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State signs LNG MOU with Japan; LNG project pre-files with FERC
The Alaska LNG Project and the state of Alaska have taken steps to move the project forward.
The partners in the Alaska LNG Project have submitted a formal request to the Federal Energy Regulation Commission to start the pre-file process for the project, the companies said in a Sept. 8 statement.
Later that same day the governor’s office issued a statement confirming news reports that the state and Japan’s Ministry of Economy, Trade and Industry had signed a memorandum of understanding on the Alaska LNG Project and other Alaska natural resource development opportunities. Natural Resources Commissioner Joe Balash signed for the state.
As the basis for its equity participation in the Alaska LNG Project, the state is taking its royalty gas in kind and taking its production tax as gas, and will be discussing sale of that gas with the markets.
The MOU with Japan’s Ministry of Economy, Trade and Industry “is yet another key milestone in the State’s rapid advancement of the commercialization of our world-class North Slope natural gas resources - to Alaskans first and then to markets beyond,” Gov. Sean Parnell said in the statement.
“It is an extremely positive development that the government agency that sets Japan’s energy policy and works closely with Japan’s utility market has taken a strong interest in the Alaska LNG Project and the state’s overall natural resources portfolio,” Balash said in the statement.
Initial 2-year MOU The memorandum of understanding, signed by Balash and Commissioner Takayuki Ueda of METI’s Agency for Natural Resources and Energy, is a two-year agreement subject to renewal for additional two-year terms at the request of either party; either party may also terminate with 30 days notice.
The parties agree to share information on the Alaska LNG Project, described as a project “which has the potential to become a reliable and competitive supplier of LNG to Japan.” Further, the MOU is described as continuing “the strengthening of economic cooperation between Japan and Alaska.”
The state signed an MOU in 2013 with the Japan Bank for International Cooperation. That MOU says the bank “has expressed interest in contributing and supporting the organizing from an early stage of projects to be implemented by Japanese companies in the State of Alaska that meet JBIC’s financial policy and requirement.”
JBIC’s mission is described in the MOU as promoting overseas development of resources strategically important to Japan, maintaining the competitiveness of Japanese industries, promoting overseas projects for conserving the global environment and responding to financial disruption in the international economy.
Both MOUs provide that the parties will meet from time to time and that information exchanged will be confidential.
Groundwork The Alaska LNG Project formally entered the pre-front end engineering and design, or pre-FEED, stage in July, during which hundreds of millions of dollars will be spent on design and engineering, and the producers and the state will begin to engage the LNG market.
The Alaska LNG Project partners - BP, ConocoPhillips, ExxonMobil, TransCanada and the Alaska Gasline Development Corp. - said the FERC process lays the groundwork for the environmental review required for the siting, design and permitting for project construction, while supporting summer field work continues for a second season as part of pre-FEED.
“We look forward to leveraging the extensive strengths of all the parties involved in the FERC pre-file process,” Steve Butt, Alaska LNG senior project manager, said in the project statement.
Field work The second summer of field work, part of the $500 million pre-FEED phase, is almost complete, the project said. Some 250 people were employed collecting data to support environmental permitting for the project and routing and siting of project facilities.
The project said the majority of the work was focused along the pipeline route south of Livengood to the proposed liquefaction facility site in Nikiski.
Proposed facilities include transmission lines from Prudhoe Bay and Point Thomson to a gas treatment plant on the North Slope, an 800-mile pipeline with up to eight compression stations and at least five off-take points for in-state natural gas delivery and the liquefaction facility at Nikiski.
First briefing slated In related news, the House and Senate Resources committees have an Alaska LNG Project update briefing scheduled Sept. 29 at 1 p.m. at the Anchorage temporary Legislative Information Office.
This briefing is a requirement of Senate Bill 138, the enabling legislation for the state’s equity participation in the LNG project.
The statutory requirement reads: “Before the first flow of gas in a North Slope natural gas project developed under the authority of this Act, the parties to the project shall, at least once every four months, provide briefings to interested legislators, legislative staff, and legislative consultants on the progress of a North Slope natural gas project developed under the authority of this Act.”
A written report from the Department of Natural Resources is also required on “the amount of money the state may be obligated to pay a third party” under provisions of SB 138 if the project is terminated before the first flow of gas.
- Kristen Nelson
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