BP has agreed to sell its gas holdings to AGDC
FAIRBANKS—One of Alaska’s three major energy companies has signed a historic agreement to sell its massive gas holdings to the Alaska Gasline Development Corp., a state-owned entity that is proposing to build a $43 billion Alaska liquefied natural gas project.
The BP-Alaska agreement marks the first time that a company has signed a pact to sell its gas into the Alaska LNG project.
The major North Slope producer and the state-owned corporation in charge of bringing a long-sought North Slope natural gas project to fruition signed a binding gas sales precedent agreement in May.
BP holds a 26 percent interest in and is the operator of the Prudhoe Bay oil and gas field. It also holds a 32 percent stake in the Point Thomson gas field, which is operated by majority owner ExxonMobil. With roughly 24 trillion cubic feet of gas in Prudhoe Bay and another 6 tcf of gas available in Point Thomson, BP has rights to about 7 tcf of gas from the fields, net of royalty.
The company has also aided AGDC in advancing the Alaska LNG Project since the state took control of the project from the producers in January 2017.
“BP has a long history in Alaska and Prudhoe Bay,” said BP CEO Bob Dudley. “We are very pleased to be part of the state’s vision to bring Alaskan natural gas to new and expanding markets globally. We think this is good for the state, good for BP and good for the environment.”
Speaking with American Gas, Lieza Wilcox, AGDC’s vice president of commercial and economics, said, “The primary impact of this project is the realization of a long-term plan to monetize the gas resource of the North Slope. Alaska is an export state; most of our state’s revenue comes from our resources. Residents rely on the state budget to provide them with education, roads, public safety services and other benefits. The North Slope gas is going to be a new revenue source for the state. … Another benefit is economic development. The new pipeline will go through the center of the state. That means jobs. And then there is the benefit of providing natural gas to thousands of residential and commercial customers.”
Wilcox also noted that the pipeline will reduce reliance on trucked LNG in some parts of the state.
AGDC President Keith Meyer said, “We have secured the customers; we have progressed on the pipeline build with regulators and the finance community and now we have a commitment that there will be gas to sell and put through the pipeline.”
“This is a long-term construction project,” Wilcox said. “We anticipate starting construction in 2020. Final approval is expected in the first quarter of 2020. In the meantime, we’re lining up commercial, financial and engineering support. The project is expected to deliver gas in 2024/2025.”