Comparative economic evaluation of the options for transporting the Alaska North Slope stranded gas

Abstract

The most effective economic parameter often considered in feasibility analysis is the Return On Investment (ROI). Any Alaskan gas pipeline project is expected to have a high return on investment to be considered economic. A Comparative Economic (CE) model was used in this study to analyze the gas pipeline project options. These options are: The Alaskan Canadian (AlCan) Highway stand alone gas pipeline project, the AlCan Highway gas pipeline with an instate spurline to southern Alaska, the All-Alaskan Liquefied Natural Gas (LNG) Project, the All- Alaskan LNG project with a spur line to southern Alaska, and the Gas-To-Liquid (GTL) project. The CE model makes use of the Crystal Ball and some input parameters like cost, taxes, tariffs and price to determine the economic feasibility of each option based on the ROI, payout period and total revenue accrued from each project. It was shown from the analysis that the AlCan Highway stand-alone pipeline project had the highest return on investment of 33%. This was followed by the AlCan Highway gas pipeline with an instate spurline to southern Alaska with return on investment of 32.6%. The all-Alaskan LNG projects proved feasible but with less return on investment compared to other options.