Calgary-based midstream company Enbridge said today it is undertaking "substantive and exclusive discussions" with the State of Alaska to build, own and operate a natural gas pipeline from the North Slope of that state to Fairbanks and other communities.
The project is seen as an alternative to a pipeline proposal by TransCanada, which is part of a larger LNG export project that includes oil majors such as Exxon Mobil.
Enbridge is discussing the project with the state-owned Alaska Gasline Development Corporation (AGDC). The 727-mile (1,170km) pipeline, dubbed the Alaska Stand Alone project, would have a capacity of 500mn cf/d (14mn m³/d) and cost about $8bn.
The AGDC said it does not expect both the Enbridge and TransCanada pipeline proposals to come to fruition.
"They have different design goals," said Miles Baker, director of external affairs and government relations at the AGDC.
Baker said the plans for the two in-state pipelines followed years of failed attempts to build larger scale pipeline projects.
The Enbridge project would provide gas mostly for residential use and new industrial demand which is coming online, such as large-scale mining, but it could also provide supply for LNG exports, Baker said. Alaska demand averages 250mn cf/d, according to the AGDC, half of the capacity of the Enbridge project.
Enbridge said that the project could begin service in 2020 if it is selected as the state's preferred alternative and meets all required commercial commitments and regulatory requirements.
The AGDC is one of the partners in the Alaska LNG export project. The partners – which include producers ExxonMobil, BP and ConocoPhillips and TransCanada – recently signed a formal commercial agreement to start a preliminary engineering study for the project, the office of Alaska governor Sean Parnell said.
The LNG project includes the TransCanada pipeline project – an 800-mile, 42-inch pipe to a planned liquefaction plant in the Nikiski area in southern Alaska. The project has been estimated to cost $45bn-$65bn, but the partners likely will not make a final investment decision until 2017-18.
The parties in the Alaska LNG project will begin work in the coming weeks to secure export and construction permits from US regulators.
Parnell in May signed a bill into law to advance the Alaska LNG export project by allowing the state to acquire equity in the planned LNG terminal and modifying some tax and royalty laws.
Under the law, Alaska would receive 20-25pc of the gas produced to supply the project as payment for taxes and royalties. The state would also acquire, with further legislative approval, a corresponding interest in a gas processing plant and the LNG export plant, allowing it to market its share of the gas, according to the US Energy Information Administration.
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