The Alaska LNG Project said Monday it has reached a historic milestone as BP plc’s Alaska unit and the Alaska Gasline Development Corporation (AGDC) agreed to key terms of a gas sales agreement, including price and volume.
The terms are captured in a gas sales precedent agreement the parties signed last Friday (May 4).
The parties anticipate finalizing a long-term gas sales agreement this year for AGDC to purchase BP Alaska’s share of 30 Tcf of gas from the Prudhoe Bay and Point Thomson units.
BP operates the Prudhoe Bay field, considered the the largest oil and gas field in North America, and it owns a 26% share of Prudhoe Bay and a 32% stake in the nearby Point Thomson field.
“BP has a long history in Alaska and Prudhoe Bay,” said BP Group CEO Bob Dudley. The company will be “part of the state’s vision to bring Alaskan natural gas to new and expanding markets globally. We think this is good for the state, good for BP and good for the environment.”
BP Alaska President Janet Weiss added that the LNG export venture “is an important project for the future of the Alaska oil and gas industry.”
The development comes six months after President Trump and China’s President Xi Jinping witnessed the signing in Beijing of the five-party joint development agreement to monetize Alaska’s natural gas.
U.S. and Chinese officials signed a joint development agreement last November to help get the project off the ground. The Federal Energy Regulatory Commission in March said it planned to conduct an environmental review of a proposed project, estimated to cost about $43 billion. The state-owned AGDC filed an application with the Commission in April 2017 to commercialize North Slope gas; a notice of application was issued shortly thereafter.
“This gas sales agreement is a significant factor in progressing the Alaska LNG Project,” said AGDC President Keith Meyer. “We have secured the customers, we have progressed on the pipeline build with regulators and the finance community, and now we have a commitment that there will be gas to sell and put through the pipeline. I look forward to continued negotiations to secure supply from other North Slope producers.”
Gov. Bill Walker thanked BP for its commitment to the project.
“This agreement means Alaskans are one step closer to cleaner air, more jobs and more affordable energy to power homes and businesses,” Walker said. “Having BP, one of our longtime partners on this project, commit its share of the gas for sale underscores the progress we continue to make as we work toward building a stronger Alaska.”