Natural Gas Pipeline Update FEDC: Energy for All Alaska Task Force Fairbanks, Alaska December 15, 2015
! State of Alaska s Objectives Secure a stable, affordable, long-term energy supply for Alaskans! Commercialize Alaska s enormous North Slope gas resource! Maximize the value of state s royalty and tax gas! Generate revenue, jobs and economic growth! Facilitate further oil and gas development! 2
AGDC Overview Independent public corporation! Initially created as a public response to concerns over declining Cook Inlet gas supplies! Corporation has primary responsibility for developing a North Slope natural gas pipeline project on the State s behalf! May enter into contracts to treat, transport, liquefy or market gas! Shall assist DNR & DOR to maximize the value of the state s gas resources! 3
North Slope Gas Projects AGDC is owner of two Project alternatives! State s priority project! $45-$65 billion LNG export project! Partnership with Exxon, BP, Conoco! State s back-up project! $10 billion in-state gas pipeline! Currently 100% state owned! Either project is capable of delivering gas to Alaskans but they vary significantly in size, scope and cost! AGDC is also responsible for planning and developing the plans for gas off-take within Alaska regardless of project built! 4
Special Session Results Legislature just concluded special session appropriating $157.6 mill:! $68.4 mill Acquire TransCanada s mid-stream interests in the Alaska LNG project! $75.6 mill Fund state s full 25% share of remaining Alaska LNG pre-feed! $13.0 mill - Fund state agency participation through the end of FY16 (June 2016)! AGDC will now assumes state s full 25% equity in the project and will oversee as the owner! 5
Governance Issues Resolved Equity Alignment: State s share of gas in the project (25%) was not equal to its equity in the integrated project:! o State, through AGDC, held 25% in the downstream (LNG plant)! o TC held 25% in the midstream (pipeline & GTP)! o State s resulting equity in the integrated project was ~ 12.5%! Voting Rights: State didn t have full voting participation in all project decisions:! o State, through AGDC, voted on downstream issues! o TC voted on mid-stream issues! o AGDC will now have full voting rights on project components and in all integrated project decisions! 6
Project Participation Resource Owners Project Interest State s Interest 75% 25% Gas Treatment Plant (GTP) Pipeline LNG Facility TransCanada previously held State s mid-stream interest: Pipeline & GTP AGDC board authorized conveyance on Nov 21 st ; DNR closed purchase & sale agreement Nov 24 th AGDC will now hold State s interest in the entire integrated project 7
Completing 2 nd year of Pre-FEED! Project Update $690+ million commitment by all parties - following a stage gate approach to development! 135 full-time personnel on Project Management Team! FERC environmental permitting (NEPA) process initiated! DOE export approval granted for both Free Trade and Non-Free Trade countries! AOGCC recently approved gas off-take levels! 2016 Work Program & Budget Approved - $230 mill! Pre-FEED is expected to be concluded by 1Q 2017! 8
Project Timeline Key Milestones Date Pre-FEED Ini,ated July 2014 Conclude Pre-FEED 2016-2017 FEED Decision 2017 Conclude FEED (2-3 years) 2019 Final Investment Decision (FID) 2019-2020 Construc,on (5-6 years) 2020-2025 Project Complete/First Gas 2025-26 Pre-FEED: Preliminary Front-End Engineering and Design! FEED: Front-End Engineering and Design! 9
Meeting In-State Gas Demand AGDC s is responsible for developing pipelines and other mechanisms for delivering natural gas in-state! Completed a forecast of in-state natural gas demand! Completed preliminary cost estimates for gas off-take facilities! Developed a framework to assist policy makers in evaluating in-state off-take infrastructure! AGDC Board has authorized the formation of a subsidiary capable of aggregating in-state gas demand. Potential activity:! o o o Pool small quantities of in-state demand! Serve as an intermediary between resource owners (including DNR) and small instate buyers! Assist small communities in developing local distribution entities! 10
In-State Gas Demand Project volumes more than adequate to meet in-state demand growth Base Case 2040 demand 333 MMscfd (122 Bcf per year) High Case 2040 demand 422 MMscfd (154 Bcf per year) Demand will be par,ally supplied from Cook Inlet during the forecast period Demand by Segment 2014 Actual 2030 2040 ExisVng Demand Enstar, railbelt electrical u,li,es, and industrial users (excluding export) 214 227 243 PotenVal Demand Interior hea,ng and power u,li,es 2.5 51 56 Industrial opera,ons (primarily mining) 0 31 31 Small communi,es within 50 miles of alignment 0 3.2 3.4 Total Base Case Demand: 217 312 333 In-State Natural Gas Demand: Base Case Es,mates (MMscfd) 11
In-State Gas Off-Take PBU + PTU GTP Main Pipeline LNG Facility Export Non-Project Costs Customers Off-Take Facility Lateral to AK Community Local U,lity Meters Meters Meters Project Costs - project is responsible for providing a minimum of 5 interconnec,on points along the line where gas can be accessed for in-state use Non-Project Costs - facili,es required to remove gas from the project and process it for in-state use are the responsibility of third par,es SOA, local governments, public u,li,es, end users or a combina,on of these groups Off-take Facili,es Lateral/Spur Lines Local Distribu,on Systems Fuel system conversion costs AKLNG Project Costs 12
In-State Gas Off-Take Progress to date: Approximately 20 potential interconnection points identified along pipeline corridor! Some communities would be best served from a common access point, off-take facility and lateral! AGDC has developed conceptual cost estimates for offtake facilities, excluding local distribution and appliance conversion costs! Preliminary analysis highlights significant economic challenges with bringing small communities online! 13
Challenges By every standard, this is a world class construction project: $45 to $65 billion, three mega-projects! Regulatory and construction risks are higher in Alaska! Difficult to estimate long-term LNG demand, pricing, and world-wide competition! Competing against other LNG projects looking to sell to same buyers! Final Investment Decision (FID) will be economically driven! Low oil price environment makes large capital investments more difficult for producer partners! Balancing the risk/rewards of state equity participation in a challenging fiscal environment! 14
Questions Miles Baker!! VP, External Affairs! & Government Relations!!!! Alaska Gasline Development Corporation (AGDC)! 3201 C Street, Suite 200! Anchorage, Alaska 99503! (907) 330-6300! www.agdc.us! 15
Backup Slides 16
North Slope Gas Projects Project Sponsors State of Alaska, ExxonMobil, BP & ConocoPhillips State of Alaska Design Objective Facilities Gas Treatment Pipeline LNG Plant Liquefied Natural Gas (LNG) principally for export markets GTP at Prudhoe Bay (~200+ acres) 8 Compressor Sta,ons (30kHP) 800 mile, 42 mainline In-state off-takes LNG plant, storage tanks and tanker berths at Nikiski (~600 acres) U,lity grade lean gas principally for in-state markets GCF at Prudhoe Bay (~70 acres) Compression at Prudhoe Bay 733 mile, 36 mainline 30 mile, 12 lateral to Fairbanks In-state off-takes N/A Terminus Nikiski (Kenai Peninsula) Currently Near Big Lake (ENSTAR s Beluga line) Design Capacity ~ 3.3 billion cubic feet/day at GTP ~ 2.2 billion cubic feet/day at LNG plant Currently 500 million cubic feet/day Cost ~ $45 - $65 bill ~ $10 bill (+/- 20%) Workforce Peak: 9,000-15,000 Opera,ons: ~1,000 Peak: 8,000 Opera,ons: ~150 Construction 5-6 years (after FID in 2019) 3.5 years (after FID in 2019) Completion 2025-2026 2024 17
Project Overview Integrated LNG export project! Prudhoe Bay & Point Thompson gas fields! 98% of known NS gas resource! Gas Treatment Plant (GTP)! 3.3 bcfd peak! Three process trains w/compression! CO2 removal and reinjection! Gas Pipeline! 800-mile; 42 diameter; 8 compressors! ~1.2 million tons of steel! Liquefaction Facilities at Nikiski! Three trains; 20 million tons/year! Storage & Marine Terminals! Two jetties; 15-20 tankers per month! 18
In-State Gas Off-Take Off-Take Facility Cost EsVmates Size Volume (MMscfd) Off-Take Facility Capital Expense ($Mill)* Macro 80.00 330.00 $38 CharacterisVc Community North/South Cook Inlet Mini 20.00 75.00 $28 Fairbanks Size Micro 0.40 2.00 $15 Medium Density Nano 0.04 0.25 $14 Very Small *Cost of laterals, spurs, local distribu,on and appliance conversions not included in figures above 19