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Alaska LNG Project Parties Sign Commercial Agreement

A commercial agreement has been signed by the Alaska Gasline Development Corp., BP plc, ExxonMobil Corp., ConocoPhillips, and TransCanada Corp. to advance the Alaska LNG Project (see Daily GPI, May 7).

"Environmental and pipeline engineering fieldwork has officially begun," said Alaska Gov. Sean Parnell. The Alaska LNG Project has fully entered the pre-front end engineering and design phase -- a milestone no previous Alaska gasline project has achieved.

In the coming weeks, the project will begin work to secure an export license with the U.S. Department of Energy and continue permitting work with the Federal Energy Regulatory Commission. Each producer party, in addition to the state, will begin to engage the liquefied natural gas (LNG) sales market during this phase.

Earlier this year Alaska lawmakers passed and Parnell signed legislation enabling the state to take a 25% stake in the LNG export project and its associated pipeline from the North Slope (see Daily GPI, April 21).

The decades-long effort to commercialize Alaska’s North Slope gas reserves shifted from a long-haul pipeline project to serve the Lower 48 to an LNG export project at the end of 2012 (see Daily GPI, Oct. 5, 2012).

The companies estimate a cost of $45 billion to more than $65 billion (in 2012 dollars) for a project that includes a gas treating plant; an approximately 800-mile pipeline from Alaska’s North Slope to the liquefaction plant; and an LNG plant, storage and shipping terminal at Nikiski, 60 air miles southwest of Anchorage along Cook Inlet.

The 42-inch diameter pipeline would be built to carry 3-3.5 Bcf/d. Alaskans would use some of the gas in their own state, and running the pipeline and LNG plant would also consume some. The plant would have the capacity to make 17 million to 18 million metric tons a year of LNG, processing 2.2-2.4 Bcf/d of gas.

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