AGDC signs with Chinese

Deal among 15 inked during Trump visit; development agreement terms not revealed

Steve Quinn

For Petroleum News

Gov. Bill Walker and Alaska Gasline Development Corp. President Keith Meyer went to China to strike a deal to market liquefied natural gas and they got one - sort of.

Alaska signed a development agreement with potential gas buyer Sinopec, lender Bank of China and investor China Investment Corp. Potential being the operative word.

They did so in front of respective presidents Donald J. Trump and Xi Jinping. It was among 15 trade deals, according to a White House release.

“Support at the highest level from both countries is very, very important,” Walker said in a conference call with reporters. “It’s the beginning of what we hope is a long relationship between these companies and Alaska. This is the market responding.”

A lot of work remains between now and next year, said AGDC President Keith Meyer, who joined Walker in China and on the conference call.

“We’ve got a year ahead of us where we are looking at moving into definitive agreements and carving out the role of each of the parties,” Meyer said.

Meyer added he believes AGDC could reach final investment decision by the first quarter of 2019 so construction can begin by the end of that year.

He said he expects to release the newly signed development agreement sometime within a week.

What’s still missing are: an agreement to the scope of work to be done; funding - how much and from whom, including questions over whether the Legislature needs to appropriate more money at a time when they face a $2.8 billion budget gap; a lead engineering and procurement contractor, also known as an EPC; a specified volume of gas to be purchased because Sinopec is not expected to be the lone buyer, rather it will take between 10 to 20 buyers for a successful project.

Former federal pipeline coordinator Larry Persily said the deal is still akin to a memorandum of understanding - nonbinding.

“This is another one of those things where we are going to walk in the same direction,” he said. “We aren’t really holding hands and we aren’t going steady, but we are still walking in the same direction.

“I’m not going to say it’s nothing because it’s nice to have potential partners, customers, and investors,” Persily said. “I think a lot of it was politics on the part of the Chinese. Regardless of what you think of communism, they know that making Trump happy makes their life easier.”