Clock running out on TAGS.

• Author: Tyson, Ray
• Position: Yukon Pacific Corp.'s proposed Trans-Alaska Gas System

Yukon Pacific's president says buyers and suppliers need to pick up the pace on what may be Alaska's last great project, the Trans-Alaska Gas System.

Time is running out on what could be Alaska's last great megaproject, Yukon Pacific's proposed $14 billion Trans-Alaska Gas System, as TAGS' overseas competitors position themselves to capture future liquefied natural gas (LNG) markets in the Pacific Rim.

To meet financing and construction deadlines for delivery of North Slope gas beginning shortly after the turn of the century, Yukon Pacific's own schedule calls for purchase and sales agreements to be in place by the end of this year. But that has become a moving target that now appears to be a few years off, at best.

For one, North Slope gas owners Arco Alaska, BP Exploration (Alaska) Inc. and Exxon still are not prepared to move on an LNG project, a situation that has the generally upbeat president of Yukon Pacific, Bill McHugh, champing at the bit.

"They have more people working on this than Yukon Pacific has employees," McHugh says. "All I am saying is that you need to start fast-tracking some of this stuff. I'm concerned about the pace."

Moreover, the all-important Japanese, representing about 70 percent of the world LNG market, will not negotiate an Alaskan contract until the producers are ready to deal, McHugh says.

He explains, "The buyers in Japan will not commit to a project until the project's structure is defined -- who is going to play the game, what the price is going to be, when the project is going to start."

VANISHING OPPORTUNITY

And, McHugh emphasizes, the next and perhaps last "window of opportunity" to market North Slope gas -- the years 2000 to 2005 -- is rapidly closing as Alaska's major overseas competitors -- Qatar, Natuna and Sakhalin -- continue their vigorous pursuits of post-2000 markets in Asia.

"My view of the marketplace is that some project is going to come in before 2005. And that project probably is going to sap the demand available through 2010," McHugh predicts.

Meanwhile, John Morgan, president of BP Exploration (Alaska), says it will be "two or three" years before the producers "have a project formed and mature and able to be locked into as this is the way it's going to be."

He adds, "I'm enormously sympathetic with the frustration people ... have with this project. I mean the gas is there, the market is there. So ... why can't we get after it and do it? But with the best will in the world, you actually...