Earlier this year, the APP partners agreed on a work plan aimed at commercializing North Slope natural gas resources within an Alaska Gasline Inducement Act (AGIA) framework. Because of a rapidly evolving global market, large-scale liquefied natural gas (LNG) exports from south-central Alaska would be assessed as an alternative to a natural gas pipeline through Alberta, the partners said.

I’m encouraged that the companies have made significant progress in advancing a project and an associated schedule for commercializing North Slope gas. Clearly, they have fully shifted their efforts to an Alaska LNG project.

—Governor Parnell

The companies’ new letter addresses a critical benchmark that Governor Parnell laid out in his January State of the State address, calling on the companies to harden the numbers on an LNG project and identify a project timeline by the end of the third quarter.

Over the past six months, more than 200 employees from the four companies have been working on managerial, technical, and commercial aspects during this phase of the project schedule, according to the letter. The focus of the work includes:

• Developing a design basis for the pipeline, including areas of continuous and discontinuous permafrost;

• Investigating multiple ways to remove and dispose of CO₂ and other contaminants;

• Assessing use of existing and addition of new Prudhoe Bay field facilities;

• Mapping multiple pipeline routing variations;

• Assessing multiple pipeline sizes;

• Providing for at least five in-state gas off-take points;

• Completing preliminary geohazard and marine analysis of 22 LNG site locations;

• Developing a design basis for the required LNG tanker fleet;

• Evaluating multiple LNG process design alternatives; and

• Confirming a range of gas blends from the Prudhoe Bay and Point Thomson fields can generate a marketable LNG product.

The letter also addresses an additional third-quarter benchmark that Governor Parnell laid out in his address, calling on the companies to complete their discussions with the Alaska Gasline Development Corporation (AGDC) on the potential to consolidate their work. In the letter, the companies said they have established a cooperative framework with AGDC to share information.

As the concept selection technical work reaches closure, additional commercial agreements as well as support from the State of Alaska will be required in order to progress this world- class opportunity. This opportunity is challenged by its cost, scale, long project lead times, and reliance upon interdependent oil and gas operations with declining production. The facilities currently used for producing oil need to be available over the long-term for producing the associated gas for an LNG project. For these reasons, a healthy, long-term oil business, underpinned by a competitive fiscal framework and LNG project fiscal terms that also address AGIA issues, is required to monetize North Slope natural gas resources. The producers look forward to working with the State to secure fiscal terms necessary to support the unprecedented commitments required for a project of this scope and magnitude and bring the benefits of North Slope gas development to Alaska.

—APP letter to Gov. Parnell

While the companies have been developing their LNG project design, the Parnell administration has undertaken significant outreach to Pacific Rim markets to highlight the comparative advantages of Alaska LNG exports, and to other key stakeholders, including U.S. government officials in charge of export licensing.

The most recent of these efforts was Governor Parnell’s trade mission in September to South Korea and Japan, where he discussed Alaska LNG exports with government and industry officials.