Alaska, Exxon Mobil sign gas binding sales agreement
ExxonMobil Corp. has agreed to sell natural gas to Alaska’s gas line project, state and company officials announced on Monday.
Exxon became the second North Slope leaseholder to sign a binding sales agreement with the state this year. BP signed an agreement in May.
“This precedent agreement is good for Alaska and ExxonMobil and represents a significant milestone to help advance the state-led gas line project,” ExxonMobil Alaska President Darlene Gates said in a prepared statement.
“As the largest holder of discovered gas resources on the North Slope,” Gates said. “ExxonMobil has been working for decades to tackle the challenges of bringing Alaska’s gas to market.”
The agreements are long considered critical to advancing the $43 billion project designed to ship North Slope gas down an 800-mile pipeline to Kenai for delivery to Asian markets.
The terms include price and volume but were not disclosed.
“This is particularly important because Exxon Mobil is the largest working-interest owner of discovered gas on the North Slope,” said Lieza Wilcox, vice president with the Alaska Gasline Development Corp., the state agency in charge of advancing the project.
The project has long been a priority of Alaska governors for nearly two decades, including Gov. Bill Walker.
In an interview, Walker said there are two “critical pieces to a project.”
“One is the market, the other is the gas,” he said. “What's critical is the market now sees the gas is available for the project.”
Exxon’s public position on a gas line project is often closely tracked from within the industry. A former pipeline chief executive 10 years ago noted a pipeline project goes only as far as Exxon goes.
That doesn’t seem to have changed.
Walker noted a recent visit from Chinese dignitaries seeking an update on Exxon’s “level of engagement.”
“We knew we were getting close, but we couldn’t say anything quite yet,” Walker said. “It was important for them to know where was Exxon on this project. Now we have advised them of today’s announcement. I think they will be very pleased with hearing this news.”
Senate Resources Committee Chair Cathy Giessel called the news, “one of step forward, a step among many that needs to take place before we can actually monetize the gas. Regardless, it’s a step forward.”
One of those steps is to secure similar agreements with the third major North Slope leaseholder ConocoPhillips.
Wilcox said the gas is to be sold to the state – the project owner – which will aggregate it, convert it into liquefied natural gas, then re-sell it overseas to Asian markets.
In a separate but related development, the state and Exxon Mobil agreed to amend a 2012 agreement to develop a unit known as Point Thomson, about 93,000 acres east of Prudhoe Bay.
It contains an estimated eight trillion cubic feet of proven gas reserves and has long been considered vital to a successful pipeline project.
Under the revised agreement, Exxon’s production benchmarks will align closer to the gas pipeline’s timeline.
With Point Thomson considered essential to the pipeline project, the state wanted to keep the two from going down divergent paths.
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