Alyeschem reaches FID; working on loan papers for petrochemical plant

Kay Cashman

Petroleum News

On Feb. 29, the Alaska Industrial Development and Export Authority, or AIDEA, and Alyeschem LLC announced a major milestone in the monetization of Alaska's North Slope stranded gas through the advancement of Alyeschem's petrochemical plant at Prudhoe Bay, the first petrochemical facility in the U.S. Arctic. The project could be a trigger for economic growth in the region.

AIDEA could ultimately invest as much as $70 million in the facility that would convert natural gas into two products that oil companies currently have to import to the North Slope: methanol and low-sulfur diesel.

In a recent interview with Petroleum News, Alyeschem CEO JR Wilcox said "AIDEA's board approved a term sheet and commitment letter for this loan late last year, contingent upon Alyeschem securing its equity funding. We have now achieved FID and are working with AIDEA to finalize the loan documents and close the loan."

Wilcox expects the loan to close by the end of June.

The minute that happens, he said, Alyeschem's contractor for the modular petrochemical plant is ready to start fabrication.

During the Feb. 29 AIDEA Board meeting in Juneau, Wilcox and AIDEA Executive Director Randy Ruaro signed key documents, including a cost reimbursement agreement and a loan promissory note, marking a significant step toward project fruition. Reaching FID is another major step.

This project represents several groundbreaking achievements for Alaska:

* First industrial manufacturing plant on the North Slope, pioneering industrial development in the region.

* Monetization of Alaska's stranded natural gas, unlocking economic potential and resource utilization.

* Job creation as Alyeschem's modular plant is expected to generate approximately 150 construction jobs and 15-20 full-time operational positions.

* Reduced traffic and infrastructure benefits in that the petrochemical plant is expected to remove some 4,000 trucks from the Haul Road, extending road life and reducing maintenance costs.

* Reduced environmental impact, in that it's anticipated to reduce 45,000 tons of CO2 emissions annually.

* Economic benefits because the facility is estimated to raise $5 million in annual tax revenue for the state and boroughs.

* Enhanced energy and oil production by providing natural gas for oil production, energy generation, and the production of low-sulfur diesel essential for oil operations.

* Support for the Trans-Alaska Pipeline by ensuring a reliable supply of critical resources for pipeline transport.

* Increased state revenue by generating manufacturing-based tax revenue to support further development.

"AIDEA was created to support projects just like this, and we are proud to see it moving forward," said Ruaro. "With strong backing from the North Slope Borough and a robust market for the methanol produced at this facility, we anticipate Alyeschem's success for decades to come."

Dana Pruhs, AIDEA Board Chair said "AIDEA's partnership in the project will generate revenue to support future development investments."

--KAY CASHMAN