To better serve our many subscribers that are working from home during this time, we are offering digital issues of North American Oil and Gas Pipelines. Please Subscribe to ensure delivery of future digital editions. Thank you and be well.

Agreements Move Alaska Gas Pipeline Forward

0

The state of Alaska and the four companies planning a North Slope liquefied natural gas export project have signed agreements that aligned their interests and laid out a roadmap for the project to proceed toward engineering, design and permitting work.

The agreement signed Jan. 15 by the state, ExxonMobil, BP, ConocoPhillips and TransCanada lays out terms for the state to become an equity owner in the estimated $45 billion to $65 billion project and the next steps to move the work forward.

In a related action, the state released its “Memorandum of Understanding” with TransCanada defining that company’s role in the midstream portion of the project — the 800-mile pipeline and massive gas treatment plant on the North Slope.

/*** Advertisement ***/

The LNG export project is in a pre-front-end engineering and design, or pre-FEED, phase, which is expected to cost more than $400 million over the next 18 months or so, according to the five-party argreement. The pre-FEED work is expected to ramp up in the second quarter of 2014.

The Alaska LNG project anticipates piping 3 billion to 3.5 billion cubic feet (bcf) per day from Alaska’s North Slope fields. After gas consumed in-state and at the liquefaction plant, about 2 bcf to 2.4 bcf per day — or 15 million to 18 million metric tons per year — would be exported as LNG to Asian markets.

Besides commercial terms, the agreement addresses the hiring of Alaskans, use of Alaska businesses during construction, providing at least five off-take points along the pipeline where gas can be drawn off for in-state distribution and capacity expansion of the project after it is built to handle additional gas production.

The state’s separate agreement with TransCanada covers the midstream pieces of the project — the gas transmission lines for the Prudhoe Bay and Point Thomson fields on the North Slope, the treatment plant that would remove carbon dioxide and other impurities from the gas stream, and the 800-mile gas pipeline itself.

Under the agreement, TransCanada would fund the state’s share of the pipeline cost and give the state an option to purchase up to 40 percent of the midstream portion before the project moves to its FEED phase. The option would expire no later than Dec. 31, 2015.

Investment in the liquefaction plant and marine terminal is not part of the state’s deal with TransCanada.

Since 2008, TransCanada has been working on a North Slope gas line project under the Alaska Gasline Inducement Act (AGIA), whereby the state was reimbursing the company for most of its early development costs. That work originally focused on a pipeline to move Alaska gas to North American consumers, but the shale gas boom ended that plan. In its place, TransCanada and North Slope producers in 2012 shifted to the LNG export project.

As part of this latest agreement, the state and TransCanada are ending work under the AGIA, which allows for mutual termination if the two parties agree the project is uneconomic. The new five-party deal between the state, North Slope producers and TransCanada will replace the AGIA license as the path forward, according to Alaska Gov. Sean Parnell and his Revenue and Natural Resources commissioners.

Some remaining work eligible for state reimbursement, however, will continue under the AGIA license through June 30.

Share.

Comments are closed.

Copyright Benjamin Media 2018