On Friday, a consortium of companies including Exxon Mobil Corporation (NYSE:XOM), ConocoPhillips (NYSE:COP), BP plc (ADR) (NYSE:BP), and TransCanada Corporation (USA) (NYSE:TRP) announced that they have started summer field work for a natural gas pipeline and liquefied natural gas, or LNG, project in Alaska’s North Slope.
“The summer field work is a key activity to support the project’s engineering, design and cost estimation work while also gathering data required for permitting the project,” said Steve Butt, the project’s senior manager. ”It is another significant step forward for the SC LNG project, further demonstrating the commitment and capabilities of the sponsor companies.”
By the end of this year, the companies involved will have spent an estimated $80 million-$100 million since joint work on the project began in March 2012. The planned summer field work will build on the companies’ previous efforts, which included the joint Alaska Gas Producer Pipeline Team effort in 2001-2002, the Denali Project, and the Alaska Pipeline Project.
North American gas export potential
As oil production from the North Slope has plunged over the past few decades, energy companies have focused their attention toward the region’s vast deposits of natural gas. According to Alaska Gov. Sean Parnell, the North Slope may contain some 35 trillion cubic feet of gas reserves and more than 200 trillion cubic feet of undiscovered, technically recoverable gas.
If true, that would make it one of the largest natural gas deposits in the world. And if that gas can be exploited, it could bring in as much as $20 billion in annual revenue once markets in Asia open up. With the global LNG trade expected to rise substantially over the next several years, other companies are also building LNG facilities in North America.
For instance, Apache Corporation (NYSE:APA)‘s subsidiary, Apache Corporation (NYSE:APA) Canada, and Chevron Corporation (NYSE:CVX) Canada, a subsidiary of Chevron Corporation (NYSE:CVX), are currently completing front-end engineering and design, as well as other preliminary site work, at the Kitimat LNG plant in British Columbia. Two liquefaction trains are in the works, each with expected capacity of about 750 million cubic feet of gas per day.
Apache Corporation (NYSE:APA) and Chevron each command a 50% interest in Kitimat LNG, located at Bish Cove on the northern British Columbia coast roughly 400 miles north of Vancouver, after former partners Encana Corporation (USA) (NYSE:ECA) and EOG Resources Inc (NYSE:EOG), who previously had a 30% non-operating interest in the project, sold their interests and exited the venture earlier this year.