Governments better wake up and believe they are competing for investment…and prosperity!


 

Petroleum News by Kristen Nelson.  The Alaska Support Industry Alliance’s “Meet Alaska” conference heard a ConocoPhillips perspective on the Alaska LNG Project Jan. 8 from Al Hirshberg, the company’s executive vice president for technology and projects.

Hirshberg listed mega project critical success factors and said they fell into three buckets: alignment among all the players; a strong effort to identify project risks and putting together a plan to manage risk; and economics – driving down the cost of supply enough that the project can be successful in the marketplace.

Challenges for the Alaska LNG Project, prior to final investment decision, include commercial agreements between all co-venturers, including the state; certainty around fiscal terms; FERC/state permitting issues; and global LNG project competition, he said.

With smaller projects commercial agreements could be pushed out in time, Hirshberg said, but with a project the size of AKLNG those agreements need to be locked down in the pre-front-end engineering and design phase.

He said he’d worked on a number of big important projects but called AKLNG unprecedented in terms of complexity and cost and said there was no room for loose ends.

Commentary: Does anyone still doubt that Alaska — and its BC competitor friends — face daunting worldwide, LNG competition?  

LNG demand will be filled by the projects and their government supporters presenting the best economics to potential customers.  

Governments desiring world-class LNG projects might also be well advised to treat their petroleum industry investors with good will and fair dealing.  

Hostility and unstable fiscal regimes do not stimulate investment interest in a highly competitive world, if they ever did.  -dh

Hirshberg also reviewed the global LNG market. The total world demand in 2014 was 200 million tons per year, he said, with the demand through about 2025 projected at another 200 million tons per annum.

Of that 200 million, about 140 million is already spoken for, he said, leaving about 60 million tons, of which Alaska is about 20 million tons.

Chasing that are announced discoveries of some 780 million tons per annum, of which about 210 million tons are in projects spending serious money on engineering, some three to four times the estimated need.

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