ALASKA GAS PIPELINE the port authorityAGIA that rby the Harris Group predictedALASKA PIPELINE PROJECT . As of fromtwo years. "* #+ Comparison of Current Alaska Gas Pipeline Proposals
  10. 10. ALASKA STAND ALONE PIPELINE odecided by the session. r the project should be publicly owned (as recommended by AGDC). Comparison of Current Alaska Gas Pipeline Proposals
  11. 11. COMPARISON of CURRENT ALASKA GASLINE PROPOSALS Alaska Gasline Project Proposals Alaska Stand Alone Gas Pipeline All Alaska Gas Pipeline Alaska Pipeline Project (APP) (ASAP) “bullet line” (non-AGIA) (AGIA) (AGIA-compliant) Alaska Gasline Port Authority TransCanada Alaska Gasline Development Sponsor Corporation (AGDC) Project Team or Port authority members: Fairbanks North TransCanada and ExxonMobil AGDC formed by Alaska Partners subsidiary corporation of Finance Corporation to plan, construct, and finance the project Proposed Route Prudhoe Bay- Two alternative routes: Prudhoe Bay-Fairbanks-Delta Junction, Parallel to TAPS south 1. Alberta option. Delta Junction- Near Nenana south Whitehorse-Boundary Lake (BC/AB). Generally follows Alaska Hwy to AK/Yukon border. This option is the only one Lake currently pursued. 2. Junction- f (offered in 2010 open Alberta option). Current focus is on Alberta option. Additional transmission line from the Point Thomson field to the Prudhoe BayComparison of Current Alaska Gas Pipeline Proposals 9
  12. 12. Alaska Stand Alone Gas Pipeline All Alaska Gas Pipeline Alaska Pipeline Project (APP) (ASAP) “bullet line” Proposed Lateral/Off- Required to provide at least 5 taps for in- Fairbanks Lateral: 35 miles, 12-inch takes approximately 125 miles. Proposed 18 state consumption. Points likely to diameter, 60 MMscfd capacity locations for off-takes dedicated to in- include Parks (spur lines need to be (alternative to Delta constructed by AK, other Junction), Delta Junction/Richardson or private parties) Source: AGPA 2007 AGIA application. , and Tok. Source: TransCanada open season document to FERC, 2010. Other proposed Gas treatment plant at Prudhoe Bay facilities Bay Two compressor stations Liquefaction/Fractionation plant, Gas take-off facility near Dunbar Operation/maintenance centers in Wasilla, Fairbanks, Prudhoe Bay NGL extraction plant at pipeline terminus Length 806 miles Alberta option: 1,717 miles (745 in AK) 737 miles Point l 58 miles Diameter 48 inches 48 inches 24 inches Point Thomson section: 32 inches Pipeline capacity: 3 bcf/d (5.9 bcf/d Alberta option: 4.5 bcf/d (5.9 bcf/d 500 mcf/d – Capacity w/max. compression) w/max. compression) Alaska Gasline Inducement Act (AGIA)). LNG plant capacity: 2.7 bcf/d additional added at a Possibility for future additional capacity capacity of .9 bcf/d per train) Point Thomson section: 1.1 billion scf/d with compression.Comparison of Current Alaska Gas Pipeline Proposals 10
  13. 13. Alaska Stand Alone Gas Pipeline All Alaska Gas Pipeline Alaska Pipeline Project (APP) (ASAP) “bullet line” $20- Alberta option: $32 - $41 billion $5.3 - $9.8 billion ($7.52 billion as Estimated Cost a -$26 billion Source: Alaska Pipeline Project website and Source: Alaska Pipeline Project website and Source: ASAP Project Plan. July 2011. 2011 TransCanada request for open season OFC. TransCanada request for open season dollars. document. 2009 dollars. OFC. document. 2009 dollars. Proposed Ownership Owner: State of Alaska TransCanada/ExxonMobil Ownership models before l : - State of Alaska own and private Operator option: Private sector developer builds and operates (lowest (TransCanada or others) tariff of the ASAP options: and lower cost of debt, requires . AGDC Builder: private sector recommends this model. - Public-private ownership - Private builder/owner/operator Source: ASAP Project Plan. July 2011. Adjusted tariff to Fairbanks approximately $2.43—$3.13/MMBtu GTP to Alberta Estimated Tariff $1.15/million BTU. nominal tariff) is $7.75/MMBtu. $2.22— (incl. Source: Alaska Gas Pipeline Project Office. 2009 dollars. Source: ASAP Project Plan July 2011. Source: Harris Group report Asia plus in-state consumption. AGPA Gas to Fairbanks and Cook Inlet areas. Proposed Markets anticipates the ability to provide at Boundary Lake to supply Alberta and Other Alaska communities as feasible. all communities in Alaska accessible by Lower 48 -state to a variety Rim (approximately half of supply). within Alaska. Source: ASAP Project Plan. July 2011.Comparison of Current Alaska Gas Pipeline Proposals 11
  14. 14. Alaska Stand Alone Gas Pipeline All Alaska Gas Pipeline Alaska Pipeline Project (APP) (ASAP) “bullet line” Anticipated Jobs 6,000+ Alaska jobs pipeline construction 6,500 - construction (plus an estimated 2,700 – the LNG facility). It has recently been noted that construction of the Trans Alaska Oil Pipeline created 21,000 construction and 70,000 total jobs. 50,000+ indirect Source: 2007, 2008 an , Source: Alaska Department of Labor and Superior Court for the State of AK. Workforce Development (DOLWD) A similar LNG facility in Lake Charles, Direct, indirect, induced jobs for pipeline Louisiana estimates indirect employment plus potential expansions: of over 100,000 new jobs over 20 years. Another project, the Dominion Cove 250,000 to 303,000 U.S. jobs Point LNG facility in Maryland, estimates 337,000 job-years (direct, indirect, induced) over a 23- Source: Alaska Gasline Project Office website. period. The Dominion Cove project estimates between 2,700 and 3,400 jobs Source: Alaska Stand Alone Gas Pipeline/ASAP Neither of these comparable projects - includes a pipeline. of-Way Lease. 3/11. Source: AGPA website, estimate based on BG Lake Charles facility in LA and Dominion Cove facility in MD (EIS of Construction and Operations for application to the DOE for export of LNG Oct. 3, 2011). Timeline to Production 2018-2021 2020/2021 Late 2018/2019Comparison of Current Alaska Gas Pipeline Proposals 12
  15. 15. Alaska Stand Alone Gas Pipeline All Alaska Gas Pipeline Alaska Pipeline Project (APP) (ASAP) “bullet line” “ “The project would not spark as much More Oil in TAPS? it to market.” Source: All-Alaska Gasline website “ transport and markets for both -- Source: ADN July 30, 2011 “ - pipeline.” Source: OFC -A, USGS provides “new economic analysis of the reserve, ” Source: ADN May 10, 2011 “The in- exploration for new reserves.” Source: OFCComparison of Current Alaska Gas Pipeline Proposals 13
  16. 16. Alaska Stand Alone Gas Pipeline All Alaska Gas Pipeline Alaska Pipeline Project (APP) (ASAP) “bullet line” Projected Revenue for $3 billion-first year Total Annual Public Revenues: $3.75 billion to $4.57 billion in direct State of Alaska (from nominal revenues from State royalties, royalties, production tax, $2.3 billion per year property taxes, and income tax over the property tax and first 20 years of the project. In the corporate income tax) Up to $24 billion in Year 30. - Annual royalty: $527 million (at state/public ownership model only property least 25% to Permanent Fund) taxes will be paid, not income (as payments- $75-$419 billion in total State revenues in-lieu-of -taxes). over a 30-year life - Annual production tax: $901 million - Property tax: $1.1 billion. Annual $622 million - State corporate income tax year one: $283 million (“simplistic estimate”) . The Source: Liquefied Natural Gas (LNG) Project Denali project included in this report has been Source: Comparison discontinued since publication because of a 2011 for AGPA. lack of customer commitments. Requires industrial anchor for full Other important project capacity: “a consumer or exporter of elements -term portion of the capacity with minimal seasonal variation above the residential, commercial, and pipeline” - ASAP Project Plan. July 2011.Comparison of Current Alaska Gas Pipeline Proposals 14
  17. 17. Alaska Stand Alone Gas Pipeline All Alaska Gas Pipeline Alaska Pipeline Project (APP) (ASAP) “bullet line” Approximate Current - $8.85/MMBtu AK Consumer Costs Fairbanks - $23.35/MMBtu Source: ASAP Project Plan. July 2011. Bethel – $40/MMBtu (diesel) Predicted Energy Prices Fairbanks - $5.29/MMBtu wholesale Predicted Fairbanks off-take price as low Un-inflated 2011 consumer cost -off as $4.19/MMBtu - $9.63/MMBtu. (Inflated (for Alaska consumers (compared to a predicted diesel fuel cost to 2021: $12.21/MMBtu). wholesale cost of $27.23 per million BTU Predicted Cook Inlet price for in-state unless otherwise noted) in 2021). Un-inflated 2011 consumer cost NS wellhead price): $5.95/MMBtu for Fairbanks $10.45/MMBtu (Inflated cost Bethel - $25.31/MMBtu in 2021 spur off Alberta line at Delta Junction. to 2021: $13.25/MMBtu). (predicted diesel retail price of This price predicts an approximate 33 $52/MMBtu in percent reduction in Cook Inlet natural medium case model. These predicted prices represent an approximate 50 y price for Bethel. Predicted Cook Inlet price for in-state NS wellhead price): $5.70/MMBtu for spur line from Glennallen. Source: (Cook Inlet). Source: ASAP Project Plan. July 2011, Source: Harris Group study 11/11, ISER, ANGDA 9/12/11. Inflation rate estimate based Alaska consumers.Comparison of Current Alaska Gas Pipeline Proposals 15
  18. 18. Alaska Stand Alone Gas Pipeline All Alaska Gas Pipeline Alaska Pipeline Project (APP) (ASAP) “bullet line” Support/Licenses 1999 – Alaska voters created AGPA to 2008 - Sole recipient of license under Granted un- -of-way lease the 2007 Alaska Gasline Inducement by DNR (first un-conditional pipeline Act (AGIA) 2002 - created the Alaska Natural Gas Development Authority Up to $500 million in pre-construction (ANGDA) to “ subsidies available from the State of pipeline from Prudhoe Bay to Alaska. The state is under contract tidewater on Prince William Sound (AGIA) for up to $500 million of and a spur l stribution reimbursable expenses AK.” 2005 - AGPA acquired, for a period of time that has now expired, an option to purchase the Yukon Pacific - of-way for a NS- and LNG plant. AGPA: -of- way and permits will shorten the project development timeline. Source: AGPA AGIA License Application 11/07. In n line customers 2011-2015 - Project sponsor sharpens Continue to work with Asian markets to after 2010 open season with no Next Steps identify customers. Continue to discuss commitments yet - need firm 20-25 year permits, and solicits customers. commitments for (ADN clause within AGIA with current 9/17/11). 2015-2018 - Construction and administration, and the Alaska 8/1/11 – FERC issued intent to prepare an EIS for the APP Alberta option. Not sufficient information submitted by TransCanada route. Source: Source: Bill Walker, AGPA, General Commission (FERC) in October 2012 for Bill White. Office of the Federal Coordinator. a certificate to construct and operate the 8/15/2011 pipeline. (FERC review about two years).Comparison of Current Alaska Gas Pipeline Proposals 16
  19. 19. Alaska Stand Alone Gas Pipeline All Alaska Gas Pipeline Alaska Pipeline Project (APP) (ASAP) “bullet line” (General From AGIA: From ASAP Project Plan. July 2011: Other Comments of AGPA: “If, before the commencement of “AGPA continues to respond to Asian commercial operations, the state - market interest in LNG from the deep extends…preferential royalty or tax diameter pipeline open seasons do not and work with the timeframe that makes a spur line a viable to exercise the clause under AGIA that project alternative to a stand-alone pipeline. requires there to be proof of the in this state, and if the licensee is in ASAP is predicated on the uncertainty of compliance with the requirements of the license and …state and federal statutes considered a comparable economic entities to measure fiscal benefits to the alternative to ASAP.” entire State the licensee is entitled to payment from the state of an amount equal to three performed such an analysis and times the total amount of the concluded that the economics of LNG expenditures incurred and paid by the licensee that are qualified compared to 9 other proposed LNG expenditures...” [AS 43.90.440(a)]. export projects in other parts of the world (Australia, British Columbia, and Lower 48).Comparison of Current Alaska Gas Pipeline Proposals 17

×