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    Alaska LNG Shaves Project Cost by 12.4%


Federal regulator also announces issuance of key state water quality certificate.

by: Dale Lunan

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Alaska LNG Shaves Project Cost by 12.4%

Alaska Gasline Development Corp (AGDC), the state-owned agency sponsoring the proposed 20mn mt/yr Alaska LNG project, said June 25 it had shaved 12.4%, or $5.5bn, from the project’s price tag.

At its regular board meeting in Anchorage, the AGDC said the estimated cost of the project had been trimmed to $38.7bn from a 2015 estimate of $44.2bn after what it called a “rigorous 14-month process” involving “significant third-party” gas and LNG expertise.

“Along with AGDC staff, participants included representatives from BP, ExxonMobil (two of the project’s initial sponsors), and Fluor Corporation, an international engineering, procurement, construction, and maintenance company,” AGDC said.

The cost reductions, it said, take into account technology and process improvements developed within the LNG industry over the past several years and include advancements in liquefaction technology, modular construction techniques and lower engineering costs.

“These updates improve the competitive position of the Alaska LNG project and its ability to deliver LNG and natural gas at favorable prices,” AGDC president Frank Richards said. “We are incorporating these results into our discussions with potential partners as we work to transition to a new market-led project team and maximise project benefits for the State of Alaska.”

But while the new cost estimate strengthens the case for developing Alaska LNG, he said, it will be the global LNG market that ultimately “determines the best path forward” for the project.

Also on June 25, the US Federal Energy Regulatory Commission (Ferc), which approved the Alaska LNG project in May, announced that the AGDC had received a key water quality assurance certificate from the Alaska Department of Water Conservation related to dredging work required for the project’s gas treatment plant on the North Slope and an 807-mile pipeline connecting that plant to the proposed liquefaction terminal on Alaska’s Cook Inlet.