Regional LNG: Alaska to court Asian buyers for natural gas

The new chief executive of a voter-approved state agency to build an Alaska natural gas pipeline said Monday he'll go to South Korea, Japan and Taiwan in October to try to drum up customers for North Slope gas, Anchorage Daily News reported on Tuesday.

Harold Heinze also said he will travel to California next week to meet with companies there about buying natural gas.

Heinze, hired last month to head the Alaska Natural Gas Development Authority, announced the Asia trip during a business conference of Korean and Pacific U.S. states at the Hotel Captain Cook.

Korea, Japan and Taiwan have all expressed interest in the past in Alaska's vast North Slope natural gas reserves, and all three import liquefied natural gas, or LNG, aboard tankers. Japan is by far the biggest importer, followed by Korea.

The goal, Heinze said, is to get utilities and major industrial firms in the three Asian nations to buy North Slope natural gas -- a lot of it.

Discovered in the late 1960s, the gas has remained in the ground for lack of a multibillion-dollar pipeline to carry it out.

Heinze said he's optimistic his trip can help break more than 30 years of frustration in trying to market the gas, though he doesn't expect an easy time of it across the Pacific.

"Selling in all these countries is always tough. But all have historically had interest. Probably Japan is toughest because its economy has not yet recovered. Korea is an interesting case because its economy is expanding."

Seok-Soong Seo, a former Korean energy official who now directs an office promoting foreign investment in the country, said Alaska has much competition from nations closer to Korea with plenty of LNG to sell and tanker ports already in place.

Right now, the LNG market is oversupplied and Korea already has contracts with producers in Indonesia, Australia and Yemen in the Middle East, he said.

Korea also is exploring the idea of piping in gas from the Irkutsk region of Russia, a project that might involve BP, a major holder of North Slope gas.

Korea is unlikely to sign any long-term contracts of the sort needed to sustain a major LNG project of the type the Alaska authority has proposed, Seo said.

But he added: "If Alaska LNG is competitive in terms of quantity and price, then why not?"

The authority, which voters approved overwhelmingly in November, is charged with building a pipeline to carry North Slope gas to Valdez, where it would be liquefied for shipment to Pacific Rim markets.

Major oil companies holding the gas, however, have said they prefer another option: building a pipeline down the Alaska Highway and across Canada to the Midwest.

Heinze is a former president of one of those companies, now known as ConocoPhillips Alaska Inc.

He's been on Asia trips to promote Alaska gas before, both as an oil company executive and as natural resources commissioner under former Gov. Wally Hickel.

Heinze said Monday that his goal is not only to sell gas but to recruit companies willing to invest in an Alaska gas pipeline and LNG port, and to locate steel or other industries in Alaska to feed off the gas.

In California next week, Heinze said, he plans to meet with executives at Sempra Energy, a San Diego-based power utility holding company proposing an LNG receiving port at Baja, Mexico. He said he'll also meet with people at Japanese conglomerate Mitsubishi, which is proposing an LNG port at Long Beach, Calif.

Heinze said one of the authority's seven board members, David Cuddy, will accompany him on the California trip. (*)