Alaska Natural Gas Development Authority

1. Alaska Natural Gas Development Authority ACCESS ISSUES Before the Legislative Budget & Audit Committee -and- Senate Resources Committee In Anchorage, Alaska, on July 28-29, 2004

2. Access Issues in Alaska • Gas Take-Off Points Along the Gas Line • Electric Power Plants • Propane Distribution Centers • Piped Gas Distribution Systems • Getting the Gas to Tidewater • Barge Distribution to Coastal Communities • LNG Sales to West Coast & Across Pacific • New Industrial or Manufacturing Plants • Gas Spur Line to Cook Inlet Area ANGDA to L B & A on 072904

3. ANGDA to L B & A on 072904

4. Gas Take-Off Points Along the Gas LineElectric Power Plants • Livengood, Rampart, Stevens Village, Minto • Fairbanks • North Pole & Fort Wainwright • Delta & Fort Greely • Tok • Glennallen • Palmer / Wasilla ANGDA to L B & A on 072904

5. Gas Take-Off Points Along the Gas LinePropane Distribution Centers • Coldfoot • Yukon River Crossing • Fox • Delta Junction • Tok • Northway Junction • Glennallen • Palmer / Wasilla ANGDA to L B & A on 072904

6. Gas Take-Off Points Along the Gas LinePiped Gas Distribution Systems • Fairbanks • Eielson AFB • Fort Wainwright • Fort Greely • Glennallen • Whitehorse ANGDA to L B & A on 072904

7. Getting the Gas to TidewaterBarge Distribution - Coastal Communities • Barges used to transport and store gas at town, village, or commercial site • New or replacement gas fired electric generation facility (? Also barge mount ?) • LNG (liquified natural gas) -or- CNG (compressed natural gas) • Wainwright -to- Ketchikan with ? 50 ? communities in-between ANGDA to L B & A on 072904

8. Getting the Gas to TidewaterLNG Sales - West Coast & Pacific Rim • Large volume gas sales provide an economy of scale that lowers costs to Alaskan gas consumers • LNG delivery at coastline may reach some West Coast communities better than overland pipeline system • LNG to Japan, Korea, and Taiwan expands Alaska’s gas markets ANGDA to L B & A on 072904

9. Getting the Gas to TidewaterNew Industrial or Manufacturing Plants • Expansion of Agrium and Kenai LNG plants is attractive with larger North Slope gas supply available in Cook Inlet • Price advantage of $1.50 under “world gas price” may attract entrepreneurs and new investors • Synergies of power generation, communications, and transportation infrastructure will cluster industrialization ANGDA to L B & A on 072904

10. ANGDA Spur Line Providing Intrastate Gas Transmission • Seek certification under AS 42.06 as a gas transportation pipeline • Regulatory Commission of Alaska (RCA) processes are reasonable and appropriate • Consideration should be given to reduce the regulatory complexity for ANGDA (as a State entity) and strengthen in-state opportunities ANGDA to L B & A on 072904

11. Spur Line to Cook Inlet Area • ANGDA building the gas spur line as a State gas transmission utility with low interest rate debt financing can reduce the cost of service by more than 25% • Connection and routing dependent on other’s decisions on larger North Slope gas projects • “Bullet line” needs to be evaluated as best solution to Cook Inlet gas shortage ANGDA to L B & A on 072904

12. ANGDA Concerns on Access • Availability of numerous physical take-off points for modest volumes • Tariff to Alaska destinations proportioned for actual transportation distance • Informational in-equities and preparing for a level “open season” process • Very limited West Coast re-gasification sites may be un-available in future to Alaskan LNG ANGDA to L B & A on 072904

13. Availability of numerous physical take-off points for modest volumes • Gas fired power generation facilities along the line key to interior Alaskan and Canadian communities energy needs and cost • Industrial and spur line take-off points defined before open season • Gas line project proposal must include simple standardized design for gas take-off, propane separation, and gas re-injection (also hook-in) ANGDA to L B & A on 072904

14. Alaska tariff’s proportioned for transportation distance • Having gas physically available in Alaska doesn’t mean much if the tariff within Alaska (set by FERC, not RCA) includes lost downstream revenues as a cost • Communities and industries should enjoy the tariff advantage of being located closer to the gas supply in Alaska • Consider inclusion of in-State tariff design in fiscal terms of Stranded Gas Act contract ANGDA to L B & A on 072904

15. Informational in-equities and preparing for a level “open season” process • FERC generally requires information boundaries between corporate affiliates in gas production, gas transmission, and gas marketing functions • Fundamental design input to producer’s $125 million study is not available (ie, composition of gas transported in the line) • Open season commitments are major corporate decisions requiring time & due diligence ANGDA to L B & A on 072904

16. Very limited West Coast re-gasification sites may be un-available to Alaska LNG • FERC’s laissez’ faire approach to LNG regas facility sighting is working in Gulf Coast • West Coast of US may have only one LNG regas site and FERC will likely let it be “proprietary” • Sempra/Shell Baja site will be supplied by BP’s Tangguh (Indonesia) & Shell’s Sahkalin projects • Conoco-Phillips is partnering into Mitsubishi’s proposed Port of Long Beach LNG regas terminal ANGDA to L B & A on 072904

17. FERC Existing Terminals with Approved Expansions A. Everett, MA : 1.035 Bcfd (Tractebel – DOMAC) B. Cove Point, MD : 1.0 Bcfd (Dominion – Cove Point LNG) C. Elba Island, GA : 1.2 Bcfd (El Paso – Southern LNG) D. Lake Charles, LA : 1.2 Bcfd (Southern Union – Trunkline LNG) Approved Terminals 1. Hackberry, LA : 1.5 Bcfd, (Sempra Energy) 2. Port Pelican: 1.6 Bcfd, (Chevron Texaco) 3. Bahamas : 0.84 Bcfd, (AES Ocean Express)* 4. Gulf of Mexico: 0.5 Bcfd, (El Paso Energy Bridge GOM, LLC) 5. Bahamas : 0.83 Bcfd, (Calypso Tractebel)* 6. Freeport, TX : 1.5 Bcfd, (Cheniere/Freeport LNG Dev.) Proposed Terminals and Expansions – FERC 7. Fall River, MA : 0.8 Bcfd, (Weaver's Cove Energy/Hess LNG) 8. Long Beach, CA : 0.7 Bcfd, (Mitsubishi/ConocoPhillips – Sound Energy Solutions) 9. Corpus Christi, TX : 2.6 Bcfd, (Cheniere LNG Partners) 10. Sabine, LA : 2.6 Bcfd (Cheniere LNG) 11. Corpus Christi, TX : 1.0 Bcfd (Vista Del Sol - ExxonMobil) 12. Sabine, TX : 1.0 Bcfd (Golden Pass - ExxonMobil) 13. Logan Township, NJ : 1.2 Bcfd (Crown Landing LNG – BP) 14. Lake Charles, LA: 0.6 Bcfd (Southern Union – Trunkline LNG) 15. Bahamas : 0.5 Bcfd, (Seafarer - El Paso/FPL ) 16. Corpus Christi, TX: 1.0 Bcfd (Occidental Energy Ventures) 17.Providence, RI : 0.5 Bcfd (Keyspan & BG LNG) 18. Port Arthur, TX: 1.5 Bcfd (Sempra) Proposed Terminals – Coast Guard 19. California Offshore: 1.5 Bcfd (Cabrillo Port – BHP Billiton) 20. Louisiana Offshore : 1.0 Bcfd (Gulf Landing – Shell) 21. So. California Offshore : 0.5 Bcfd, (Crystal Energy) 22. Louisiana Offshore : 1.0 Bcfd (Main Pass McMoRan Exp.) 23. Gulf of Mexico: n/a (Compass Port - ConocoPhillips) 24. Gulf of Mexico : 2.8 Bcfd (Pearl Crossing - ExxonMobil) Planned Terminals and Expansions 25. Brownsville, TX : n/a, (Cheniere LNG Partners) 26. Mobile Bay, AL: 1.0 Bcfd, (ExxonMobil) 27. Somerset, MA : 0.65 Bcfd (Somerset LNG) 28. Belmar, NJ Offshore : n/a (El Paso Global) 29. Altamira, Tamulipas : 1.12 Bcfd, (Shell) 30. Baja California, MX : 1.0 Bcfd, (Sempra & Shell) 31. Baja California - Offshore : 1.4 Bcfd, (Chevron Texaco) 32. California - Offshore : 0.75 Bcfd, (Chevron Texaco) 33. St. John, NB : 0.5 Bcfd, (Canaport – Irving Oil) 34. Point Tupper, NS 1.0 Bcf/d (Bear Head LNG - Access Northeast Energy) 35. Pleasant Point, ME : 0.5 Bcf/d (Quoddy Bay, LLC) 36. Quebec City, QC : 0.5 Bcfd (Project Rabaska - Enbridge/Gaz Met/Gaz de France) 37. Lázaro Cárdenas, MX : 0.5 Bcfd (Tractebel/Repsol) 38. Mobile Bay, AL: 1.0 Bcfd (Cheniere LNG Partners) 39. St. Helens, OR: 0.7 Bcfd (Port Westward LNG LLC) 40. Cove Point, MD : 0.8 Bcfd (Dominion) 41. Puerto Libertad, MX: 1.3 Bcfd (Sonora Pacific LNG) 42. Offshore Boston, MA: 0.8 Bcfd (Northeast Gateway – Excelerate Energy) 43. Kitimat, BC: 0.34 Bcfd (Galveston LNG) 44. Prince Rupert, BC: 0.30 Bcfd (WestPac Terminals) *US pipeline approved; LNG terminal pending in Bahamas Existing and Proposed North American LNG Terminals 44 43 36 34 33 35 39 A 42 17 27 7 28 13 B 40 19 8 21 C 32 30 26 15 18 31 D 1 38 10 3 5 41 14 6 12 23 9 24 16 22 11 4 25 2 20 US Jurisdiction FERC US Coast Guard 29 37 July 2004 ANGDA to L B & A on 072904 Office of Energy Projects

18. From INGAA Foundation Updated Assessment by EEA Pipeline & Storage Infrastructure for the North American Gas Market ANGDA to L B & A on 072904

19. The Wyoming Natural Gas Pipeline Authority • “simply put, all the natural gas production and the highest prices in the world won’t do us much good if we can’t get the gas to market.” Governor Freudenthal, Wyoming • Created in 1979 as an instrumentality of the state with the authority to build, operate, and maintain gas pipeline & storage facilities. • Resurrected in 2003: Governor recognized the lack of pipeline infrastructure is costing the State of Wyoming up to $130 million/year. • Producer’s are waiting for pipeline companies to expand pipeline capacity, pipeliners are waiting for producers to drill more wells. • The Wyoming Legislature increased the WNGPA’s bonding authority from $250 million to $1 billion to facilitate the building of gas pipelines. ANGDA to L B & A on 072904

20. Alaska Natural Gas Development Authority Homepage is: http://146.63.35.79/ Harold Heinze 411 W. 4th Ave, Anchorage 99508 • 257 – 1347 Fax: (907) 646 - 5005 hheinze@jpo.doi.gov ANGDA to L B & A on 072904