- Email: [email protected]
David M. Lawrence
72
JOURNAL OF ENERGY FINANCE AND DEVELOPMENT,
VOL. 3/NO. l/l 998
DAVID M. LAWRENCE ARC0 ARC0 performed a review of the Alaska Department of Revenue (DOR) report referenced above including a review of the associated spreadsheet that generated the results and exhibits. We concur with the overall conclusion that there are no disincentives or conflicting interests amongst PBU WIO’s to pursue and create an economical gas sale project. As the report concludes, the PBUOA/IRA cost implications and PBU liquid recovery impacts of a MGS from 2005 and beyond does not discourage progression of an economical MGS. In addition, the PBU resource owners could realize even greater potential benefits of a MGS depending on their investment in the various downstream elements of an LNG chain. We would like to point out that ARC0 does not necessarily utilize all the same assumptions for our internal projections as utilized in this DOR analysis. However, given the assumptions made in the DOR report, the estimated implications are reasonable. The actual net impacts of a MGS will vary significantly depending on the initiation of Phase 3 for PB field cost and fluid allocations. As you know, this timing is greatly influenced by oil rates, oil prices, and actual operating costs late in field life. The large uncertainty in long term future operating costs coupled with variability in future oil rates and prices makes determination of profitability at end-of-field life difficult with or without a MGS. Determining when the field reaches the economic limit with or without a MGS will require substantial additional analysis closer to the timeframe of the actual project. Therefore, ARC0 does not necessarily concur with all the assumptions made in the DOR’s final analysis; however, we realize that any projections for 2005 and beyond are uncertain and will undergo modifications over time. ACKNOWLEDGMENTS: The editor of this journal would like to point out that the comments made here are related to the study “Relative Economic Impact of a Major Gas Sale On the Prudhoe Bay Participating Area” by Greg Bidwell and Roger Marks (1998), published in the current JEPD volume. The editor of JEPD would like to thank both Beverly Mentzer of Exxon U.S.A. and David M. Lawrence of ARC0 Alaska for their feedback.
JOURNAL OF ENERGY FINANCE AND DEVELOPMENT,
VOL. 3/NO. l/l 998
DAVID M. LAWRENCE ARC0 ARC0 performed a review of the Alaska Department of Revenue (DOR) report referenced above including a review of the associated spreadsheet that generated the results and exhibits. We concur with the overall conclusion that there are no disincentives or conflicting interests amongst PBU WIO’s to pursue and create an economical gas sale project. As the report concludes, the PBUOA/IRA cost implications and PBU liquid recovery impacts of a MGS from 2005 and beyond does not discourage progression of an economical MGS. In addition, the PBU resource owners could realize even greater potential benefits of a MGS depending on their investment in the various downstream elements of an LNG chain. We would like to point out that ARC0 does not necessarily utilize all the same assumptions for our internal projections as utilized in this DOR analysis. However, given the assumptions made in the DOR report, the estimated implications are reasonable. The actual net impacts of a MGS will vary significantly depending on the initiation of Phase 3 for PB field cost and fluid allocations. As you know, this timing is greatly influenced by oil rates, oil prices, and actual operating costs late in field life. The large uncertainty in long term future operating costs coupled with variability in future oil rates and prices makes determination of profitability at end-of-field life difficult with or without a MGS. Determining when the field reaches the economic limit with or without a MGS will require substantial additional analysis closer to the timeframe of the actual project. Therefore, ARC0 does not necessarily concur with all the assumptions made in the DOR’s final analysis; however, we realize that any projections for 2005 and beyond are uncertain and will undergo modifications over time. ACKNOWLEDGMENTS: The editor of this journal would like to point out that the comments made here are related to the study “Relative Economic Impact of a Major Gas Sale On the Prudhoe Bay Participating Area” by Greg Bidwell and Roger Marks (1998), published in the current JEPD volume. The editor of JEPD would like to thank both Beverly Mentzer of Exxon U.S.A. and David M. Lawrence of ARC0 Alaska for their feedback.