Stranded gas resources are defined for this study as gas resources in discrete accumulations that are not currently commercially producible, or producible at full potential, for either physical or economic reasons. Approximately 35 trillion cubic feet (TCF) of stranded gas was identified on Alaska’s North Slope. The commercialization of this resource requires facilities to transport gas to markets where sales revenue will be sufficient to offset the cost of constructing and operating a gas delivery system. With the advent of the shale gas revolution, plans for a gas pipeline to the conterminous US have been shelved (at least temporarily) and the State and resource owners are considering a liquefied natural gas (LNG) export project that targets Asian markets. This paper focuses on competitive conditions for Asian gas import markets by estimating delivered costs of competing supplies from central Asia, Russia, Indonesia, Malaysia, and Australia in the context of a range of import gas demand projections for the period from 2020 to 2040. These suppliers’ costs are based on the cost of developing, producing, and delivering to markets tranches of the nearly 600 TCF of recoverable gas from their own conventional stranded gas fields. The results of these analyses imply that Alaska’s gas exports to Asia will likely encounter substantial competitive challenges. The sustainability of Asia’s oil-indexed LNG pricing is also discussed in light of a potentially intense level of competition.
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Commercial possibilities for stranded conventional gas from Alaska's North Slope