BP, state agrees on natural gas deal
BP has agreed to sell natural gas that would be part of Alaska’s major state-owned liquefied natural gas project, the company and state announced Monday.
Gov. Bill Walker says the agreement is a key step toward advancing a project seeking to export gas to Asian markets.
The two sides signed the deal on Friday and announced Monday morning. Terms cover sale price and volume of gas to be sold, but they were not disclosed.
Gas would come from BP’s share at Prudhoe Bay and the nearby Point Thomson field, which lies east of Prudhoe.
Walker’s gas line team has been trying to secure outside investors to help advance the $43 billion project. He says this deal with BP bodes well with prospective investors.
“It’s a significant step,” he said. “It means there is gas committed to the project. That’s something we have not had before. It’s a critical piece. The two most critical pieces for a project are the market and the gas. The market is there, now the gas is there.”
BP is one of three major producers on the North Slope. Exxon Mobil and ConocoPhillips also have significant reserves. Walker says negotiations remain ongoing with those companies.
Senate Resources chair Cathy Giessel (R-Anchorage) says she still needs much more information before seeing the announcement as significant.
“Is there anything in this piece of paper to give me optimism? There isn’t anything there to really hang anything on. I don’t see a dollar amount. I don’t see amount of gas in it. That’s really what it boils down to at the end of the day," she said.
“A gas pipeline is very different than an oil pipeline because oil is so much more valuable, the price of oil is so much higher. The gas pipeline, we need to be very careful with it. It could be very, very good for 50 years. On the other hand, it could be very, very bad for 50 years.”
House Resources co-chair Andy Josephsen (D-Anchorage) says he would still love more information and that he may agree to sign a non-disclosure agreement to learn more.
Still, he sees the announcement as positive.
“In a sense, I’m not really that surprised we knew the majors sort of informally made offers or commitments with a small ‘c’ as long as two years ago,” Josephsen said. “But this seems to be a much more definitive announcement that indeed they are going to commit all the gas they can offer from Prudhoe Bay and Point Thomson to the line and it helps finance the project. It helps secure investment dollars we need to make the line a reality.”
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