According to Setting the Bar for Global LNG Cost Competitiveness, published in October by McKinsey & Company, a global market intelligence and analytics group focused on the energy sector, "By 2035. global liquefied natural gas (LNG) demand is expected to increase to between 560 million metric tonnes per year (MTPA) and 600 MTPA, up from 315 MTPA in 2018." But that looming demand is no secret. From October 2018 to October 2019, eight LNG projects have reached a final investment decision (FID), boosting available supply by 84 MTPA, and "this capacity addition is expected to prolong excess supply in the global LNG market into the late 2020s, welt beyond the 2022-2023 forecast of just a year ago. However, the Qatar North Field LNG Expansion--the world's most cost-competitive source of LNG, expected to add a further 33 MTPA of supply-may, depending on its construction start date, extend the expected period of oversupply by a couple of years.
"Taking into account existing supply, recently announced post-FID projects, and Qatar North Field LNG Expansion, we expect that an additional 100 MTPA to 140 MTPA of new LNG supply will be required to meet demand: the equivalent of adding 25 standard LNG trains globally. However, more than 100 projects totalling 1,100 MTPA of proposed capacity are in contention to fill this supply gap, indicating that global competition among pre-FID supply projects is set to rise sharply."
Short and sweet: Alaska's approximately 32.4 trillion cubic feet of stranded natural gas resource is likely to remain stranded unless a globally-competitive project can be planned and constructed relatively quickly (in industry terms). The good news for Alaska is that, according to McKinsey, approximately 50 percent of global gas demand growth by 2035 is expected to come from Asia--already the largest region for Alaska exports internationally. This growth is "supported by population increases, greater wealth, rural electrification schemes, and gas' rising share of national primary energy mixes," according to a Nexant report, Global LNG Outlook. Through 2040. additional demand is also expected in the Middle East, Africa, Latin America, Asia Pacific, and North America.
So what are Alaska's options to enter the LNG market instead of injecting a highly valuable commodity back into the ground?
In March the Alaska Gasline Development Corporation (AGDC) secured the final federal permit needed to make a FID on the approximately $10 billion Alaska Stand Alone Pipeline (ASAP). Instead of delivering natural gas to global markets, this 733-mile pipeline would provide natural gas to...