Executives for ExxonMobil, ConocoPhillips, BP, and TransCanada submitted a letter to the Parnell administration describing their companies’ progress in advancing an Alaska liquefied natural gas (LNG) export project.
“I’m encouraged that the companies have made significant progress in advancing a project and an associated schedule for commercializing North Slope gas,” Governor Parnell said. “Clearly, they have fully shifted their efforts to an Alaska LNG project.”
The companies’ letter addresses a critical benchmark that Governor Parnell laid out in his January State of the State address, calling on the companies to harden the numbers on an LNG project and identify a project timeline by the end of the third quarter.
The letter also addresses an additional third-quarter benchmark that Governor Parnell laid out in his address, calling on the companies to complete their discussions with the Alaska Gasline Development Corporation (AGDC) on the potential to consolidate their work. In the letter, the companies said they have established a cooperative framework with AGDC to share information.
“I am also encouraged to see the significant work between AGDC, which is advancing an in-state gas project, and the Alaska Pipeline Project (APP), which is advancing an LNG export project. Deeper cooperation between these two state-backed efforts is strongly in the state’s interest,” Governor Parnell said.
Prior to the announcement, ExxonMobil, ConocoPhillips and BP had met two earlier benchmarks laid out in Governor Parnell’s State of the State address. On March 29, the state and the companies resolved the Point Thomson litigation. The following day, the companies announced their alignment “on a structured, stewardable and transparent approach with the aim to commercialize North Slope natural gas within the Alaska Gasline Inducement Act (AGIA) framework.”
Letter from the producers and TransCanada provide details on the team they have assembled and the team’s activities in developing a project, building on their previous work to commercialize North Slope gas. The documents include a project timeline and a cost range covering various stages in the project development schedule and work plan. The documents also provide new details regarding the components of an Alaska LNG project, including a liquefaction facility, gas production and storage, a large-diameter pipeline, and a gas treatment plant.
Over the past six months, more than 200 employees from the four companies have been working on managerial, technical, and commercial aspects during this phase of the project schedule, according to the letter.
Given the massive size of the North Slope conventional gas resource (35 trillion cubic feet of reserves and more than 200 trillion cubic feet of undiscovered, technically recoverable resources) and the scope of the project as described by the companies, an Alaska LNG project will be one of the largest in the world.
While the companies have been developing their LNG project design, the Parnell administration has undertaken significant outreach to Pacific Rim markets to highlight the comparative advantages of Alaska LNG exports, and to other key stakeholders, including U.S. government officials in charge of export licensing.
The most recent of these efforts was Governor Parnell’s trade mission in September to South Korea and Japan, where he discussed Alaska LNG exports with leading government and industry officials.
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The Alaska Pipeline Project (APP) announced that it will conduct a non-binding public solicitation of interest in securing capacity on a potential new pipeline system to transport Alaska’s North Slope gas.
The solicitation of interest will take place from August 31 through September 14, 2012.
The solicitation of interest is being conducted to identify parties potentially interested in making future capacity commitments on a pipeline system from the Alaska North Slope to a gas liquefaction (LNG) terminal at a tidewater location in south-central Alaska or to an interconnection point near the border of British Columbia and Alberta in Canada.
APP will conduct the solicitation of interest in accordance with the Alaska Gasline Inducement Act (AGIA), which requires TransCanada, as the AGIA Licensee, to assess market interest in a pipeline transportation system for Alaska North Slope gas every two years after its first open season.
APP has set a high priority on providing access opportunities for in-state natural gas to heat and power local homes, business and industry. All options being pursued under AGIA provide for a minimum of five delivery points for local natural gas connections in Alaska.
ExxonMobil, ConocoPhillips, BP and TransCanada, through its participation in the Alaska Pipeline Project, announced that they are working together on the next generation of resource development in Alaska.
The four companies have agreed on a work plan aimed at commercializing North Slope natural gas resources within an Alaska Gasline Inducement Act (AGIA) framework. Because of a rapidly evolving global market, large-scale liquefied natural gas (LNG) exports from south-central Alaska will be assessed as an alternative to a natural gas pipeline through Alberta.
“Commercializing Alaska natural gas resources will not be easy. There are many challenges and issues that must be resolved, and we cannot do it alone. Unprecedented commitments of capital for gas development will require competitive and stable fiscal terms with the State of Alaska first be established,” the CEOs of ExxonMobil, ConocoPhillips and BP wrote in a joint letter to Governor Sean Parnell.
The producing companies support meaningful Alaska tax reform, such as the legislation introduced by Governor Parnell, which will encourage increased investment and establish an economic foundation for further commercialization of North Slope resources.
With Point Thomson legal issues now settled, the producers are moving forward with the initial development phase of the Point Thomson project. Alaska’s North Slope holds more than 35 trillion cubic feet of discovered natural gas, and Point Thomson is a strategic investment to position Alaska gas commercialization.
- Alaska Governor, BP, Conoco and Exxon Discuss LNG Export (mb50.wordpress.com)
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By Ed Crooks in London
BP, ExxonMobil and ConocoPhillips are in discussions about a $40bn project to export liquefied natural gas from Alaska to Asia, potentially opening up large but stranded reserves that currently have no route to market.
According to people close to the negotiations, the three companies and state authorities hope to reach agreement next week over a long-running lease dispute at Point Thomson, a large oil and gas field on Alaska’s North Slope.
A settlement would clear the way for the companies to hasten their commercial assessment of a large gas pipeline to Alaska’s southern coast, from where LNG could be shipped to China and other Asian countries. Sean Parnell, Alaska’s governor and a champion of the project, told the Financial Times he was “cautiously optimistic” that the plan would be able to move forward.
The state argues that BP, ExxonMobil, ConocoPhillips and Chevron have been too slow to produce oil and gas at Point Thomson, having agreed to a development plan in 1977, and he wants to take their lease away. John Minge, BP’s president for exploration in Alaska, told reporters in the state last week that talks about the dispute were on track to be resolved by an end of March deadline.
Alaska’s North Slope has proven reserves of 35tn cubic feet of gas – about one-eighth of US total reserves – and undiscovered resources estimated at 236tn cu ft. Without a pipeline, however, the gas is worthless.
Exxon and TransCanada, a pipeline company, have been working on a route to take the gas across Canada to the “lower 48” US states, but industry executives and government officials say the proposal was stymied by weak prices stemming from the shale gas boom.
Mr Parnell said Alaska was frustrated by the slow progress of plans to develop the gas, which could earn the state an estimated $400bn. He has been urging the companies to move forward with a shorter pipeline to the south coast of Alaska, where a new LNG plant could be built for export to Asia. “The gas is there, the market is there, particularly on the Pacific Rim,” he said. “There is no reason why we should not be able to move the gas to the market.”
The companies have warned that they need to assess the commercial case for the project, which would cost an estimated $40bn-$50bn and take at least 10 years to develop.
Governor Sean Parnell met yesterday in Anchorage with the chief executive officers from BP, ConocoPhillips and Exxon Mobil to discuss alignment between the three companies on commercializing the North Slope’s vast natural gas reserves.
The meeting took place at the request of Governor Parnell after he publicly called on the three companies – the major lease holders for gas reserves on the North Slope – to work together on developing a liquefied natural gas (LNG) project that focuses on exporting Alaska North Slope gas to Asia’s growing markets.
“We had a productive discussion about how to get alignment between the companies and grow Alaska’s economy through oil and gas development,” Governor Parnell said. “I made it clear that we want to see progress on commercializing Alaska’s gas for Alaskans and markets beyond.”
The Parnell administration is targeting LNG exports to Asia given increasing demand there.
Governor Parnell and the CEOs – Bob Dudley of BP, Jim Mulva of ConocoPhillips and Rex Tillerson of Exxon Mobil – met for two hours. During the meeting, the CEOs briefed the governor on the extensive work they’ve been doing in response to his request.
“I appreciate the willingness of the chief executives to come to Alaska to discuss the important topic of commercializing North Slope gas,” Governor Parnell said. “For a gas project to advance, all three companies need to be aligned behind it. This meeting is an important step, but much work remains.”
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