The Dunleavy administration announced Thursday that two Alaska oil producers will invest $20 million to help advance the state’s $43 billion Alaska gas line project, in an effort to achieve a key federal permit next year.
Officials with BP and ExxonMobil also expressed support for the Alaska LNG project, an effort seven years in the making to tap vast reserves of natural gas on Alaska’s North Slope.
The two companies, along with ConocoPhillips, had backed out of the project as investors in 2016, amid concerns over the project’s global competitiveness. Since then, the state has advanced the project on its own while courting potential Chinese-owned entities as investors, including the Bank of China.
Damian Bilbao, vice president of commercial ventures for BP in Alaska, said Thursday the company is “very optimistic” the project’s cost can be reduced to below $40 billion, thanks in part to lower prices in recent years for products and services across the industry.
The company is “excited by the potential for monetizing Alaska’s gas, which has always been an objective," Bilbao said. "It still remains the single largest undeveloped resource on the planet.”
Lt. Gov. Kevin Meyer announced the commitment from ExxonMobil and BP at an oil and gas conference in Anchorage. Each company would each contribute $10 million as the project continues to refine details while it seeks authorization from the Federal Energy Regulatory Commission.
The state will cover the remaining $10 million of the expected costs before FERC makes that decision, expected next year.
The project would transport North Slope natural gas across Alaska in an 800-mile pipeline. The gas would be super-chilled into a liquid in Nikiski, for transport in ocean-going tankers to Asian utilities. If the project is approved, gas would not flow until at least 2025.
The three oil companies and the state had spent more than $500 million studying Alaska LNG for four years, before the companies pulled out as investors.
But those companies own leases for the North Slope gas and remain involved in aspects of the state-led project.
A statement from ConocoPhillips on Thursday said the company is willing to sell its gas to the project and is engaged with the state in negotiating a gas-sales agreement.
BP and ExxonMobil have provided technical expertise to Alaska LNG as it moves through the federal regulatory process. Last year, they signed precedent agreements spelling out the price and other terms of gas sales to the project.
“We are continuing our support of the state and (the state gasline corporation) in their efforts to progress toward a globally competitive LNG project,” said Hans Neidig, a public and government affairs manager with ExxonMobil, on Thursday.
Bilbao, with BP, said the company will keep working with the state to receive the federal authorization.
“Then we’ll work with them to figure out what comes next,” Bilbao said.
The Dunleavy administration in recent months has studied the project to see if it will pencil out, an effort that continues.
But project officials have stressed the importance of Alaska LNG winning federal approval after years were spent trying to secure it. Former Gov. Sean Parnell, who launched the project in 2012 and was an Alaska LNG adviser to Gov. Mike Dunleavy before he was sworn into office last year, said federal authorization could boost the value of the project for potential investors.