The Alaska North Slope (ANS) holds a vast resource of natural gas but has no current method of transportation from the North Slope to world markets. The Prudhoe Bay field contains the largest portion of the discovered natural gas on the North Slope or about 21.8 Tcf of natural gas available for sale after CO 2 removal and satisfying power requirements and other North Slope use. The natural gas at Prudhoe Bay that is produced during oil production operations is reinjected and used to increase oil recovery. Currently, there are two broad gas-marketing schemes proposed for commercializing the natural gas on the North Slope. One is a gas-pipeline/liquefied natural gas (LNG) plant scenario; the other is a gas-toliquids (GTL) option that chemically converts the natural gas to a stable, liquid syn-crude in a North Slope plant, eliminating the need for an additional pipeline from the North Slope to a southern Alaska port.The purposes of this report were to assess the effect of applying new technology to the economics of a proposed GTL plant, to evaluate the potential of a slower-paced, staged deployment of GTL technology, and to evaluate the effect of GTL plant placement on economics.Five scenarios were economically evaluated and compared: a no-major-gas-sales scenario, a gaspipeline/LNG scenario, a fast-paced GTL development scenario, a slow-paced GTL development scenario, and a scenario which places the GTL plant in lower Alaska, instead of on the North Slope. Evaluations were completed using an after-tax discounted cash flow analysis. Results indicate that the slowpaced GTL scenario is the only one with a rate of return greater than 10 percent. The other scenarios did not show positive net present values under the economic conditions selected for the simulations. Their rank, in order of net present value, is as follows: slow-paced GTL development, no-major-gas-sales, fastpaced GTL development, a fast-paced GTL development in southern Alaska, and finally a gaspipeline/LNG project.The slow-paced GTL development would allow cost saving on subsequent expansions. These assumed savings along with the lowering of the transportation tariff combine to distinguish this option for marketing the North Slope gas from the other scenarios. Critical variables that need further consideration include the GTL plant cost, the GTL product premium, and operating and maintenance costs. Reducing these costs, or increasing the premium, would increase the profitability of the GTL process. In addition, understanding these variables better and reducing their uncertainty would allow a more accurate prediction of economic profitability.
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EXECUTIVE SUMMARYThe Alaska North Slope (ANS) holds a vast resource of natural gas but has no current method of transportation from the North Slope to world markets. The Prudhoe Bay field contains the largest portion of the discovered natural gas on the North Slope or about 21.8 Tcf of natural gas available for sale after CO 2 removal and satisfying power requirements and other North Slope use. The natur...