Can We Bring Alaska North Slope Gas to Market With LNG Carriers?

Aker Arctic Technologies Arctic-class LNG carrier concept.

Are Arctic-class liquified natural gas (LNG) carriers a reasonable alternative to pipelines for transporting Alaska North Slope gas?  Unlikely, thinks Jim Craig of the Minerals Management Service, as reported by Petroleum News: Icebreaker LNG carriers for Arctic Alaska gas an interesting but challenging concept (June 15, 2008).  Among other things:

The waters are too shallow.  A typical LNG carrier draws 39 feet of water when loaded and, for safety, needs 78 feet at dock, and 117 to 156 feet in transit.  Its hard to find water that deep within five miles of Alaska's Arctic coast.

Shipments to the West Coast would be constrained by limited LNG terminal capacity.  Moreover, under the Jones Act, the LNG would have to travel to the West Coast in U.S. flagged ships.  There are no "Jones Act LNG ships operating today..."

There are currently no LNG carriers "built to operate in ice infested waters..." (Although this is likely to change; the article also discusses technological changes that may lead to Arctic-class LNG carriers, Russia's intense interest in LNG carriers, and efforts by U.S. and Russian certification societies to create an Arctic-class LNG standard.)

Finally, do you really think that it would be politically possible to export natural gas?

Exporting LNG overseas, say to Japan or one of the other Pacific Rim countries, would require an export license from the U.S. Department of Energy. A DOE export license can be denied if DOE determines that the export of the gas would not be in the public interest, perhaps as a consequence of domestic U.S. need for the gas.

The export of gas that originates from the U.S. outer continental shelf, perhaps from a future gas field in the Chukchi or Beaufort seas, would currently be prohibited under federal law and would require an exemption from Congress and the president.

The article does note that the American Bureau of Shipping and the Russian Marine Register of Shipping have agreed to work together on a set of standards for Arctic Liquid Natural Gas (LNG) carriers: First Joint Rules for LNG Class Societies ABS and RS Jointly Develop Rules for Arctic Gas Carriers (ABS press release, April 10, 2008).

Note: the implication of the article is that Craig brought up the political difficulties with exporting.

Source: the picture of an Arctic-class LNG concept tanker is from Marine Industry Gears Up (MarineLog.com).

Comments

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Actually, it is and is being used for multiple purposes, but if you read my posts, I did not mention shale deposits. What I said was that "there is far more CONVENTIONAL GAS around the Gulf of Mexico that is cheaper to extract and thousands of miles closer to the markets just waiting for the right moment". Consider the Henry Hub pricing point in Louisiana- just getting AK gas to the US border will cost more now than the HH price! The reason that most shale deposits have not yet been tapped is due to the low price. I do agree that it is more expensive to extract than from a standard reservoir, but you don't need to pay the extra $5 per mcf for transport. You also neglect the massive foreign supplies that will depress prices for a long time to come.