:quality(70)/cloudfront-us-east-1.images.arcpublishing.com/adn/YY2G6IYK75FW3ILM5ZUPX7LCZ4.jpg?ssl=1 "B Alaska LNG project and oil and gas exploration company take early step toward a gas deal")
Alaska’s gas line agency and an oil and gas company with North Slope prospects have taken a step toward a deal that could one day provide gas for the $44 billion Alaska LNG project.
A subsidiary of Pantheon Resources signed a gas sales precedent agreement with 8 Star Alaska, a subsidiary of the Alaska Gasline Development Corp., the company and the state agency said on Tuesday.
The agreement is primarily focused on providing gas for an initial phase of the gas line export project, the statement said.
That initial phase, estimated to cost about $11 billion, is designed to provide North Slope gas to address a looming shortage of the Cook Inlet natural gas that has long provided heat and electricity in Anchorage and other areas of the state.
Frank Richards, AGDC president said in the statement that the agreement “solidifies the commercial foundation” for the initial phase.
It “provides enough pipeline-ready natural gas, at beneficial consumer rates, to resolve Southcentral Alaska’s looming energy shortage as soon as 2029,” he said.
The agreement contains key commercial terms for a binding gas sales agreement that will be negotiated. The terms include Pantheon supplying up to 500 million cubic feet per day of gas, the statement says.
But large uncertainties exist with the plan.
Pantheon Resources, based in London, does not currently produce the natural gas that would be needed for the project. It is working to develop the Ahpun prospect and a nearby project on Alaska’s North Slope.
It has not yet made a final investment decision that would be needed before the company would develop the Ahpun field for oil and gas production.
The Alaska LNG project has been unable to secure investments from potential private partners to support project costs. The initial project phase also needs private funding. The agency has signed other preliminary gas deals with major oil and gas producers in the past, but the project has continued to struggle.
The state-led Alaska LNG project calls for an 800-mile pipeline carrying natural gas from the North Slope so it can be liquefied in Southcentral Alaska and exported to Asian markets in oceangoing tankers.
The gas line agency this year pitched the new pipeline-first approach to lawmakers, in part to help move the full project forward. That would initially build a pipeline, and later construct other aspects of the project to support the gas exports.
The Alaska LNG project has been in the works for about a decade.
In April, top board members with the gas line agency asked the Legislature to provide another year of funding to keep the project alive.
If the gas line agency cannot secure funding for the entire project or the initial pipeline phase, then staff have been instructed to shut the project down by the end of this year, they said in a letter.
