ExxonMobil Corp and BP of the UK plan to invest more administrative funds with Alaska Gasline Development Corp. into the Alaska LNG project to keep it moving forward in terms of resource availability and the regulatory process.
The two energy majors will spend a further $20 million to help advance the state’s $43 billion Alaska liquefaction and export plant using their natural gas resources from the state’s North Slope reserves.
The two companies, along with ConocoPhillips, had backed out of the project as investors in 2016 amid concerns about its global competitiveness after they had already spent $500M on studies, field preparations and regulatory presentations.
Since then, the state of Alaska has tried to advance the project on its own with potential support from Chinese energy and banking companies.
Damian Bilbao, vice president of commercial ventures for BP in Alaska, said at an oil and gas conference in Anchorage that the company was optimistic that the project’s cost could be reduced to below $40Bln.
Alaska’s deputy governor Kevin Meyer said at the conference that ExxonMobil and BP had each committed an additional $10M as the project continues to refine details while it seeks authorization from the Federal Energy Regulatory Commission.
The state will cover the remaining $10 million of the expected costs before FERC makes that decision in 2020.
The Alaska project is designed to liquefy 3.5 billion cubic feet per day of gas for sale to customers in the Asia-Pacific region from a liquefaction facility to be built in Nikiski on the Kenai Peninsula, south of Anchorage.
The venture includes a pipeline of 807 miles in length linking the gas fields to the liquefaction facilities with several interconnections for domestic supplies.
The FERC recently delayed the date it expects to finally decide on the LNG project to June 2020 from February 2020.
“When the governor took office, he made it clear that we needed participants with the credentials and the resources necessary in order to make a project of this scope work,” said Meyer, the deputy of Alaska Governor Michael Dunleavy.
“The involvement of BP and Exxon provides confidence that all future decisions regarding Alaska LNG will be rooted in world-class LNG experience,” added Meyer.
Damian Bilbao, Vice President of Commercial Ventures for BP in Alaska, said the company has at least one big reason to put money into the project.
“Alaska gas remains BP’s single largest global undeveloped resource,” he said.
Bilbao said it was significant that industry and the state were collaborating on the project again.
“The state has made good progress over the last several years. And, working together with Exxon and AGDC we think we can unlock some additional opportunities,” he said.
“But we’ll just have to see in a few months after some work gets done where the project is relative to other opportunities around the world,” stated Bilbao.
ConocoPhillips has also said at the conference that it was willing to sell its natural gas to the project and was engaged with the state in negotiating a gas-sales agreement.
BP and ExxonMobil have provided technical expertise to Alaska LNG as it moves through the federal regulatory process. Last year, they signed precedent agreements spelling out the price and other terms of gas sales to the project.
AGDC has been negotiating with several parties interested in the project, though these efforts have been weighed down by the political and trade disputes between the US and China.
Alaska LNG had been expecting to sign a joint development agreement with the Chinese energy major China Petroleum & Chemical Corp., also known as Sinopec, and possible finance deals with China’s sovereign wealth fund, China Investment Corp. Capital and the state-owned Bank of China.
A formal agreement was been delayed several times because of the US-China trade dispute and has now been side-lined until trade relations improve.
