5-21-16 Alaska Gas Project: When Does One More Straw Break The Camel's Back?

5-21-16 Alaska Gas Project: When Does One More Straw Break The Camel’s Back?

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 headache, Petroleum 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 …

About the Author: wpnorthern

Dave Harbour, publisher of Northern Gas Pipelines, is a former Chairman of the Regulatory Commission of Alaska, a Commissioner Emeritus of NARUC, NARUC's Official Representative to IOGCC and Vice Chairman of NARUC's Gas Committee. He served as Gas Committee Chairman of the Western Conference of Public Service Commissioners. He also served as commissioner of the Anchorage Bicentennial Commission and the Anchorage Heritage Land Bank Commission. He earned a Bachelor of Arts Degree: English, at Colorado State University, a Master of Science Degree: Communications-Journalism at Murray State University and graduated from Utility Regulatory School for Commissioners at Michigan State University. He served as a Vice President for Communications and Public Affairs at Alaska Pacific University, taught bank marketing classes at the University of Alaska and was an English teacher at Los Alamos High School. Harbour served in ranks of Private - Captain during a 4-year assignment with the Army in Korea, Idaho, Georgia and Fort Meade and received the Meritorious Service Medal among other commendations. Harbour is also a past Chairman of the Alaska Council on Economic Education, the Alaska Oil & Gas Association Government Affairs Committee, the Anchorage Chamber of Commerce, the Export Council of Alaska and the Department of Commerce's District Export Council. He is a past President of the Alaska Press Club, American Bald Eagle Foundation, Consumer Energy Alliance-Alaska and Common Sense for Alaska. Harbour was instrumental in founding the American Bald Eagle Research Institute (UAS), the Alaska Support Industry Alliance, the Downtown Anchorage Business Partnership, and Arctic Power. He also served as CEO of several small Alaska organizations, including the Anchorage Parking Authority and Action Security, Inc. Harbour is also Chairman Emeritus of the Alaska Oil & Gas Congress. Harbour's wife, Nancy, is a professional, performing arts administrator and his three boys, Todd, Benjamin and William work in the fields of environmental management, energy marketing and medicine.