State Unveils Plans To Take Equity Stake In Alaska LNG

25 Feb 2014: While non-binding, commercial agreements signed on January 14 confirm plans by the state of Alaska to join a liquefaction project based on reserves in the North Slope. The Heads of Agreement with ExxonMobil, ConocoPhillips and BP reserves an equity stake of 20-25% in Alaska LNG for the state, who will take its share of royalties and gas production tax in LNG and liquids rather than value under a Royalty in Kind concept that was first mooted last year and has since been embraced by Governor Sean Parnell and his administration (see LNGWM, Sep ’13). “This HoA implicitly acknowledges that the only way to get the risks and rewards aligned between the state and the producers is for Alaska to participate directly in the project,” notes one insider. A separate Memorandum of Understanding between the state and TransCanada that effectively terminates the Alaska Gasline Inducement Act was signed on the same day. AGIA had contemplated a gas pipeline to the Lower-48 states, an idea that died after the shale revolution, with TransCanada as Alaska’s licensee. The new MoU lays out plans for TransCanada to invest on the state’s behalf in the 800-mile feedgas line to tidewater as well as the gas processing facilities at Prudhoe Bay on the North Slope that will treat 3.5 Bcf/d of wellhead gas. Alaska’s designee, in turn, will pay TransCanada tariffs for processing the state’s share of this gas and transporting it to the liquefaction plant. Download here