New proposed LNG project would ship gas from North Slope to Asia on icebreaking tankers

Construction on Exxon Mobil’s Point Thomson field in December 2015. (Photo courtesy of Exxon Mobil/MSI Communications)
Construction on Exxon Mobil’s Point Thomson field in December 2015. (Photo courtesy of Exxon Mobil/MSI Communications)

A new company headed by former Alaska Lt. Governor Mead Treadwell has announced a project that would ship liquefied natural gas from the North Slope to Asia markets. Qilak LNG made the announcement Wednesday that it plans on shipping gas on icebreaking tankers from fields in Point Thomson.

The company is a subsidiary of Dubai-based Lloyds Energy, a company that’s been focused on LNG since forming in 2013. Treadwell serves as CEO of Qilak.

Since the 1980s, there have been dreams of shipping LNG through Arctic waters, but climate change has made the prospect more feasible in recent years.

“Over the last three and a half decades, we’ve seen a significant reduction in the amount of sea ice,” said Qilak President David Clarke. “And also in the nature of that ice. There’s much less multi-year ice and a lot more first-year ice in the Arctic.”

Clarke, a former longtime BP project manager, says the Russian Yamal LNG project has had success since beginning their gas exports two years ago. Since then, they’ve sold gas to markets in both Europe and Asia, and that gives Qilak confidence that the Alaska project would be financially feasible. Clarke also says Qilak’s project would be much cheaper than the proposed Alaska LNG pipeline project.

“By eliminating the 800-mile pipeline, we can reduce the cost to about two-thirds,” Clarke said.

The proposed state Alaska LNG pipeline was a major construction goal of former Gov. Bill Walker, but the project has stalled since the election of his successor, Gov. Mike Dunleavy.

Clarke says that the major costs of the project will be construction of a liquefaction plant and the offshore structure. He says they plan on leasing the icebreaker tankers, a plan Clarke says was similar to what the state planned on doing with its project.

At an Anchorage press conference Wednesday, Qilak announced that they have partnered with Exxon Mobil, who will supply at least 560 million cubic feet of their Point Thomson field for LNG mining.

“And that’s enough to generate four million tons a year of LNG, over a 20-year period,” Clarke said.

Clarke says the project is much smaller in scale than the Alaska LNG pipeline project, which estimated 20 million tons of LNG a year. Clarke says he’s open to gas from Exxon’s other partners, but he wants the project to show viability at a smaller scale before expanding.

“It makes it a lot more manageable in terms of matching supply and demand for the LNG and also a lot less capital has to be raised for the initial phase,” Clarke said.

As far as benefits to the state, Clarke says that LNG project would generate revenue for the state and North Slope Borough from Exxon as it expands in the region.

“We won’t generate as many jobs as building a pipeline, but we will generate jobs,” Clarke said. “Exxon will generate jobs doing their expansion, and we will have about 200 permanent staff at the liquefaction plant.”

He says that the company plans on reaching out to local communities to reduce impacts to whaling and subsistence in the area. Additionally, he says that LNG spills on tankers are much rarer than other fuel spills. The tankers don’t run on heavy fuel oil and are instead mostly powered by LNG, which evaporates when spilled into the ocean. He says that creates a minimal pollution risk for the Arctic, though LNG emissions do still affect the atmosphere.

Clarke says Qilak has already completed an initial feasibility study for the project, with a more detailed one to start next year. He says, ideally, the project would begin exporting LNG in the mid 2020s.

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