State receives AK LNG work; land issue unresolved

  • Wednesday, December 21, 2016 10:06pm
  • News

The State of Alaska is now halfway to officially leading the Alaska LNG Project after the Alaska Gasline Development Corp. board unanimously approved a resolution Wednesday afternoon authorizing the state corporation to take ownership of the $600 million worth of information gathered on the project to date.

The resolution also gives AGDC the ability to formally notify the Federal Energy Regulatory Commission, or FERC, that BP, ConocoPhillips and ExxonMobil will be withdrawing from the project’s application to the agency and the quasi-state agency will “carry on the project from there,” AGDC President Keith Meyer said.

Board chair Dave Cruz called it “another monumental day for AGDC,” as the action ostensibly gives the corporation free rein over the two-plus years of pre-front end engineering and design, or pre-FEED, work led by ExxonMobil that wrapped up late this year.

Most of the roughly $600 million spent on that work was put in by the producers, with the state contributing about 25 percent of the funding. However, the joint-venture agreement the project started under generally allowed for the parties remaining in the project if there was a change to the ownership structure to have access to pre-FEED information free of charge.

Earlier in the year Meyer said he hoped to have the project transition wrapped up by the end of the year and Wednesday’s action was a big step toward that goal.

The big issues that remain outstanding are agreements giving AGDC access to the 600-plus acres of land in Nikiski the producers purchased for the LNG plant and marine terminal, as well as access the project LNG export licenses held by the producers.

It is the general practice of FERC that AGDC must demonstrate access to the land before it can hold the export licenses.

“Those agreements will come next year,” Meyer said to the board.

Whether AGDC can work out a land access agreement with the producers or the state will have to directly buy the land from them remains to be seen. The producers have kept how much they spent on the parcels confidential.

Board member David Wight, recently appointed by Gov. Bill Walker and the former head of Alyeska Pipeline Service Co. expressed concern that the agreements for the pre-FEED information could hurt the state’s position in the land and license negotiations.

Other board members responded by saying the issue of negotiating leverage shouldn’t be discussed in the public meeting and would be best addressed in an executive session.

In a brief interview following the meeting Meyer said the years of pre-FEED work shifted the Alaska LNG Project cost estimate significantly — and in the right direction for the project proponents.

What was formerly a megaproject with a low-end cost estimate of $45 billion and an upper-end estimate of $65 billion is now a project with a cost where the “top end of the range is $45 billion,” Meyer said.

AGDC hopes the final cost can come down further through project financing arrangements that harness the state’s federal tax-exempt status among other things and Meyer is confident in the new figure.

“$600 million spent on a project gets you a pretty good cost estimate,” he said.

In the coming year AGDC will be focusing on its FERC license application for Alaska LNG, securing customers and in-turn the financing mechanisms that will be supported by customer contracts, Meyer added.

While the producers’ role in the future of the project isn’t clear, he said AGDC and ConocoPhillips continue to work on a joint venture to market the company’s and state’s shares of North Slope natural gas and if nothing more the three companies will hopefully be customers of the state’s project in some fashion.

Elwood Brehmer can be reached at

More in News

Sockeye salmon caught in a set gillnet are dragged up onto the beach at a test site for selective harvest setnet gear in Kenai, Alaska, on Tuesday, July 25, 2023. (Jake Dye/Peninsula Clarion)
Board of Fish proposals center on king salmon, east side setnet fishery

Many proposals describe changes to the Kenai River Late-Run King Salmon Management Plan

Jake Dye/Peninsula Clarion
Senior Prom King and Queen Dennis Borbon and Lorraine Ashcraft are crowned at the 2023 High Roller Senior Prom at Aspen Creek Senior Living in Kenai, Alaska, on Friday, Sept. 22, 2023.
Senior prom crowns king and queen

In brainstorming options, the concept of putting on a prom turned some heads

A photo distributed by the Federal Bureau of Investigation shows a man who allegedly robbed the Global Credit Union branch located in Anchorage, Sept. 19, 2023. Tyler Ching, 34, was arrested last week on charges related to robberies at the credit union and an Anchorage bank. (Photo courtesy Federal Bureau of Investigation)
Alleged bank robber arrested in Cooper Landing

An Anchorage resident was arrested by the Federal Bureau of Investigation in… Continue reading

A seal rescued earlier this summer by the Alaska SeaLife Center awaits release on the North Kenai Beach in Kenai, Alaska, on Saturday, Sept. 23, 2023. (Jake Dye/Peninsula Clarion)
2nd harbor seal release draws large crowds

The seals were Pierogi, Pringle and Belle de Fontenay

Attendees search the waters of the Kenai River for sightings of Cook Inlet belugas during Belugas Count! at the Kenai Bluff Overlook in Kenai, Alaska on Saturday, Sept. 23, 2023. (Jake Dye/Peninsula Clarion)
Belugas Count! celebrated in Kenai

At a viewing station on Kenai’s bluff overlook, dozens gathered and peered out over the Kenai River during a morning session

Kenai Peninsula Borough School District Finance Director Elizabeth Hayes, left, gives a presentation on the school district’s FY23 budget at Soldotna High School on Thursday, Oct. 8, 2021, in Soldotna, Alaska. Hayes during the KPBSD Board of Education’s Sept. 11, 2023, meetings, debuted first of an informational “Budget 101 Series.” (Ashlyn O’Hara/Peninsula Clarion)
School district warns of looming $13 million deficit in first ‘Budget 101’ presentation

The first installment explored Alaska’s foundation formula

Clockwise from bottom left: U.S. Army Corps of Engineers Alaska Division Commander Col. Jeff Palazzini, Gov. Mike Dunleavy, Kenai Mayor Brian Gabriel, Kenai City Manager Terry Eubank and Assistant Secretary of the Army for Civil Works Michael Connor participate in a signing ceremony for a project partnership agreement for the Kenai Bluff Stabilization Project at the Kenai Senior Center on Monday, Sept. 25, 2023, in Kenai, Alaska. (Jeff Helminiak/Peninsula Clarion)
Bluff stabilization agreement signed

The agreement allows the project to go out to bid and construction to begin

Lyndsey Bertoldo, Penny Vadla and Jason Tauriainen participate in a Kenai Peninsula Borough School District Board of Education candidate forum at the Soldotna Public Library in Soldotna, Alaska, on Monday, Sept. 25, 2023. (Jake Dye/Peninsula Clarion)
School board candidates tackle budget deficits, home-schooling, school maintenance

The discussion was the first of two forums featuring KPBSD school board candidates

Jake Dye/Peninsula Clarion
Brad Snowden and Julie Crites participate in a Seward City Council candidate forum at the Seward Community Library in Seward on Thursday.
Seward council candidates discuss issues at election forum

Participating in Thursday’s forum were Julie Crites and Brad Snowden

Most Read