On Wednesday it was announced that Russia has signed a deal with China to supply the country with natural gas for 30 years. Russian gas company Gazprom CEO Alexei Miller said that the contract is worth about $400 billion. The gas will be shipped from Russia to China via a network of pipelines.
The deal has the potential to significantly impact Europe’s relationship with Russia and changes the power-dynamics between the United States and both Russia and China. Closer to home, people are questioning what, if any, impact that deal will have on getting Alaska gas to market.
Alaska is currently working on a plan with the big three producers—ExxonMobil, BP and ConocoPhillips—to build an 800-mile pipeline to carry gas from the North Slope to tidewater in Southcentral Alaska, where it would be liquefied and put on tankers headed to Asia markets. All told, the project is expected to cost up to $65 billion.
Larry Persily, the federal coordinator of Alaska gas pipeline projects, and a go-to gas analyst, doesn’t think that the Russia-China deal will have much of an effect on the project. “It’s not a death knell for Alaska LNG” he said.
For one, the focus has been on selling Alaska LNG to Japan and Korea. Secondly, China will still need gas, he said. But more than anything, price will dictate the viability of any LNG project. He said that the price envisioned for Alaska’s LNG will be competitive with what Russia is offering China.
It is, however, a reminder that we’re not the only ones selling gas, Persily said.
Interesting note: Gazprom’s Alexei Miller traveled to Alaska in October, 2008 to talk about Alaska’s gas. While in Alaska, Miller and his entourage met with ConocoPhillips executives, and with DNR Commissioner Tom Irwin and Deputy Commissioner Marty Rutherford. During the meeting, Miller predicted that a pipeline would never be built. He said that gas would eventually be put on tankers that, with the help of ice cutters, would carry gas through the Northeast passage.
Then-Gov. Sarah Palin didn’t make the meeting. She was on the presidential campaign trail.
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