Wednesday, May 20, 2009

Haynesville Shale to Impact Alaskan Pipeline?

There has got to be some hand wringing going on in Alaska right now as they watch the development of the Haynesville Shale, as well as that of the Marcellus and Barnett. Several years ago, Alaska approved a package of incentives to lure a pipeline company to build a massive natural gas pipeline from Prudhoe Bay to the Lower 48 States through Canada. The incentive package is called AGIA, or the Alaska Gasline Inducement Act.

The only qualified bidder so far is TransCanada Corp. This is a massive project: 1,715 miles of 48" pipeline with initial capacity of 4.5 Bcf/day and up to 5.9 Bcf/day with enhancements. Total estimated cost is $25 billion, and the completion date is November 2017. The project and the potential selection of TransCanada is still working their way toward the end of a lengthy process. (Project website)

I'm sure Alaskan officials and TransCanada are closely watching the sudden surge of gas supply projected to come from the new shale plays in the Lower 48. I read an opinion article from the Alaska Journal of Commerce last week suggesting that the project is as good as dead and that the state should be looking for a way to ship the gas to Valdez and go into the LNG business. I don't know if that will happen, but these folks are probably also secretly rooting for adoption of the Pickens Plan, which will create numerous opportunities to sell gas in the Lower 48.

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