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AGDC board hears progress on year-end goal
Focus: advancing work with strategic parties, discussing participation with other interested entities; finalizing 8-Star structure
Kristen Nelson Petroleum News
The Alaska Gasline Development Corp. has a year-end goal to designate a new project sponsor for the Alaska LNG Project and transition from state control to new project leadership by June 30.
While the dream of moving Alaska North Slope natural gas to markets dates to the development of Prudhoe Bay in the 1970s, AGDC grew out of an effort, begun by the Alaska Legislature in 2009, to explore an in-state North Slope natural gas pipeline. AGDC was created in 2010 as a subsidiary of the Alaska Housing Finance Corp. and worked initially on the Alaska Stand Alone Pipeline project, geared to bring North Slope gas south for in-state use. In 2013 the Legislature established AGDC as an independent public corporation of the State of Alaska; for administrative purposes, AGDC is in the Alaska Department of Commerce, Community and Economic Development.
The Legislature expanded AGDC’s mission in 2014 to include developing an Alaska LNG project. AGDC filed an application for the Alaska LNG Project with the Federal Energy Regulatory Commission in 2017, FERC issued a draft environmental impact statement in 2019, a final EIS in March 2020 and an authorization to construct and operate the project in May 2020.
State takes over In a previous iteration of the Alaska LNG Project the state partnered with North Slope producers BP, ConocoPhillips and ExxonMobil. The project reached a stage-gate in 2016 following completion of preliminary front-end engineering and design and the industry partners declined to move into FEED based on economic issues.
Under former Gov. Bill Walker, AGDC then took over as the project’s sole proponent, working with state funding.
The direction of AGDC changed in 2018 when Gov. Mike Dunleavy was elected. He replaced a majority of the AGDC board and the new board replaced AGDC’s president and returned to a stage-gate process, abandoned under the Walker administration.
Under a strategic plan adopted by the new board, AGDC’s year-end goal is to designate a new project sponsor, with a transition to new project leadership by June 30.
Primary focus In AGDC President Frank Richards’ Nov. 5 update to the board, advancing a development agreement with strategic parties and discussing participation with interested entities topped the list, followed by finalizing the asset structure of 8-Star LLC and working with joint venture agreement parties to agree to future transfer.
In overheads prepared for the board meeting Richards said AGDC is targeting additional strategic parties with experience in LNG and major projects development.
The purpose of 8-Star, established in 2018, is to provide a vehicle for AGDC to transfer project ownership to the private sector.
Richards also said the project is being further optimized, with recent cost reductions putting Alaska LNG on a competitive footing with the lowest cost Gulf of Mexico projects, with higher infrastructure costs offset by lower gas supply and shipping costs.
But he noted the challenge of high capital requirements and a need for property taxes to be in line with competing projects, with fiscal certainty needed for investors to move forward.
Walker, Meyer AGDC has not released names of the strategic parties it has been working with as it moves to hand off the project to the private sector, but another entity has surfaced.
Former Gov. Bill Walker and former AGDC CEO Keith Meyer, along with Bernie Karl and Laborer’s Local 341, are the organizers of Alaska Gasline & LNG LLC, established Nov. 8, according to the Alaska Department of Commerce, Community and Economic Development corporation website.
The purpose is listed as: “Build a large volume integrated Trans Alaska gasline LNG project from the North Slope to tidewater.”
According to a story by Alaska’s Energy Desk, at a Nov. 9 press conference, the four organizers are the only current investors, and Meyer said if the state turns AGDC over to their venture, they aim to get the project built by 2028.
Meyer has previously presented a proposal to the AGDC board to take over the project.
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