Tim Bradner, NGP Photo by Dave Harbour 5-13-11

Tim Bradner, NGP Photo by Dave Harbour 5-13-11

Tim Bradner of the AJOC brings us another Alaska gas monetization reality: wetlands mitigation (Story below).  Higher but unknown additional mitigation/litigation costs cannot improve feasibility of AGDC’s (https://www.agdc.us/) government investment in the Alaska LNG project (http://ak-lng.com/).  Nor can such open-ended future expenses make the state’s socialist equity investment in Alaska LNG more beneficial to citizens.

This is precisely the type of uncertainty that leads project proponents to add additional contingency requirements to Financing Plans: uncertainty requires hedging as greater assurance of “project completion” to satisfy both lenders and equity participants.

But higher project costs make a project less competitive than its rivals, and no one knows when one additional straw breaks the camel’s back.  In the case of Alaska LNG, it faces stiff potential competition from several score LNG export schemes standing in various states of readiness and planning, awaiting higher prices.

At this point, we would guess that even small shreds of additional project uncertainty/cost will argue for suspension of project engineering and feasibility studies by this coming fall.

Should this occur, citizens should not be worried that Alaska’s oil producers have not done the best possible job to prove out feasibility at this stage in the project’s development.

Rather, in this environment of LNG project competition, and outrageously higher costs due to Alaska’s higher climatic, labor, pipeline and logistical realities, state leaders should be focusing on how to make oil & gas investment in Alaska more feasible, and not — as they have done in the past — how to politically attack and further tax Alaska’s largest investors and community benefactors.     -dh

Mitigation costly headachePetroleum News.  A major concern for the Alaska LNG Project, for example, is the potential cost of wetlands mitigation if it moves forward. Estimates are in the $500 …