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August 2018

Vol. 23, No.33 Week of August 19, 2018

AGDC board hears optimistic forecast

President Keith Meyer cites Cedigaz on elimination of natural gas surplus as early as 2022-23, says demand pull created for LNG

Kristen Nelson

Petroleum News

At a meeting Aug. 9, Alaska Gasline Development Corp. President Keith Meyer told the AGDC board that Cedigaz, the International Association for Natural Gas, is now forecasting that the liquefied natural gas market will see demand grow faster than expected, with surplus supply eliminated as early as 2022-23.

He said AGDC continues to engage in negotiations with the North Slope producers on gas supply agreements and noted that initial agreements are critical for project financing. AGDC and BP signed a gas sales precedent agreement in early May and said at that time that they anticipated finalizing a long-term gas sales agreement this year.

The supply picture is one of Alaska’s strongest points, Meyer said, noting that AGDC is working with the Department of Natural Resources on identifying fields which will be available to fill out the remainder of gas needed, beyond known resources at Prudhoe Bay and Point Thomson.

On financing, Meyer said an initial road show is planned for the fourth quarter of this year to describe the Alaska LNG investment opportunity to investment markets and said AGDC would be seeking equity commitments in the first quarter of 2019.

FERC

Frank Richards, AGDC’s senior vice president of program management, said the FERC schedule for the project has not changed from March, when the agency published it. Under the new FERC chairman staff there is being pushed to accelerate work, he said, and have authorizations for project developers to come in with third-party contractors to assist. The first for AGDC will be a third-party LNG fire protection review contractor. Richards said AGDC submitted a draft request for proposals for that position to FERC in early August.

He said the third-party contractor for the draft environmental impact statement, due out next March, is working on drafting that document, with chapters being developed.

Marketing

Lieza Wilcox, AGDC’s vice president of commercial and economics, discussed AGDC participation at the World Gas Conference, and said this was a concentration of industry in one place, with attendees generally being very senior people, making it a great opportunity for AGDC.

She said AGDC’s emphasis from a commercial point of view is stability of supply and long-term price stability. They had discussions with 17 potential buyers, Wilcox said, some of whom could also be potential project investors. Of the 15 companies with which AGDC has letters of intent, they met with 11, she said, and also had discussions with companies they’d met with previously who weren’t interested earlier. Of those, at least two now have interest, including one that surprised them - the meeting was just to check the box, but it turned out that the company was now interested in the project, Wilcox said.

As to why companies are interested, she said Alaska has a good global position close to the Asian LNG market and presents an opportunity to diversity supply.

Companies continue to come to Alaska for due diligence visits, Wilcox said, with two delegations in July, including visits to Prudhoe Bay and the Andeavor LNG plant in Nikiski.

Wilcox said the negotiations with suppliers are progressing rapidly and said AGDC sees earnest engagement from suppliers.

On the financing side, AGDC has had detailed meetings with Goldman Sacks since the last board meeting and is on track for a fourth quarter introduction of the project to equity markets.

Kenai files to intervene

Citing late intervention by the Matanuska-Susitna Borough, and defense of the proposed siting of the liquefied natural gas facility at Nikiski, the Kenai-Peninsula Borough on Aug. 10 moved for late intervention in the Federal Energy Regulatory Commission proceeding on the Alaska Gasline Development Corp.

The borough said it “has a direct and substantial interest in this proceeding that cannot be adequately represented by any other party,” and said in light of FERC’s granting of late intervention to the Matanuska-Susitna Borough, “it would be unjust, unreasonable and unduly discriminatory were the Kenai Borough denied intervention.”

The Kenai Borough is concerned by efforts of the Matanuska-Susitna Borough to have the location of the LNG facility shifted to that borough. Kenai told FERC that AGDC has indicated there will be more than 4,000 jobs in the Kenai Peninsula Borough during peak project construction and 250 permanent jobs once the facility is operational.

The borough said its mayor submitted a letter in the proceedings in January in support of the project, but the assembly at that time did not think it necessary to formally intervene. After it learned that the Matanuska-Susitna Borough had submitted a letter July 20 indicating it intended to file specific comments on the proceeding in favor of an alternative site, the assembly approved a resolution to seek intervention.

“The Kenai Borough requires the opportunity to respond, as a party in this proceeding, to any additional comments filed by the Mat-Su Borough or any other entity,” it told FERC.

- KRISTEN NELSON






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