Deal to buy North Slope gas boosts Alaska Gasline prospects, but hurdles remain

The Trans-Alaska Pipeline runs alongside nan Dalton Highway adjacent nan Toolik Field Station connected June 9, 2017, successful nan North Slope Borough. A projected state pipeline would travel overmuch of nan lipid pipeline’s route. (Rashah McChesney/Alaska’s Energy Desk)

The authorities entity moving towards a earthy state pipeline from nan North Slope to Southcentral Alaska says it’s taken an early measurement towards making nan long-planned statement a reality. 

The Alaska Gasline Development Corp. announced Tuesday it’s signed a woody pinch a London-based lipid and state patient to proviso capable state to meet request successful Southcentral, and past some. But nan task still faces a number of hurdles.

The state income precedent agreement, arsenic it’s known, is portion of nan Alaska Gasline Development Corp.’s renewed effort to build nan $44 cardinal task successful stages: first, a pipeline to Southcentral to reside a projected shortfall successful Cook Inlet state accumulation — and then, down nan road, a liquefied earthy state export terminal to proviso markets crossed nan Pacific. 

AGDC President Frank Richards says nan $10.7 cardinal in-state statement could stave disconnected nan worst of a looming earthy state shortage for nan Railbelt and moreover trim power prices from their existent levels successful nan longer term. 

“This is nan first opportunity for a caller improvement for state proviso to beryllium capable to meet Alaska’s in-state needs coming from nan North Slope, extracurricular of nan long-produced earthy state resources successful Prudhoe Bay and Point Thompson,” Richards said by telephone Tuesday.

Under nan agreement, a subsidiary of Pantheon Resources would supply arsenic overmuch arsenic 500 cardinal cubic feet of earthy state per time for nan pipeline. 

Sen. Bill Wielechowski, D-Anchorage, a longtime protagonist of nan gasline project, welcomed nan news.

“For years, 1 of nan problems that we’ve had pinch immoderate state pipeline is getting patient state waste commitments, and this appears to do that,” he said by phone. “It’s a beautiful important magnitude of state to get america started, and I deliberation it’s a very affirmative development.”

But there’s a agelong measurement to go, and immoderate are skeptical, for illustration erstwhile national gasline coordinator and newspaper patient Larry Persily.

“No one’s putting thing astatine risk. No one’s spending immoderate money. It’s conscionable different letter,” he said. “The gasline, complete nan decades, has walls papered pinch letters for illustration this.”

Persily is skeptical because nan statement is conditional, he said: AGDC will bargain nan state if it builds a statement and if Pantheon’s task moves forward. And neither of those is simply a judge thing.

In 2018, AGDC secured akin state proviso commitments from BP and ExxonMobil. But those person agelong since expired. That’s because nan biggest situation for nan gasline hasn’t been supply, but demand.

Until earlier this year, AGDC was targeting export markets. Utilities successful Japan and Korea and crossed nan Pacific Rim would finance nan pipeline. But those efforts person grounded — astatine slightest truthful far.

With its caller attack targeting an in-state statement first, Richards says AGDC is looking to trim nan consequence for export customers who person been reluctant to invest. Instead, Richards says AGDC is looking for commitments from Alaska utilities to bargain astir 75 cardinal cubic feet of state per year, astir nan full state request for nan full Railbelt this year. 

It’s besides looking for an business customer successful nan authorities to return different 50 cardinal cubic feet. Richards says AGDC is successful “discussions” pinch utilities and business customers, but nan developer has yet to denote immoderate patient commitments. And nan timepiece is ticking: Under unit from lawmakers, AGDC’s committee told legislators successful April that if it couldn’t find investors for astatine slightest nan in-state pipeline by nan extremity of this year, nan corp would shut itself down.

“If AGDC fails to unafraid backing for nan full task aliases for nan first pipeline shape of nan task by that date, we person instructed AGDC unit to initiate nan activity required to unopen down and either waste Alaska LNG task assets aliases put them into storage,” sounds nan April 22 letter first reported by nan Anchorage Daily News.

The lipid and state imaginable that would substance nan recently announced statement besides faces uncertainty, but Pantheon’s main commercialized officer, erstwhile Department of Revenue commissioner Pat Galvin, said he’s assured nan institution will beryllium capable to clasp up its extremity of nan bargain. Along pinch gas, nan institution hopes to nutrient astatine slightest 20,000 barrels of lipid per time by nan extremity of 2028 from its Ahpun field, according to Tuesday’s news release.

“The economics of nan task look highly positive, and a task that should beryllium capable to beforehand rather quickly,” Galvin said by phone.

But earlier nan section starts production, it faces a agelong roadworthy up filled pinch stumbling blocks. It’ll require permits from authorities and national authorities — including a lengthy reappraisal and an extended biology effect connection nether nan National Environmental Policy Act, Galvin said.

But nan project’s location on nan Dalton Highway 15 miles southbound of Deadhorse puts it acold from villages, subsistence areas aliases delicate habitats, he said. 

“At nan extremity of nan day, we’re successful a overmuch different location than nan much caller lipid and state developments connected nan North Slope,” he said.

Pantheon expects to make a last finance determination by nan extremity of 2027 aliases early 2028. And if each goes according to plan, AGDC says nan statement could supply state to Southcentral by 2029.