Point Thomson Natural Gas Agreement Reached
Gas should be flowing through in-state pipeline by 2016
ANCHORAGE - After seven years of litigation, the dispute over the Point Thomson oil and gas unit is over.
Now Governor Parnell hopes the settlement between the state of Alaska and a handful of oil companies will set the stage for a major natural gas pipeline.
The governor announced "alignment" under the Alaska Gasline Inducement Act among North Slope producers and AGIA licensee TransCanada.
BP, ConocoPhillips and ExxonMobil, who all testified vigorously against AGIA in 2007, now have committed to planning a gas line under those terms.
Exxon, which later decided to work with TransCanada, also is the unit operator at Point Thomson.
Today’s convergence meets Parnell’s objective, laid out in his State of the State speech in January, for specific actions by the end of March.
"Today I'm announcing that my two benchmarks for gas line progress have been met: resolution of the point Thomson litigation in Alaska’s interest, and historic alignment among major parties around a gas line to tidewater within the state of Alaska."
The three major North Slope producers weren't there to share the moment with the governor, but a letter jointly signed by their CEOs pledged cooperation with the state and AGIA licensee TransCanada.
The key to the alignment was resolving the long dispute over Point Thomson, which holds about 25 percent of the proven gas reserves on the North Slope -- making it crucial for a major gas export line, shipping liquefied natural gas to Asia.
The settlement does not require the gas line, but it calls for continued expansion of Point Thomson development if a major gas project isn't sanctioned by June 2016.
Either way, the Point Thomson leaseholders are required to send 10,000 barrels per day of gas liquids into the trans-Alaska oil pipeline by May 2016.
"A simple and powerful principle runs throughout this agreement,” said Dan Sullivan, commissioner of the Alaska Department of Natural Resources. “The more work, the more commitment, more investment and more production that occur, the more point Thomson acreage the companies will retain. The common thread in the settlement is to begin production, keep momentum on developing this world-class field or lose acreage."
The governor says there is no link between the agreements announced today and the oil tax debate raging at the state Capitol in Juneau. And maybe surprisingly, the governor did not seem to take political advantage as far as that debate goes.
"This settlement stands on its own and is not tied to HB 110 changes. But I think what it does, is, it says Alaska is getting, we're getting our house in order to maximize this gas for Alaska’s interest, just as on the tax side, we're getting our house in order to incentivize more investment on the oil side."
Parnell says he hopes the Senate will consider a bill passed by the House to encourage development of a bullet line to provide gas to Alaskans.
"I’m not going to at this point cut off another option. But instead we're consolidating now down to two -- two options -- that I believe will eventually here merge, align and get this gas to Alaskans."
If the governor has his way, it will be all for one.
Sullivan, the former attorney general, says the 56-page settlement agreement is unusually complex because so many definitions and timetables were built into it, in order to avoid future litigation.
In some cases, the oil companies explicitly waived their right to appeal to court.
As for the gasline, Parnell says amendments to AGIA might be necessary at some point.
But Sullivan said TransCanada is still eligible for reimbursement for certain expenses, for work that would have to be done either for an in-state gas line to tidewater or the original route into Canada to tie into the North American grid.