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Global gas prices diverge
BP Statistical Review of World Energy

Liquefied natural gas buyers continued to show no love to sellers at an international gas conference last month in South Korea. The escalating price of energy has eroded the economic competitiveness of the world’s dominant LNG buyers, the chairman of Taiwan's state-owned LNG importer told delegates at the international Gastech Conference in South Korea in late March.

“There are times that the old ways don't work anymore. We need to get rid of the old and find new and better (pricing) alternatives,” said the chief executive of Korea Gas, the world’s top buyer of LNG.

Sellers also were in force at Gastech, too, talking about spiraling construction costs and new development opportunities, but in challenging, expensive locations. They at least struck a more peaceful tone: “I know we can find common ground. We’ve done it in the past.”

ExxonMobil foresees multiple LNG projects needed

In ExxonMobil’s world view, an immense build-out of LNG plants will be needed in the next 15 years or so to satisfy burgeoning global demand for natural gas.

The decision to break ground on a liquefied natural gas export project is a momentous move for the sponsors, a multibillion-dollar stake on their futures. Reaching what the industry calls a "final investment decision" takes time, money and tight coordination between multiple parties working on different parts of a project.

Sponsors and financial backers want to make sure they've done their due diligence.

After all, more than 90 percent of project costs — the money for production modules, compressors, pipe, motors, installation and construction — are incurred after the final investment decision.

That decision is a big breakthrough in a risky and uncertain multi-year process.


Guide to Alaska gas projects
and glossary of gas terms

blue gas flame

Hundreds of millions of state dollars have been allocated to a variety of projects that could move North Slope natural gas to market. These include an ambitious North Slope producer-led effort that could pipe massive amounts of gas to an LNG export plant, a small-volume state-sponsored pipeline project and an even smaller-scale proposal to truck LNG to Fairbanks, Interior Alaska’s largest community.

White Papers

Well before big money gets committed to construct a liquefied natural gas export project, sponsors typically spend years studying such questions as: Should this project get built? Does it make business sense? And, as the analysis progresses: Does this project continue to make sense?

The proposed $45 billion to $65 billion Alaska LNG export project is going through that process now.

For Alaska LNG, the current work is called pre-FEED — or pre-front-end engineering and design — which will be followed by a more intense FEED phase if the project continues.

It’s the up-front planning that is critical to megaproject success. Project sponsors that do this work poorly have a high probability of producing a failure. But when done well, this pre-construction effort can be the reason a project gets built on time and on budget, and creates the kind of cash flow the board of directors was told to expect.


Permitting

Any project as large and complex as a multibillion-dollar natural gas pipeline from Alaska's North Slope will require numerous federal, state and local permits. Agencies have been working with developers on National Environmental Policy Act and permitting efforts for an Alaska gas line project.

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