Daily Archives: September 6, 2010

9/3/2010 (Revised) Estimated Alaska North Slope Netback Values

Market Bbl MMBtu
Oil $67.41/BOE $11.62/MMBtu
Gas  (AGIA) Negative $2.09/BOE Negative $0.36/MMBtu
Gas (Valdez LNG) Negative $2.11/BOE Negative $0.36/MMBtu
Gas (Bullet Line) $.17/BOE $.03/MMBtu

These prices represent estimated values, netted back to the field level, for Alaska North Slope (ANS) oil and gas marketed through various options, based on closing prices for the relevant markets on the indicated day.  For an explanation of the basis for all of the estimated netback values, see “Basis for Estimates of Alaska North Slope Netback Oil & Gas Values (rev. Sept. , Sept. 6, 2010),” (Sept. 6, 2010) http://bit.ly/cNqYw5.

Basis for Estimates of Alaska North Slope Netback Oil & Gas Values (revised September 6, 2010)

(Revised to reflect the addition of an estimated netback value for “Bullet Line Gas.”)

The purpose of these estimates is to provide an indication of the relative value of Alaska North Slope (“ANS”) oil and gas to the Alaska economy.  The estimates provide values, netted back to the field, for ANS oil, and ANS gas delivered through three outlets – through an overland pipeline through Canada to the Lower 48 (“AGIA Gas”), through a pipeline to Valdez, Alaska, for conversion to LNG and ultimate sale in the Pacific Rim (“Valdez LNG”) and through a pipeline to Southcentral Alaska for conversion to LNG and ultimate sale to the Pacific Rim (“Bullet Line LNG”).  These estimates attempt to provide field netback values because that is the starting point used to calculate royalty and production taxes which, together, fund a large portion of Alaska state government.

To be clear, none of the market outlets for ANS gas actually exist today.  The reported value for the Alaska Gasline Inducement Act (or “AGIA”) market estimates what the current netback to the ANS would be for gas transported initially to the Canadian AECO hub through a pipeline yet to be built, and then on to the Lower 48 through either existing pipeline systems or additional pipelines yet to be built.  The second value, for “Valdez LNG,” estimates what the current netback to the ANS would be for gas transported initially by pipeline yet to be built to Valdez, Alaska, then liquefied at an LNG liquefaction facility yet to be built, then transported by ship and sold in markets in the Pacific Rim.   The third value, for the “Bullet Line,” estimates what the current netback to the ANS would be for gas transported initially by a pipeline yet to be built to Southcentral Alaska, then liquefied at the existing LNG export facility located near Kenai, Alaska, then transported by ship and sold in markets in the Pacific Rim. Continue reading