Bloomberg reported that Alaska plans to jump start a USD 45 billion natural gas export project by pitching in more than 10% of the cost and joining Exxon Mobil Corporation, ConocoPhillips and TransCanada Corporation as an equity partner.
The agreement between the state and the 4 companies outlines a framework in which Alaska would take as much as a 25% stake in a proposed gas processing plant, an 800 mile pipeline from Alaska’s North Slope and a liquefaction facility in the Kenai Peninsula.
The Alaska Department of Natural Resources said that “Governor Mr Sean Parnell has asked the Alaska legislature to approve the deal and give state agencies the ability to negotiate shipping and leasing arrangements.”
Mr Joe Balash, the department’s commissioner, said that “This is the first time we’ve had all of the parties aligned on a path forward. The deal gives the project a good shot at proceeding.”
The JV renews a prolonged effort to harvest Alaska’s vast reserves of gas, which have remained largely untapped since the 1968 discovery of the Prudhoe Bay oil field. The North Slope holds more than 35 trillion cubic feet of discovered gas, almost 4 times the UK’s reserves.
Gas shipments may begin as early as 2021, giving Alaska a foothold in an increasingly competitive race to supply Asian countries with liquefied natural gas or LNG, from North America.
ConocoPhillips has a small LNG export plant in Nikiski on the Kenai peninsula, the only such facility in the US.
Although, the project is expected to cost USD 45 billion, the final bill could reach as much as USD 54 billion, according to a November 2013 Black and Veatch Limited study produced for the state. The producers estimated in a February 2013 letter to Parnell that the cost could reach USD 65 billion.
Mr Balash said that “Under the terms of the agreement, Alaska will assume a 20 to 25% stake in the entire project. TransCanada has agreed to pay the state’s costs for its share in the USD 22 billion gas processing facility and pipeline in exchange for a lower tariff for shipping the gas. That would represent a USD 5.5 billion investment.”
He said that “The state would pay as much as USD 5.75 billion for its share of the USD 23 billion liquefaction facility, which would be capable of shipping 18 million tonne of LNG a year. The producers would pay the remaining portion of the USD 45 billion total project cost.”
He added that “The equity stake will allow Alaska to help fund the project and control transportation costs. Alaska may sell part of its stake in the project to a number of LNG buyers, allowing it to reduce what it owes for the liquefaction facility.”
Source - Bloomberg
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