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Associated Press - Parnell in Asia Seeking Support for Alaska Natural Gas

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Location: Unknown

By Becky Bohrer

Gov. Sean Parnell went to Japan and South Korea, seeking to drum up support for Alaska natural gas. The trip, which is expected to concentrate on Japan, began Sept. 24 and was expected to conclude Oct. 1.

It is Parnell's second state-sponsored overseas trip as governor.

In an interview just prior to his departure, he said he plans to make a "compelling case" for Alaska gas in meetings with government officials, and utility company and business leaders in South Korea and Japan. He said he will explain the progress that's been made toward commercializing Alaska's North Slope gas and emphasize the comparative advantage Alaska holds over others, noting a more-than-40-year history of liquefied natural gas exports to Japan from a plant in Nikiski on the Kenai Peninsula.

Having that trust with a trading partner can lead to increased sales of Alaska gas, which can also help meet the recipient country's needs, Parnell said.

"This is a trading relationship that has been fostered and maintained for decades, and I'm working to grow it across the years to come," Parnell said in an interview Sept. 21. "I'm not going over there with an MOU (memorandum of understanding) to sign or anything. That's not my goal. My goal is simply to work to grow demand for Alaska gas in Japan by opening their eyes to the opportunity that can come with LNG from Alaska."

Parnell said he remains convinced that the market for Alaska gas exists in Asia, rather than overland to the Lower 48.

TransCanada holds an exclusive license with the state to advance a line, and Parnell last year called on the North Slope's three major producers -- ExxonMobil, BP and ConocoPhillips -- to get behind a project that would allow for liquefied natural gas exports to the Pacific Rim if the market had shifted from the Lower 48.

State officials have said Alaska is closer than ever to its dream of a major gas pipeline, but significant challenges remain.

For example, there's no firm project yet, though the CEOs of the three major producers have agreed to focus on a large-scale LNG project and to work with TransCanada so efforts toward a pipeline will be coordinated. (ExxonMobil had already partnered with TransCanada.) Parnell has set an end of September deadline for the companies to identify a project and associated work schedule and said he expects the benchmark to be met.

Any project will easily cost in the tens of billions of dollars, and the CEOs have already said that "unprecedented commitments of capital" for gas development by the companies will first require "competitive and stable" terms on taxes from the state -- a simmering, contentious issue in the Legislature.

Still, Larry Persily, federal coordinator for Alaska natural gas pipeline projects, said the administration is doing the right thing by sending officials to Asia.

While there's no definitive project yet, "everyone else in the world is over in Asia and Japan and China and South Korea touting their proposed, tentative, plausible, theoretical projects, so it behooves us to be there, too, making sales calls," Persily said.

Parnell's natural resource commissioner, Dan Sullivan, just returned from Japan and South Korea (see adjacent article), where he addressed a major conference of LNG producers and consumers in Tokyo, and met with utility and government officials. Parnell is to build on that, meeting with higher-level officials.

Sullivan said Sept. 24 that while Alaska isn't as far ahead as other gas-producing regions, it has clear advantages, including a stable government and vast resource that can help diversify the global supply chain. He said there is "a lot of interest" in having Alaska as another large-scale source of supply.

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