Alaska’s gas line agency and an oil and gas company with promising prospects on the North Slope have taken a significant step towards a deal that could potentially supply gas to the $44 billion Alaska LNG project. On Tuesday, a subsidiary of Pantheon Resources, a company with a strong track record, signed a gas sales precedent agreement with 8 Star Alaska, a subsidiary of the Alaska Gasline Development Corp. If successfully implemented, this agreement could bring a steady gas supply to the project, paving the way for its successful operation.
According to the statement, the agreement primarily aims to supply gas for the initial gas line export project phase. This first phase, estimated at $11 billion, is intended to deliver North Slope gas to mitigate an impending shortage of Cook Inlet natural gas, which has historically provided heat and electricity to Anchorage and other state regions.
Frank Richards, AGDC president, emphasized the agreement’s significance, stating that it “solidifies the commercial foundation” for the initial phase. He further noted that it “ensures a sufficient supply of pipeline-ready natural gas at favorable consumer rates, addressing Southcentral Alaska’s impending energy shortage by 2029.” This reassures us of the project’s progress and potential to meet the region’s energy needs.
According to the statement, the agreement outlines key commercial terms for a binding gas sales contract that will be negotiated, including Pantheon’s commitment to supply up to 500 million cubic feet of gas per day. However, significant uncertainties remain with the plan.
Based in London, Pantheon Resources does not produce the required natural gas for the project. The company is focused on developing the Ahpun prospect and a nearby project on Alaska’s North Slope.
The company has yet to make the final investment decision to develop the Ahpun field for oil and gas production. Additionally, the Alaska LNG project has been grappling with the challenge of securing investments from potential private partners to cover project costs. Private funding is also crucial for the initial project phase. Although the agency has previously signed preliminary gas agreements with significant oil and gas producers, the project has encountered ongoing difficulties. This underscores the urgency and importance of addressing the funding issue to ensure the project’s continuity.
The Alaska LNG project, led by the state, involves an 800-mile pipeline transporting natural gas from the North Slope to Southcentral Alaska, where it will be liquefied and exported to Asian markets via oceangoing tankers. This year, the gas line agency proposed a new pipeline-first strategy to lawmakers to advance the entire project. This approach initially prioritizes the pipeline’s construction, with plans to develop other necessary infrastructure to facilitate gas exports.
The Alaska LNG project, which has been underway for approximately ten years, saw top board members of the gas line agency requesting additional funding from the Legislature in April to sustain its progress. Should the agency fail to secure the financing of either the entire project or its initial pipeline phase, staff members have been directed to cease project operations by the end of this year, as stated in a letter.
