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Overview & Status. July 18, 2001. Outline. Brief Overview Current Activity / Progress Government Engagement Issues Forward Plan. Joint Team Objectives. Assess the economic viability of the project Focus on route evaluation Cost and environmental considerations

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Overview status

Overview & Status

July 18, 2001


Outline
Outline

  • Brief Overview

  • Current Activity / Progress

  • Government Engagement Issues

  • Forward Plan


Joint team objectives
Joint Team Objectives

  • Assess the economic viability of the project

  • Focus on route evaluation

    • Cost and environmental considerations

  • Prepare sufficient information to support potential permit applications

Safe and Environmentally Responsible


Overall project scope

Fluor Veco

NGL Extraction Facility:

Removal of C2+

Gas Treatment Facility (Prudhoe Bay) :

Removal of Acid Gases - CO2, H2S

Compress / Chill gas to P/L entry conditions

Natchiq Parsons

Environmental / Regulatory – Canada

Field studies

AMEC Earth and Environmental

Land – US Alaska

American Reclamation Group

Land – Canada (2)

Scott Land and Lease

Progress Land Services

  • Alaska to Alberta

  • Pipeline System (A-B) :

  • Buried, High Pressure, Chilled Pipeline

  • Intermediate Compression

  • Block Valve Stations

  • Intermediate Pigging Facilities

Fluor Veco

Land – US Lower 48

Alberta to Market

Pipeline System (B-C) :

New-Build and/or Expansion

Wilbanks Resource Corporation

The AlasCan Group

Environmental / Regulatory – US

Field studies

URS

Overall Project Scope


The seven lenses of evaluation
The “Seven Lenses” of Evaluation

  • Economics

  • Environment

  • Gas Access

  • Jobs

  • Revenues

  • Safety

  • Timing


Current activity progress
Current Activity / Progress

  • Contractors On-Board (approx. 500)

  • Technical / Regulatory Work Proceeding

  • Defining Commercial Issues

  • Ongoing Discussions with Interested Parties

    • Hundreds of public/private meetings

  • Engaging Governments & Communities


Current technical studies
Current Technical Studies

  • Process Development

    • Acid Gas (CO2, H2S) Removal Technology

    • NGL Removal Processes

  • Pipeline Hydraulic Simulations (Over 1,000 Cases)

    • Pressure (1,750-3,000 psi) vs Diameter (42”-56”)

    • Comparisons of Compressor Drivers

    • Throughput and Expandability


Compressor stations vs throughput
Compressor Stations vs. Throughput

System Optimization Plot Example

50

45

40

35

44”

75 mile station spacing

48”

30

52”

Compressor Stations

56”

25

(@2500 psig)

20

150 mile station spacing

15

10

5

0

0

1

2

3

4

5

6

7

Nominal Volume BCFD


Current technical studies1
Current Technical Studies

  • Materials

    • Feasibility of High Strength Steel

  • Logistics

    • Port Surveys in Anchorage, Seward, Valdez and West Coast

    • Review of Potential Fabrication Site Locations

    • Trucking and Highway Analyses

    • GTP Sealift Analyses – Potentially Largest Ever

  • Construction Technology

    • Directionally Drilled River Crossings

    • Trenching Technology

    • Construction Equipment Requirements & Availability


Regulatory environmental land activities
Regulatory / Environmental & Land Activities

  • Summer field work / center line studies

  • Cultural resource surveys

  • Land owner discussions

  • Beaufort Sea survey


Government engagement
Government Engagement

  • Ongoing Discussions with Governments

    • US and Canadian Federal

    • State of Alaska

    • Canadian Provincial/Territorial/First Nations


State engagement issues
State Engagement Issues

  • Initiate dialogue between Producers and State of Alaska regarding fiscal stability / certainty

  • Objective is to have key terms understood prior to the January legislative session

  • Key discussion items

    • Valuation clarity (severance and royalty)

    • Pipeline vs Producer issues

    • Pipeline Ad Valorem certainty

    • Gas take-in-kind and nomination process

    • Project risk and long-term certainty

June

July

Aug

Sep

Oct

Nov

Dec

Agree ground

-

rules

Working discussions

Draft valuation, AVT

contract terms

Agreed terms pre

-

session


Simplification of state royalty severance valuation
Simplification of State Royalty, Severance Valuation

  • Common royalty and severance methodologies

  • Transparent pricing

  • Simplicity best way to minimize future concerns

  • Wellhead price for royalty and severance linked to Lower 48 with transportation differential

    • Define market price

    • Agreement on gas valuation terms

    • Concurrence with FERC/NEB tariff terms

    • Processing fees


Wrap up
Wrap-up

  • We are fully engaged in a joint program to evaluate and progress a large, modern pipeline from Alaska to Canada and the lower 48 states

  • There is a growing market for Alaskan gas, but we must be cost-competitive to be a viable project

  • It is not yet clear that we can develop an economic project

  • It is premature to preclude any options at this point

  • Still targeting completion of engineering and route studies by year end


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