| PASSING GAS |

A Sausage Factory with Money to Blow

Left to Right: Gov. Sean Parnell, Ryan Lance (ConocoPhillips, CEO), Robert Dudley (BP, CEO),  Russ Girling (TransCanada, CEO) & Rex W. Tillerson (Exxon Mobil, CEO)
These fine gentlemen are in bed together but their really not too strange of fellows. Just your average politician heading a natural resource rich state and a few other oily dudes whose combined yearly compensation for their work earns them somewhere around $50,521,590 (note that Rex is pulling most of the weight here with a 2011 total compensation from Exxon of $34,920,506). 
If I multiplied my annual IT salary by about x1058, ole Rex and I could go golfing together. I’d still have to show him how to work his office printer (then again, he’d have to show me how to golf). But, this isn’t some kinda leftist fist rattling shake down of wealthy oil barons, just a kinda awe at the amount of money that these guys and a governor that makes $150,000 are willing to throw down to build a natural gas pipeline and facilities to bring that gas to market. Then, of course, there is the fact that they’er not spending a dime of their own money.
The project’s cost seems to have been jumping around for sometime now, but the latest price tag for the LNG (liquified natural gas) project is $45,000,000,000. Alaskan Governor, the Big P, has signed an agreement that commits $5,750,000,000, grants  $5,500,000,000 in tax breaks to TransCanada and the Arctic margaritas are on the house!

That totals out to around $11,250,000,000 (for the investment and tax break) plus $6.00 for every margarita – I am assuming at least 4 margaritas for each CEO involved so $24.00 + tax + $11,250,000,000.00 = $11,250,000,024.00.

While getting dizzy typing out all of those zeros above, I realized I know as much about natural gas and pipelines as I know about astrophysics and hot dog meat. So, I thought I’d stumble through what I found of interest about what these big oil companies are proclaiming as the U.S. holy grail of cleaner energy – Exxon claims that switching to natural gas could reduce Co2 emissions by 60%.

1,715 or 800 Mile (or Both) Pipe Dream

Among the primary reasons that Gov. Parnell and big oil are looking into developing a natural gas pipeline, other than a boat load of cash and depleting crude oil output, dates back to 70s afros and Jimmy Carter. While OPEC was squeezing the petroleum testicles of the U.S. in 1973, talks about a natural gas pipeline out of Prudhoe Bay accelerated.
At that time there were two proposals to route a natural gas pipeline from Prudhoe Bay to Valdez where that magical stuff would be turned into liquified natural gas (LNG) put on death star looking tankers and shipped to the west coast.
Well, funny thing, a big contributor to Jimmy Carter’s 1976 election campaign happened to be a company by the name of Northwest Pipeline headed up by a dude named John McMillian. 

Northwest had a proposal which routed a natural gas pipeline from Prudhoe Bay through Canada to Alberta on down to Yankee Doodles in Idaho, Washington, Montana and southward.

Coincidentally, Jimmy Carter pushed through legislation to have the President of the U.S. – himself – determine which company and ultimately which route should be taken for the natural gas pipeline.

As it happend, Congress passed the Alaska Natural Gas Transportation Act of 1977 giving Carter the decision to determine which proposed route should get the go ahead. Jimmy decided to award John of Northwest Pipeline – surprise!

Well, that slippery little rooster John from Northwest Pipeline found out it was pretty freaking expensive to build the Prudhoe Bay to Alberta section and went ahead with linking up Alberta with San Francisco and Chicago under the assumption that ‘pre-building’ these routes would subsidize or bring down the costs of the Alaskan route into Alberta. Then stuff got sold, interests got shuffled and Northwest said the hell with it.

As it turns out though, by 1991 the whole LNG route through Alaska didn’t seem feasible in the end anyway. Test routes built in 1981 and 1982 of 600 miles ran some glycol (apparently acts similarly to LNG[?]) through their test tubes and decided to abort because Alaska tankers would have to get the liquified natural gas to market within 3 months, which apparently didn’t seem feasible at the time.

Walter Hickle (2nd/8th Gov. Alaska and 38th U.S. Secretary of the Interior) kept alive the LNG project and thereafter was taken up by that hockey mom ray of sunshine that keeps giving, Walker Wasllia Ranger Sarah Palin. Actually, more accurately Hickle championed the LNG pipeline through Alaska and Palin awarded TransCanada $500,000,000 in startup money to delve into the project to connect Prudhoe Bay and Alberta.

With the latest deal signed by Gov. Parnell (still needs to get the go ahead from the legislature this legislative session) Alaska is investing in the LNG line and processing plants while the other oil company partners are focused on the line through Canada to Alberta and on down into the lower 48 – i.e. where probably the most money is. This is the “Y” proposal that you see in the map above that lops off part of Alaska.

Natural Gas not from your ass

Source: Gas Pipeline Project Office

Unlike most of our flatulence which is only made of 0-10% of methane, natural gas is made of 70-90% methane. Just think of the youtube videos!

Natural gas is a non renewable fossil fuel formed over millions of years from dead plants and animals being covered and buried and over a vast amount of time being exposed to extremely high pressure and heat. The pressure and heat work out much of the water and create magio-fantastically [sic] coal, oil, and natural gas.

The natural gas pipeline out of Prudhoe Bay would be pulling up natural gas out of the already drilled wells for crude oil and turning it into liquified natural gas. This process involves doing a bunch scientific shit that I don’t completely understand, but in general, the natural gas recovered has certain components removed like dust, acid gases, helium, water, and heavy hydrocarbons (note, I’ve no real idea what heavy hydrocarbons are) and then is cooled to a nice Arctic temperature of -260 degrees Fahrenheit and pressurized, which even more fantastically turns the natural gas into a liquid.

That liquified natural gas then hops on a tube train of destiny. The Alaskan section would pipe 800 miles that liquified natural gas down through Alaska where presumably some of it would be transferred back into a gas where communities along the way could use it to produce electricity, heat their homes, and light stuff on fire.

The excess would then be piped all the way down to Nikiski (yeah, not Valdez, I am confused too) and then put on huge LNG tankers which would then cart the stuff across the Pacific into Asian countries where facilities there would convert the liquid into a gas where they would use it for electricity, cooking rice and lighting stuff on fire.

Natural Gas Jesus

Now, there is something that even monkey wrenching environmentalist terrorist have to accept – this project will be pushed through. No matter how much screaming or ever so smart PowerPoints highlighting the fact that this project will still contribute green house gas emissions, will undoubtably have environmental effects on plants and animal life, will probably trample first nation and indigenous land rights in Alaska and Canada, will further commit Alaska and the nation to non renewable energy resources, and will further entrench the idea that humans are invincible in the face of energy crises due to their good looks and massive craniums – this project will happen.

There must also be a recognition that this natural gas pipeline will bring jobs, hopefully cheaper energy, and has the possibility of lessening Alaska’s own carbon footprint. That doesn’t mean we should all jump on the wagon hitting peace pipes and having tremendous socialist orgies, but we should take those things in account.

Unremarkable AkCenozo Recommendations to take into account:

  • Since the agreement has to be passed by Alaskan legislators, is there any way to work in a commitment to take a portion of the tax revenue dedicated to the permit fund bank and set it aside to build up capital for greener more sustainable energy projects in the future?
  • Is there anyway to ensure that funds and plans are set aside and made to ensure that if a LNG tanker blows up in or around Nikiski, or if there is a pipeline leak, or any number of other mishaps that could happen, we have the capital and know-how in dealing with such a disaster?
  • With such a large commitment by the Alaskan government, would it be possible to have legislators that sign-on add-on commitments by the State of Alaska to make their facilities and operations 45-70% more energy efficient?
  • If Sean Parnell and other right leaning folks in Alaska are committed towards investing in energy projects that benefit Alaska, why not create a business incubator program which is specifically dedicated towards financing startup costs for sustainable energy Alaskan businesses?

There they are and there they went. We’ll try and keep up on developments related to the natural gas pipeline and share thoughts and ideas on this space. Stay tuned.

SIDE NOTE

I have a public information request into the Alaska Department of Natural Resources regarding how the extraction process of natural gas is taking place in Prudhoe Bay. While it seems that the natural gas that will be liquified will be those deposits that have been and are discovered as a by-product of crude oil drilling, I am curious to know weather or not approaches are being made to extract natural gas from shale or hydrates – which in many ways would change my thoughts on this whole matter.
Also, as a complete side note, apparently back in the USSR days, geologist lit some natural gas on fire seeping from sands in Turkmenistan in the 1970s. It still burns today and is lovingly called the “The Door to Hell”. Wicked.

SOURCES

The Alaska Natural Gas Pipeline Project
  • http://www.fool.com/investing/general/2014/01/17/alaska-wants-this-45-billion-project-started.aspx
  • http://www.bloomberg.com/news/2014-01-15/alaska-to-pay-5-75-billion-for-exxon-lng-export-project-stake.html
  • http://www.reuters.com/article/2014/01/16/energy-alaska-naturalgas-idUSL2N0KQ0VY20140116
  • http://en.wikipedia.org/wiki/Alaska_Gas_Pipeline#cite_note-6
  • http://en.wikipedia.org/wiki/Natural_gas_in_Alaska
  • http://www.allalaskagasline.com/project/
  • http://gasline.alaska.gov/index.html
  • http://www.thealaskapipelineproject.com/commercial
  • http://www.transcanada.com/alaska-pipeline-project.html

Natural Gas: Education & Extraction

  • http://en.wikipedia.org/wiki/Natural_gas
  • http://www.carbonbrief.org/blog/2013/08/oil-and-gas-glossary/
  • http://www.energyquest.ca.gov/story/chapter08.html (Note: This one is for kids from California, kinda fun)
  • http://www.triplepundit.com/2012/04/natural-gas-pros-cons/
  • http://www.epa.gov/cleanenergy/energy-and-you/affect/natural-gas.html
  • http://www.theguardian.com/environment/shale-gas
  • http://en.wikipedia.org/wiki/Liquefied_natural_gas
  • http://www.quoddyloop.com/savepassamaquoddybay/documents/newspaper_inserts/insert-7.pdf (Note: The folks who wrote this report are either batshit [sic] crazy or extremely safety conscious, probably the latter)
  • http://www.naturalgas.org/environment/naturalgas.asp

Exxon Stuff

  • http://www.ispot.tv/brands/Ak2/exxon-mobil
  • http://corporate.exxonmobil.com/en/energy/natural-gas

Fart Chemistry

  • http://chemistry.about.com/od/medicalhealth/f/What-Is-The-Chemical-Composition-Of-Farts.htm

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