Tuesday, August 15, 2006

A Lesson in Geography

The other day I had received this e-mail from Scott Heyworth in response to a thread on the Russians are coming. In fairness to Scott he came in on a portion of what I have been saying about Gazprom and have been saying it for months.

Forwarded Message [ Download File Save to Yahoo! Briefcase ]
Tue, 15 Aug 2006 06:02:05 -0800
"Scott Heyworth"
get a map pal
"Mike Porcaro" , "Rick Rydell" , "Tom Brennan" AnchTimes@alaska.net

Whoever you are,

You need to learn geography sir.

I don’t know who the idiot was that added the line that the alaska LNG project is dead to this article. The shtokman field is in the barents sea and will deliver only to the US east coast and gulf coast where it will tie directly into pipelines to the midwest. It is direct competition to the canadian highway project. Somebody better get out a map. More of the same garbage we have to put up with in trying to intelligently discuss this issue.
Nice try.

Now some background.

In 1998, I ran against Senator Donley. Back then I campaigned on the idea that regional corporations should be set up under the Permanent Fund Corporation. These regional corporations should invest in companies that bring development in Alaska.

For South Central I felt that Kenai, Anchorage, the Mat-su and Valdez should be included under a regional corporation. Simliar to what the AGPA is but not the same.

The AGPA is flawed in that it is a political machine and it is a prime example why "State" owenership programs fail.

The governor on the other hand is taking the right approach in that a corporation within the Permanent Fund Corporation will handle the investment in the gas pipeline through Canada.

Investment in the pipeline can be achieved, but it should be done where the State of Alaska does not actually own the pipeline but gets a percentage of profits or the gas.

The same can be accomplished with the municipalities.

In the buisness world, it is done all the time. And one case is the Sempra re-gasification terminal off the Baja of Mexico.

And this brings me to where Scott and the gang are not telling the public the whole story.

During a public presentation given by the AGPA, I asked Bill Walker if he knew Shell Oil's percentage of ownership in the Sempra facility and he said he did not know. He did correctly state that Sempra owned the facility.

The important point is, here is an organization that has a member who stated to effect they did not know an answer to an important question.

Shell Oil invested 50/50 in the facility with Sempra owning the facility and Shell getting 50% of the contract to sell the gas through the facilities. Shell Oil will also get 50% of any future expansion in the facility.

The Shakalin field is where the gas is coming from that will go to the Sempra facility. Shell owns a 50% of the stake in Shakalin with Gazprom suing Shell to get 50% of Shell Oil's stake in Shakalin.

On top of that, Gazprom had signed back in April 2005, a MOU with Sempra to bring in their own gas to the facility. As it stands right now, Sempra is closed. And if the AGPA thinks that Sempra is going to put the AGPA ahead of Gazpom's wants and desires, they should not be in the business.

Just ask Shell Oil or Moncrief and then think about the Russian Courts.


Gazprom mounts legal challenge to Sakhalin II


Russian court ruling favours Gazprom on Yamal-LNG

And if you look in yesterday's Daily News, I'm sure many didn't miss the ad they ran where they spoke of a Conoco executive stating that the Canadian Route gas would be used for the tar sands?

What they didn't tell you is this:

"...Kitimat LNG Chief Executive Officer Rosemary Boulton described the Pacific Trail Pipeline joint venture as a “key milestone” in Kitimat LNG’s search for LNG supplies from Pacific sources such as Australia, Indonesia and Malaysia and the effort to line up end users.Giving further impetus was word from the backers that Alberta oil sands producers are potential buyers of the depressurized gas, adding another layer to the hopes of making sales to utilities and other customers in the Greater Vancouver region, the U.S. Pacific Northwest and California."

Next time you hear Scott talking, ask him about Sempra, Kitimat or Gazprom and see if you can get a clear and definite answer on how much gas the AGPA can sell to Sempra.

For the time, I'll just keep telling it like it is.

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