Natural Gas for Alaskans

BRAD KEITHLEY, PRESIDENTKEITHLEY CONSULTING, LLC

BGKEITHLEY.COM

Southcentral Region ChapterRetired Public Employees of AlaskaApril 8, 2014

A way to think about the issue …

Supply

Cook Inlet North Slope Imported LNG

Markets Southcentral Fairbanks Coastal (include Southeast) Rural

Cook Inlet … Remember 2009-10:

Anchorage test drills – red, yellow, green Since, decline largely has been stabilized through

Completion of Cook Inlet Storage (supplemental source of peak demand)

Additional drilling in existing fields Legislative response “Cook Inlet Recovery Act” (2010)

Has resulted in some exploration activity by start-up (and in some cases, severely underfunded) independents

But no significant supply additions as of yet (watch for news around Furie’s proposed new platform)

Going forward Absent significant new discoveries, supply will continue to

run on about a four year lead time

North Slope … Significant resource (35+ Tcf), but remote from market Various legislative efforts over the years to develop a

path to market Stranded Gas Act (1998)

Alaska Natural Gas Development Authority (ANGDA) (2002)

Fiscal Contract (2006)

Alaska Gasline Inducement Act (AGIA) (2007)

Alaska Gasline Development Corporation (AGDC) (2012-13)

Most recent, SB 138 (Alaska LNG) (2014)

Current activity Best option: major export pipeline with in-state offtakes

Alternative: instate only (challenged economics)

Imported LNG … Potential supply source to

Southcentral

Coastal Alaska (including Southeast)

Fairbanks (from North Slope via truck)

Currently Only one advancing is Fairbanks LNG project, and facing

challenged economics

Southcentral import potential reached a peak in 2011-12, on back burner currently but being kept on low simmer

Plans focused on Southeast exist, but severely challenged economics due to lack of market density (may improve if West Coast Canadian export projects crystalize)

Outlook by market … Southcentral

Continued dependence on Cook Inlet in near term (on relatively short (4 year) leash)

Long term resolved if Alaska LNG crystalizes

If not, state likely to resuscitate in-state (AGDC) option, but challenged economics if Pacific Rim LNG price drops

Fairbanks Trucked LNG project possible, but financing somewhat

undermined by potential for Alaska LNG project

Long term resolved if Alaska LNG crystalizes

If not and AGDC option also fails, hard look at pipeline to link to Southcentral supplies

Outlook by market …

Coastal Alaska If natural gas at all, will be supplied by LNG (or possibly,

CNG)

Southeast most likely market, and likely only if Canadian West Coast LNG exports crystalize

Rural Alaska Long term resolved for communities located along the route

if Alaska LNG crystalizes

Other areas need to focus on renewables and other alternative sources

One (remote) potential, Meera Kohler’s gas-by-wire project

Going forward …

Near term Continued uncertainty pending decision on Alaska

LNG project (FID 2017 – 2019) Continued “just in time” development of Cook Inlet

supplies for next several years

Longer term Increased certainty for Southcentral and Fairbanks if

Alaskan LNG project crystalizes If it does not, increased focus on AGDC and imported

LNG alternatives