State announces tentative deal with ExxonMobil to supply gas for Alaska LNG project

(left) Attorney General Jahna Lindemuth, ExxonMobil Alaska Production Manager Darlene Gates, Alaska Gov. Bill Walker, BP Vice President of Commercial Ventures Damian Bilbao, and DNR Commissioner Andy Mack, during a signing ceremony for the Gas Sales Precedent Agreement with ExxonMobil and the Point Thomson Letter Agreement between the State of Alaska, ExxonMobil and BP on Monday, September 10, 2018 at the Atwood Building in Anchorage, Alaska. (Photo courtesy/Gov. Bill Walker's office)

Attorney General Jahna Lindemuth (left), ExxonMobil Alaska Production Manager Darlene Gates, Alaska Gov. Bill Walker, BP Vice President of Commercial Ventures Damian Bilbao, and DNR Commissioner Andy Mack, during a signing ceremony for the Gas Sales Precedent Agreement with ExxonMobil and the Point Thomson Letter Agreement between the State of Alaska, ExxonMobil and BP on Monday, September 10, 2018 at the Atwood Building in Anchorage, Alaska.
(Photo courtesy/Gov. Bill Walker’s office)

In a hastily assembled, early morning press conference on Sept. 10,  state officials announced that they have settled on the terms of a gas sales agreement with ExxonMobil.

The agreement is not binding, but is intended to supply gas for the Alaska LNG project.

Though they would not share a copy of the agreement, officials say it contains key terms like the price for the gas and volume the company agrees to sell into the Alaska LNG project, which would build a pipeline to bring gas from the North Slope to Cook Inlet for export.

The state and its Alaska Gasline Development Corporation are negotiating at both ends of the proposed pipeline, including final agreements to buy gas from producers and contracts for buyers for that gas.

The gas sales agreement is also linked to production at the massive Point Thomson field on the North Slope. Exxon operates the field, though BP is a major owner as well.

Production at the field has been a point of contention between the state and the oil companies for decades. A 2012 legal agreement set a timeline for bumping up production. Now, the state has agreed to suspend that timeline — so long as ExxonMobil and BP continue to negotiate gas sales agreements for the Alaska LNG project.

The gasline corporation still needs to secure the federal and state permits to build the $45 billion project.  It wants a final investment decision by 2019 — so it can break ground that year and bring the project online by 2025.

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