Alaska Gasline Development Corporation, the state-owned developer of the Alaska LNG export project, has signed a gas sales precedent agreement with a unit of Pantheon Resources.
AGDC’s unit 8 Star Alaska and Pantheon’s subsidiary Great Bear Pantheon entered into the GSPA, according to a joint statement issued on Tuesday.
The GSPA contains the key commercial terms to be incorporated into the binding take-or-pay gas sales agreement (GSA) to take effect after a final investment decision (FID), the partners said.
Pantheon owns the Kodiak and Ahpun oil and gas fields in Alaska.
Alaska LNG is a federally authorized integrated natural gas and LNG export project under development to deliver natural gas within Alaska and export up to 20 million tonnes per annum of LNG.
The facility would have three LNG trains, two 240,000-cbm storage tanks, and two jetties to accommodate LNG carriers up to 217,000 cbm.
AGDC received all major federal permits and authorizations for Alaska LNG. It secured an approval from the US FERC back in May 2020 to construct the project.
The company said in the statement it is pursuing an option to phase Alaska LNG by prioritizing the in-state pipeline portion of Alaska LNG consisting of the 42-inch pipeline from the North Slope to Southcentral Alaska to provide natural gas to avert the looming energy crisis facing the region.
Phase 1 of Alaska LNG does not involve construction of an LNG plant, and as a result has a materially lower capex requirement and construction timeframe, allowing gas transportation as early as 2029, it said.
AGDC is aiming to undertake front end engineering and design ahead of a final investment decision planned for the middle of 2025, it said.
“Phasing Alaska LNG by leading with the construction of the pipeline will make Alaska LNG’s export components more attractive to LNG developers and investors, and this agreement will help unlock the project’s substantial economic, environmental, and energy security benefits for international markets as well as for Alaska, Frank Richards, AGDC president, said.
Under the GSPA, Pantheon agreed to supply up to 500 million cubic feet per day (mmcfd) of natural gas at a maximum base price of $1 per mmBtu in 2024 dollars.
Also, plateau natural gas deliveries will last for 20 years, with the potential for extension beyond that initial term.
“The State of Alaska has several options to reduce the natural gas unit price significantly by working with Pantheon to reduce the cost of project financing and/or enable other commercial opportunities, as specified in the GSPA,” the statement said.
The GSA remains conditional on AGDC and Pantheon making affirmative FIDs for their respective projects, as well as obtaining required permits for receiving gas from Pantheon’s fields into the Alaska LNG project.
The partners said that the GSPA is primarily focused on the potential Phase 1 portion of the Alaska LNG project, but it also creates opportunities for Pantheon to benefit as the full integrated Alaska LNG project, including LNG exports, is completed.
The initial term of the GSPA is until June 30, 2025 or until the definitive GSA is executed, they said.
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