COMMENTARY: Gasline deals put Alaska on cusp of opportunity
Last Monday was a big deal.
Fellow Alaskans, I want to share in collective celebration the significant milestone Alaska reached last Monday, Sept. 10. The Alaska LNG Project is now a compelling step closer to bringing Alaska’s vast stranded natural gas to market. We are closer to significantly lowering the cost of energy for thousands of Alaskans; closer to creating 12,000 direct construction jobs that will put Alaskans to work building the gas pipeline project; and closer to providing thousands of indirect support jobs.
There are two components now in place that advance the Alaska LNG project. First, we are building momentum for ExxonMobil to sell its share of natural gas, from both its Point Thomson and Prudhoe Bay fields.
ExxonMobil and the Alaska Gasline Development Corp. signed a binding agreement establishing terms for the price and volume of gas they’ll commit to the Alaska LNG project. BP Alaska signed a similar agreement earlier this summer.
Second, we signed a letter of understanding with ExxonMobil and BP to re-align the 2012 Point Thomson settlement agreement, pausing deadlines in order to calibrate the pace and scope of work of Point Thomson’s development to match the Alaska LNG project.
Why is this significant? ExxonMobil operates the Point Thomson field, controlling a 62 percent share of its natural gas. They also control a 36 percent share of nearby Prudhoe Bay. This makes ExxonMobil the largest holder of discovered gas resources on Alaska’s North Slope. By adjusting the deadlines for production at the Point Thomson field to match the Alaska LNG project, combined with ExxonMobil’s commitment to sell its gas to Alaska, we have an economic win-win.
Monday’s events have enhanced significance because they turn Point Thomson into an oil producing field. As it stands, Point Thomson is one of the largest stranded gas fields in the world. It is also highly pressurized, with at least three times the pressure of Prudhoe Bay.
This pressure poses a massive engineering challenge because when drilling for oil, it is incredibly difficult to reinject the gas into the ground without losing vast amounts of it. When the gas is lost, the potential for profit is lost — for ExxonMobil, and for Alaska.
The Alaska LNG project offers ExxonMobil an opportunity to sell the gas at Point Thomson, instead of reinjecting it into the ground, which in turn will liberate up to 70,000 barrels of oil every day. That’s a 15 percent boost in total barrels flowing through the Trans-Alaska Pipeline each day, creating revenue for our state.
The bottom line: because of the Alaska LNG project, the gas at Point Thomson stops being an obstacle and becomes an asset. Access to Point Thomson makes oil and gas more competitive across the North Slope, creates revenue for Alaska from the harbored underground gas, and allows easier access to the oil trapped by high-pressured gas.
To go a step further, Point Thomson is on the doorstep of ANWR. Building out the infrastructure necessary to bring the oil and gas to market from Point Thomson puts us in a better position for the future development of ANWR.
This is great news for the Alaska LNG project, and great news for the state.
For the first time in our history, a majority of the North Slope gas producers — BP Alaska and now, ExxonMobil — have agreed to terms for the sale of gas into the Alaska LNG project. This step is an important layer as we build the momentum for bringing Alaska’s stranded gas resources on the North Slope to Alaskans and the world market.
This news comes less than a year after President Donald Trump and President Xi Jinping witnessed the signing of the five-party Joint Development Agreement to monetize Alaska’s natural gas. Together, with Monday’s ExxonMobil agreement, the Alaska LNG project has made more progress, and established more project certainty than any previous effort, facilitating the final commercial and financial steps necessary for completing the project.
I cannot impress upon you enough the opportunities the gas line project will bring to Alaskans. Tens of thousands of direct and indirect jobs, well-paying jobs, access to stable low-cost clean energy, a diversification of state revenue, the list goes on.
These are changes that will affect Alaskans personally. My life changed forever when the first pipeline was built: I still remember the feeling of receiving my first construction paycheck back in 1970. But getting TAPS from plan to reality took creativity and courage — not to mention a healthy dose of resilience in the face of those who called it a pipe dream.
But those are the same ingredients we’re working with today to move the Alaska LNG project forward. Stakeholders are moving into position, the economics are in our favor, and we have the drive and focus to make this project happen.
Alaska is on the cusp of opportunity. I could not be more excited.
Editor’s note: The Alaska Journal of Commerce will publish up to two op-ed submissions from the candidates for governor between now and our Oct. 21 edition. Although this submission came from Gov. Walker’s office and not the campaign it will count as one of his two.