ANCHORAGE (KTUU) - The Alaska Gasline Development Corporation says as many as 15 letters of intent have been signed with potential LNG buyers in Asian markets.
“I'm still waiting on a call from Kim Jong Un for that deal, it's not going to surprise me,” said AGDC board chairman Dave Cruz at a meeting with the Alaska legislature’s joint resources committee Wednesday morning.
“It has been absolutely amazing to see the reception and seriousness of these agreements that we're getting.”
AGDC, along with the Department of Revenue and the Department of Natural Resources, met with lawmakers at the Anchorage LIO to provide an update on the multi-billion dollar project seeking to monetize North Slope gas reserves.
In June, the project cleared a major regulatory hurdle after the Army Corps of Engineers issued a final environmental impact statement on another proposed pipeline, the Alaska Standalone Pipeline or ASAP, which AGDC refers to as the state’s backup plan to the LNG project.
The move was a significant milestone for both projects, which share 80 percent of the same route, and the state only plans to pursue one pipeline.
“We have a right-of-way from Prudhoe to Point MacKenzie area. We have a 404 wetlands permit. That is a huge milestone and I’m extremely proud of this corporation for getting it done,” Cruz said, adding that the permit took about four and a half years to obtain.
While the project is progressing slowly, many key decisions still have yet to be made, such as how the state will collect its royalty share of the gas sales: Royalty-in-Kind, Royalty-in-Value, or some combination of the two.
“I know the producers have expressed interest in the state selecting one and sticking with it for the initial project term. They have expressed that it will facilitate and support the project, AGDC has relayed that to us,” said DNR deputy commissioner Mark Wiggin.
Among the concerns raised by lawmakers was ensuring that the project results in a stable new revenue stream once constructed, rather than additional costs to the state. DNR senior project advisor Steve Wright said the department is looking at several options to mitigate the risk of scenarios like zero or even negative netback, which is the profit on each unit of oil brought to market.
“One of those mechanisms is developing a gas supply agreement with the Alaska Gasline Development Corporation which allows setting a minimal price provision in our agreements that would essentially set a floor that would ensure the DNR’s revenue that came from our royalty gas sales would never fall below a minimum level,” Wright told lawmakers.
According to AGDC’s presentation, the deadline for a draft environmental impact statement set by the Federal Energy Regulatory Commission is March of next year. That EIS will be subject to public comment before a final version is released in December of 2019.
Authorization for construction could potentially come in March of 2020.