Gas agreement, but what about the pipeline project?
Two of the three major North Slope leaseholders have signed gas sales agreements with the agency overseeing a state-owned natural gas pipeline project. But the agreement doesn't exactly get state closer to a gas line, according to Larry Persily, a former federal coordinator for Alaska gas line projects.
On Monday, ExxonMobil signed a binding gas agreement in which the company would sell gas to the state for export to Asian markets if the pipeline project is successful. The gas agreement is just one of the dozens of contracts in the state-run project.
So, how meaningful is this particular piece?
"Meaningful, [with a] lower case," Persily said in a live interview on Daybreak Thursday morning. "An important step, but not a great step. This does not mean 'go out there and start planning for jobs.' No one's going to break ground in the next couple of years."
In a Monday interview about the ExxonMobil agreement, Gov. Bill Walker said:
"The most critical pieces to a project is, one is the market, the other is the gas. What's critical is the market now sees the gas is available for the project. "
Persily says somewhere in the equation there has to be a financial commitment -- either by a gas supplier or a gas buyer in order to break ground on the $43 billion project. He says the kind of gas agreements signed by BP in May, and now ExxonMobil, are no-risk because the companies aren't putting down any money. If anything, ExxonMobil is getting a financial commitment for gas from the state -- gas it's not making money on now.
"What's really a win for Exxon is they're the operator, the major owner, of Point Thomson. They faced a deadline next year next year to put a lot more money into Point Thomson, and the state, as part of this agreement said, 'Hey, we'll back off, give you some more time on Point Thomson,'" Persily said. "So that was definitely an important deal for Exxon."
If Alaska LNG were to follow the state's timeline, it could begin shipping gas around 2024, but Persily says that's likely too ambitious an estimate.
The Alaska Gasline Development Corp.'s state funding is expected to last through the end of 2019. After that, it will have to ask lawmakers for more money. AGDC has also told lawmakers in recent hearings this year that it is also courting private equity investors.
ConocoPhillips is the third major North Slope producer that has yet to sign a gas agreement with AGDC.
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