AGDC said in a statement that the Alaska Industrial Development and Export Authority (AIDEA) has approved a resolution to negotiate a letter of credit with AGDC to backstop the FEED costs on Alaska LNG Phase 1, the in-state pipeline portion of Alaska LNG.
This resolution brings Alaska a “critical step” closer toward a privately funded in-state natural gas pipeline, it said.
According to AGDC, the letter of credit will allow the company to unlock up to $50 million in private investment needed to move the Alaska LNG pipeline through FEED, the remaining development stage that must be completed before a final investment decision can be made.
AGDC said it is in “advanced discussions” with potential project partners to privately fund and complete FEED and will announce updates when new developments occur.
“The letter of credit for FEED will only be utilized if a final investment decision is not reached, at which time AGDC will own the completed pipeline engineering and design work,” it said.
AGDC noted that Alaska is facing a looming energy crisis and Alaska LNG represents the best long-term energy solution for this issue.
“The Alaska LNG pipeline will deliver reliable, affordable, low-emissions energy and uniquely provide billions of dollars in economic benefits for Alaskans,” the company said.
In addition, building the Alaska LNG pipeline also “strategically positions Alaska to increase the energy security of our Pacific allies by derisking construction of the other Alaska LNG components that will generate and commercially export LNG,” the company said.
LNG project
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 previously said that 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.
Pantheon deal
London-based Pantheon Resources welcomed AGDC’s announcement in a separate statement saying the resolution is a “key step” to securing private investment in the project and moving to FID.
Pantheon owns the Kodiak and Ahpun oil and gas fields in Alaska.
In June, AGDC and a unit of Pantheon signed a gas sales precedent agreement, which includes, among other conditions, a requirement for the Alaska LNG project to reach FID.
“The value of a take or pay contract under a gas sales Agreement based on the terms of the GSPA, if finalized, could potentially allow Pantheon to secure funds required to cover capital costs from the point of Ahpun FID to cash-flow self-sufficiency,” the company said.
