ANCHORAGE, Alaska, Sept 11 (Reuters) - Alaska has signed an agreement with the Japan Bank for International Cooperation (JBIC) to investigate natural resource exports in a renewed sign of demand for the state’s natural gas, officials said on Wednesday.
The memorandum of understanding (MOU) covers a variety of potential natural resource projects, but emphasizes Alaska’s ambitions to transport liquefied natural gas (LNG) to Japan and other Asian markets.
It was signed in Tokyo by Alaska Natural Resources Commissioner Dan Sullivan and JBIC managing director Koichi Yajima.
“It boosts the credibility of Alaska’s projects and efforts,” Sullivan said in a phone interview from Japan.
JBIC has been financially involved in almost all major LNG projects in Japan, and has focused recently on Australia exports, Sullivan said.
Alaska’s North Slope has known reserves of 35 trillion cubic feet of natural gas and probably 200 trillion cubic feet in all, according to the MOU.
Yet a lack of transportation for it and a committed market have left the gas stranded, while the costs of a pipeline have been deemed uneconomic since the 1970s.
A recent surge of U.S. natural gas output has only dimmed its prospects, according to state officials.
Yet TransCanada Corp and the three major North Slope oil producers - ConocoPhillips, BP and Exxon Mobil - have embarked on joint studies of a possible LNG project to supply Asian markets, estimated to cost up to $65 billion.
The state government has organized a separate proposal that would build a standalone gas pipeline serving Alaska markets, should no North Slope export project emerge.
Alaska LNG has been exported to Japan since 1969, but from southern Alaska’s Cook Inlet, not the North Slope. Cook Inlet exports were once a major source for Tokyo-based utilities, but volumes have dwindled.
This year, Conoco, owner of a 44-year-old LNG plant in Kenai, allowed its LNG export licence to lapse.
Sullivan has asked Conoco to resume LNG exports from Kenai.
Unlike gas from the Lower 48 states, North Slope gas was widely recognized as stranded, so exports to Asia would not be seen as diverting supplies from U.S. consumers, he said.
In May, Japanese consortium Resources Energy Inc issued a preliminary feasibility report on a North Slope LNG project and is considering participation in a pipeline.
The consortium said it envisaged annual LNG exports to Japan of 15 million to 20 million tons at a final cost of $7.31 to $8.58 per btu starting as early as 2018.