(Corrects to add reference to midstream, paragraph 1)
* Alaska LNG project could export 20 million tonnes a year
* Project still requires environmental approval, FiD
* Global LNG markets suffer from oversupply
By Osamu Tsukimori
TOKYO, Sept 17 (Reuters) - Alaska could pay $70 million to
$100 million for TransCanada's TRP.TO 25 percent stake in the
midstream and upstream sectors of the proposed Alaska liquefied
natural gas (LNG) project, Governor Bill Walker said on
Thursday.
Walker has recommended to legislators that the U.S. state
should buy the stake, adding to a similar stake in a planned
liquefaction plant and giving it a quarter share of the giant 20
million tonnes per annum export project.
Developed by ExxonMobil XOM.N , ConocoPhillips (NYSE:COP) COP.N and
BP BP.L , the Alaska LNG project draws on gas from Alaska's
North Slope and includes an 800 mile (1,300 km) pipeline to
Nikiski on the Kenai Peninsula where the gas would be liquefied
for export as early as 2024, most likely to Asia.
Walker, who last December became the governor, has pushed
for the project since 1999, but now says he is confident that it
will go ahead.
"I've been very pleased with the interest in this project
from the market. We're the closest (to Japan), shipping time
seven days so that's a significant advantage."
Walker estimated the cost of the project at $45 billion to
$60 billion, with plans for front-end engineering design (FEED)
to start in the first quarter of 2016.
Unfinished LNG export projects around the world are
struggling to be completed because the market has become hugely
oversupplied over the past year as production, especially in
Australia, soars just as demand slows along with economic
growth. ID:nL5N113034
Benchmark Asian spot LNG prices LNG-AS have fallen by
two-thirds since last peaking in 2014, although the long-term
demand outlook for natural gas is healthy as the fuel is
expected to take market share from thermal coal to generate
electricity.
Alaska LNG has federal approval to export up to 2.55 billion
cubic feet per day of gas for 30 years, equivalent to over 3
percent of U.S.-supplies, but it still requires an environmental
review and final investment decision (FiD). ID:nL1N0YJ1X3
To ensure the project goes through, Walker said the state
was planning a provision that in case one partner quits, its
share is equally distributed among the remaining stakeholders.
Walker said Alaska LNG's supplies would be priced flexibly,
according to customer needs, including an option of a link to
the U.S. Henry Hub gas price and a cocktail of Japan's oil
prices.
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CHART-Rebased Brent vs Asian LNG prices since 2014:
http://link.reuters.com/saf65w
LNG market emerges era of glut: ID:nL4N0W80KY
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