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Thursday, September 20, 2018
HomeTop NewsBreaking: Exxon seals deal with governor on gas

Breaking: Exxon seals deal with governor on gas

ExxonMobil has committed its gas to the Alaska Gasline.

Gov. Bill Walker has gotten his old foe Exxon to agree to a binding deal with Alaska Gasline Development Corporation, the details of which will be announced today.

Gov. Walker spent his entire legal career suing Exxon and other oil companies and his antipathy toward Exxon is widely known. To have an announcement of this sort so close to the General Election may be seen by some as pure election politics, although as a company Exxon is famously difficult to coerce.

Hawkins

The agreement includes both price and quantity of gas from Prudhoe Bay and Pt. Thomson.

In addition, the Department of Natural Resources has agreed to amend the Pt. Thomson Settlement Agreement, which will include putting a pause on deadlines for the state’s largest undeveloped oil and gas field to align its development plan with the gasline. Deadline relief under the Pt. Thompson agreement may be what motivated Exxon to devote the internal staff resources to negotiate a gas sale agreement for a project with questionable economic prospects.

At the same time Exxon is getting on board, the Chinese entities that had courted the project have recently distanced themselves.

Sinopec announced this summer that it will not be involved in construction of the project, contrary to the memorandum of understanding it signed last November. Sinopec’s given reason for its recent change of heart was lack of technical expertise.

Accordingly, AGDC has started to search for a major construction and engineering company that can manage construction of an 800-mile gasline and large liquefaction and gasification facilities.

A critical stumbling block for the project remains: Marketing massive quantities of gas at currently uncompetitive prices.

China’s penchant for industrial espionage is another factor lurking in the background.

The governor’s announcement comes 58 days before an election, and voters can expect a series of these “developments” from the Governor’s Office over the next 58 days.

The governor’s press release is linked here:

FINAL Press Release AGDC Gas Sale Negotiations.docx

Skeptics will want to look at the fine print to see who is holding the best cards — Exxon, China or the governor.

Former Gov. Sean Parnell reflected that this is now a good opportunity for Alaska to unburden itself of potential Chinese investment and instead focus on getting gas to Alaskans, leaving some available for export.

He said it’s time to pivot to the ASAP line by getting private sector investors interested in building an LNG facility at tidewater.

Others credited Parnell, saying that without the settlement agreement that he and his team won, there would be no announcement today, and if Walker had prevailed in his litigation over the Point Thomson settlement, the state would still be in court with the company today, and there would be no facilities at Point Thomson — and no gas to sell.

The announcement was to be made by press release today, with no formal press conference scheduled.

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Suzanne Downing had careers in business and journalism before serving as the Director of Faith and Community-based Initiatives for Florida Gov. Jeb Bush and returning to Alaska to serve as speechwriter for Gov. Sean Parnell. Born on the Oregon coast, she moved to Alaska in 1969.

Latest comments

  • “A critical stumbling block for the project remains: Marketing massive quantities of gas at currently uncompetitive prices”
    If China buys our gas as they seek, it will only 5% of their annual demand.
    Your and the state republican party`s animus towards the Governor and the 138,000 voters who in 2002 authorized the state to pursue selling our gas, is palpable and certainly misguided and off target.

    To say this agreement with Exxon is just political grandstanding shows a lack of perception of reality. Exxon knows it was intransigent, as in it didn`t want to compete with it`s other overseas LNG investments.
    That was the wrench in the works that Walker called them on.
    We`re not selling the gas at todays price. We are selling at a discounted price for the next twenty years.
    They will be buying far more gas from many other suppliers including middle east countries and Russia and probably any country that could get it to their receiving port. If it hadn`t been for Walker we`d still be waiting on the producers to decide what they want to do, and there would be nothing on the horizon. Compared to a project that just found the supply and price it needs to move forward. Study up Susan. We need an export portion to allow the distance sensitive rates to be taken advantage of in the interior and along those five “take-off points” along the right of way built into the AK/LNG project. Study up Susan…the market is there and growing, right across the pacific.

    https://oilprice.com/Energy/Natural-Gas/Tariff-Threats-Arent-Impacting-Chinas-LNG-Demand.html
    http://sweetcrudereports.com/2018/09/05/chinas-sinopec-to-boost-spot-lng-purchases/
    https://www.lngworldnews.com/utilities-push-asian-spot-lng-prices-up/
    ..and the current 11 bucks per mbtu is certainly a healthy spot price that China pays TODAY! Parnell, an oil lobbyist and Exxon attorney who fought the Exxon $5 BILLION jury award before he ran for Governor, only delayed the project at Exxon`s behest. Parnell wouldn`t even meet with the Japanese when they came to talk to him about our gas, right after he lied his way into office saying he just wanted to “tweak” SB21. He sent his underlings.. Ohio Dan. Who had no authority or facts or offers for the Japanese. They left without Parnell wishing t5hem a good day. A huge contrast with Walker who has worked ceaselessly for a gas line for Alaska. And we are closer than we have ever been, literally and figuratively.

    • What gas will they be buying from Alaska for the next 20 years. They won’t be buying ANY gas until it is no longer stranded. When the pipeline and the infrastructure is built it will be available, yes. Maybe in five to ten years, though. But even then, no one will buy gas at non competitive prices. Exxon did not become the company it is by making stupid decisions. Their budget for their legal expertise is probably far greater than the cost of Alaska’s entire Dept of Law and then some. Walker is really out gunned and out smarted. He is a novice dealing with the very best! And worse, this cannot pass the campaign smell test.

  • This is great news for the project. Now there is enough gas to fill the gasline`s cutomer commitments, plus .5 bcf a year for in-state use!
    Thank you Governor Walker for your dogged dedication to getting our massive stranded gas reserves to a hungry world market…finally.

  • What about the 400 barrels of oil at the Point Thomson Unit, the Flaxman discover, the Yukon Gold oil well discovery and the sourdough oil Discovery all within this UNIT WHY NOT PRODUCE THIS OIL NOW? Stinson has 3,800 Barrels of oil and has equivalent WOW lots of oil at this gas field!

  • 1. The “bullet” line was/is an uneconomic boondoggle. Just the debt
    and equity returns on a $10 billion project would bankrupt Alaskans.
    2. The fight over Pt. T. was about Exxon lying for 30 plus years over
    its POD. Not “Walker’s antipathy.”

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