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Energy Firms in Alaska LNG Project

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Energy giants Exxon Mobil Corporation (XOM - Free Report) , BP Plc (BP - Free Report) , ConocoPhillips (COP - Free Report) along with Calgary-based TransCanada Corp. (TRP - Free Report) have planned a mega project to transport liquefied natural gas (LNG) from Alaska. Project costs are expected to touch a whopping $65.0 billion.

The project will comprise an 800 mile pipeline, which will run from North Slope to South-Central Alaska. It also includes the construction of a liquefaction plant and storage tanks. For the LNG terminal, as many as 22 different sites are being considered by the companies participating in the project.

The mega project will require 1.7 millions metric tons of steel and employ 15,000 people at the construction site. It will also comprise a plant to eliminate carbon dioxide from gas and marine facilities.

TransCanada – one of Canada's largest pipeline companies – will be in charge of building the North Slope pipeline to transport gas to the export terminals. The company will receive a reimbursement of $500 million toward meeting development costs.

The project will take more than 10 years to complete owing to its massive size and scale and other technical, legal, political & financial challenges.

Due to a drop in the region’s oil productivity, the Alaskan government and the energy companies are exploring other avenues to sell gas from North Slope in order to generate revenue. There may be around 35 trillion cubic feet of reserves and more than 200 trillion cubic feet of recoverable gas in the North Slope. There are plans to export 3.5 billion cubic feet of natural gas per day.

In the next couple of decades, liquefied natural gas from Australia, East Africa, the U.S., Gulf Coast and Canada will enter the global markets posing stiff competition for the venture.

Currently, Exxon Mobil, BP Plc, ConocoPhillips and TransCanada all hold a Zacks #3 Rank, which implies a short-term ‘Hold’ rating.


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