Enough gas for all of Alaska by 2029 and for decades to come? It may be on the way.
As Cook Inlet faces a reduction of natural gas to supply the Railbelt, an agreement has been signed that could get a gasline built from the North Slope to Southcentral Alaska, which would complete one of three major aspects of the Alaska LNG project.
Pantheon Resources, owner of 100% working interest in the Kodiak and Ahpun oil and gas fields on the North Slope, and the Alaska Gasline Development Corporation announced on Tuesday that Pantheon subsidiary Great Bear Pantheon LLC has signed a gas sales precedent agreement with 8 Star Alaska LLC, a subsidiary of AGDC.
The agreement prioritizes the pipeline to Southcentral, and it de-risks the entire project, which involves both a gas treatment plant on the North Slope, and a liquefaction facility at tidewater in Nikiski. The agreement that was signed may de-risk the entire project by getting the pipeline in place first, making the other investments less risky for investors.
Alaska LNG is a federally authorized natural gas and LNG export project under development for years to deliver natural gas within Alaska and export up to 20 million tons per year of liquified natural. But right now the biggest need is for Alaskan homes businesses, and institutions.
AGDC wants the in-state 42-inch pipeline from the North Slope to Southcentral Alaska to avert a looming energy crisis facing the region.
Phase 1 of Alaska LNG does not involve construction of an LNG plant, and as a result has a much lower capital requirement and construction timeframe, allowing gas transportation as early as 2029, said AGDC, which is also in talks with a pipeline developer.
AGDC aims to undertake front-end engineering and design ahead of a final investment decision planned for the middle of 2025.
“This agreement solidifies the commercial foundation needed for the Phase 1 portion of Alaska LNG and provides enough pipeline-ready natural gas, at beneficial consumer rates, to resolve Southcentral Alaska’s looming energy shortage as soon as 2029,” said Frank Richards, AGDC President.
“Phasing Alaska LNG by leading with the construction of the pipeline will make Alaska LNG’s export components more attractive to LNG developers and investors, and this agreement will help unlock the project’s substantial economic, environmental, and energy security benefits for international markets as well as for Alaska. Today’s announcement represents the culmination of the committed work of Pantheon and AGDC leaders and enhances the prospects of Alaska LNG in a way that benefits both the State of Alaska and Pantheon,” he said.
“We are delighted to have the opportunity to create a win-win for the State of Alaska and for Pantheon as we turn the fantastic exploration & appraisal success of the past five years into the development of two giant oil and gas fields on Alaska’s North Slope. We are building a mutually beneficial long-term relationship with Alaska LNG and with the State which seeks to supply much needed gas required for Southcentral Alaska’s energy needs, while at the same time realising the value from our contingent resources exceeding 1.5 billion barrels of ANS blend and 6 Tcf of natural gas,” said David Hobbs, Pantheon Executive chairman.
“When we set out our strategy to achieve early production and cashflow on the path to financial self-sufficiency, we considered gas monetisation as a path to non-dilutive funding only one of several possibilities,” Hobbs said in a prepared statement. “However, the availability of our pipeline-quality associated gas created the opportunity to bolster the Alaska LNG project, including the pipeline, LNG export facilities and gas conditioning facilities. We are happy to be able to share the benefit, thereby enhancing both Pantheon’s and AGDC’s project economics and funding profiles. Our goal of demonstrating sustainable market recognition of $5-$10 per barrel of 1C/1P marketable liquids by end 2028 remains unchanged.”
Under the agreement, both parties agree to negotiate in good faith based on the agreed commercial terms. The final agreement will be conditioned on: AGDC and Pantheon making affirmative investment decisions for their respective projects; and required permits and regulatory approvals obtained for receiving gas from Pantheon’s fields into the Alaska LNG Project.
