State reaches settlement on Point Thomson

The Parnell administration has reached a settlement on the Point Thomson gas fields that the governor says will help clear a path to an Alaska natural gas pipeline.

Point Thomson has been dormant or tied up in litigation for the past four decades, but it holds about 25 percent of North Slope natural gas.

Gov. Sean Parnell says the settlement ends the long-running litigation with ExxonMobil and other leaseholders.

“Alaskans’ resources will be produced from Point Thomson rather than remain locked underground,” Parnell said during a news conference Friday with Natural Resources Commissioner Dan Sullivan.

Parnell received a letter Friday, signed by the CEOs of Exxon, BP, and ConocoPhillips, agreeing to work with the Alaska Pipeline Parties (APP), including TransCanada, to get North Slope gas to market within the framework spelled out in the Alaska Gasline Inducement Act, or AGIA.

“This letter states that they are now formally aligned with the APP parties and have begun to undertake work together on the commercialization of North Slope gas with a specific focus on a large-scale LNG project from Southcentral Alaska,” Parnell said.

In the letter, the CEOs say gas development will require the state offer producers competitive and stable fiscal terms.

Sullivan told reporters the companies are “on the clock” and have agreed to firm timelines for gas production. He says without production the state will terminate the producers’ Point Thomson leases.

In the near term, the settlement calls for 10,000 barrels of oil be produced a day from Point Thomson by the winter of 2015 / ’16. Sullivan says the producers will build a 70,000-barrel per day pipeline connecting into the TransAlaska Oil Pipeline. The agreement also provides two windows for the producers to sanction a major gas project off the North Slope, with gas for instate use by 2019.

“Failure to do this work, or indication that this work has been abandoned, will result in automatic return of significant acreage to the state in 2015,” Sullivan said.