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.
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:
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.