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June 2019

Vol. 24, No.23 Week of June 09, 2019

BP, ExxonMobil each contributing $10 million toward LNG certification

Kristen Nelson

Petroleumn News

Lt. Gov. Kevin Meyer announced May 30 in Anchorage at the Alaska Oil and Gas Association’s annual conference that BP and ExxonMobil are each contributing up to $10 million toward getting the Alaska LNG project through Federal Energy Regulatory Commission certification.

Meyer said the Alaska Gasline Development Corp. estimates it will take another year and $30 million to obtain the FERC permit. He noted that in addition to making the financial commitment, the companies had already been providing subject-matter expertise in the permitting process and assisting with the ongoing economic analysis to determine whether the project can be made more competitive.

“This is a welcome announcement and an important step for the Alaska LNG project, as they can now have confidence they have the resources to complete the FERC process,” U.S. Sen. Lisa Murkowski, R-Alaska, said in a June 3 statement.

When BP and ExxonMobil signed a collaboration agreement with AGDC earlier in the year, AGDC said the agreement was “to collaborate on ways to advance the Alaska LNG project by working together to identify ways to improve the project’s competitiveness, and progress the Federal Energy Regulatory Commission authorization to construct the project.”

BP and ExxonMobil previously signed gas sales precedent agreements with AGDC - BP in May 2018 and ExxonMobil in September - but until the collaboration agreement they had not been directly involved since the state took over the Alaska LNG project in 2016.

“Our respective organizations share an interest in the successful commercialization of Alaska’s stranded North Slope natural gas. BP and ExxonMobil possess world-class LNG expertise which may help AGDC responsibly advance this project with maximum efficiency for the benefit of Alaskans, and I welcome their collaboration,” AGDC Interim President Joe Dubler said in a March statement announcing the collaboration agreement.

Later in March, Dubler told legislators in an update to the House and Senate Resources committees that both technical and commercial issues would be reviewed under the collaboration agreement.

A technical meeting was scheduled for Houston in early April, he said, with the goal of lowering the total installed cost of the project.

At an AGDC board meeting in May, Frank Richards, AGDC senior vice president of program management, said the goal of the April workshop was cost reduction, because the last cost estimate for the project was based on 2015 numbers. He said the workshop looked at new market conditions, technology advancements - opportunities for cost reduction. Richards called the output of the three-day workshop positive, with multiple engineers from each organization attending, along with a commercial person from each group.

AGDC changed direction after Mike Dunleavy was elected governor, with the two new commissioners from the new administration and the replacement of two public members of the board by Dunleavy. The board then reorganized, dismissed the previous president of AGDC, Keith Meyer, and named Dubler interim president.

The project also returned to a stage-gate process, where the opportunity to go forward or not occurs at predetermined points. It was at a stage-gate when BP, ConocoPhillips and ExxonMobil, then partnered with the state in the project, determined they did not wish to continue, and the state, under then-Gov. Bill Walker, continued with the project on its own.

- KRISTEN NELSON






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