ExxonMobil, ConocoPhillips, and BP announced today that they have aligned under the Alaska Gas Line Project to assess an alternative to the proposed pipeline through Alberta. This announcement comes one day after the Alaska Supreme Court granted a request by the three oil companies and the state of Alaska to drop its review and one day before the deadline set out by Governor Parnell in January.

“Commercializing Alaska natural gas resources will not be easy. There are many challenges and issues that must be resolved, and we cannot do it alone. Unprecedented commitments of capital for gas development will require competitive and stable fiscal terms with the State of Alaska first be established,” the CEOs of ExxonMobil, ConocoPhillips and BP wrote in a joint letter to Governor Sean Parnell.

Governor Parnell released a statement today concerning the pipeline and Point Thomson, saying, “Last fall, I told TC Alaska and the producers I wanted to see them pursue a large-diameter line in state to tidewater,” Governor Parnell said. “And, in my State of the State speech in January, I gave a roadmap for commercializing Alaska’s North Slope gas that included a number of critical benchmarks. I said the companies needed to finalize a Point Thomson settlement and align with the APP parties on an Alaska gasline project by the first quarter of this year.

“I am pleased to announce that the parties have resolved Point Thomson litigation and the three CEOs have stated their companies are now formally aligned with the APP parties. They have undertaken work together on the commercialization of North Slope gas with a specific focus on a large-scale LNG project from Southcentral Alaska.”

Natural Resources Commissioner Dan Sullivan said of the oil company anouncement, “Today’s settlement lays out strong near-term production commitments and a clear path for full development of Point Thomson’s significant oil and gas resources, and it establishes clear consequences if the companies do not follow through.” He continued by saying, “The companies have agreed to firm timetables for production at Point Thomson. This will result in significant new investment, increased work for Alaskans and increased revenue for state and local government,”

The Governor’s release said that the major components of the settlement were:

• • Increasing liquids production into the Trans Alaska Pipeline System (TAPS).
  • Opening the Eastern North Slope to new development opportunities by adding infrastructure and a 70,000 barrels per day common carrier pipeline connecting to TAPS.
  • Incentivizing and laying out a clear path and alternatives for full-field development, each of which will require billions of dollars in investment if pursued.
  • Positioning North Slope gas for a large-scale gas pipeline project.
  • Providing potential for significant gas volumes for in-state use no later than 2019.
  • Requiring a commitment to develop a separate oil reservoir within Point Thomson.

Senator Begich released a statement on the news of a settlement today, saying, “A Point Thomson settlement is good news. As nearly 40 years of effort has shown, all of Alaska is going to have to pull together if we are to commercialize the enormous natural gas resources of the North Slope.

“Any large scale project, whether it’s an Alaska-only route with LNG export or a highway route to the Lower 48, will bring thousands of jobs and lower-cost energy to Alaskans.

“I stand ready to work with the rest of the Alaska delegation to help bring Alaska’s enormous natural gas resources to market. Much of that groundwork at the federal level has already been laid for the highway route.

“As the producers examine an LNG project, I’ll continue to work to smooth the path for speedy federal review that can shave time and costs such as my legislation, the Alaska Natural Gas Pipeline Improvement Act.”

In her statement, Senator Lisa Murkowski said, “It’s encouraging that the major leaseholders are once again talking about a single pipeline project to commercialize Alaska’s North Slope natural gas. This is the first time in many, many years that there’s been alignment among the leaseholders, TransCanada and the state. That in itself is good news.

“Japan is aggressively looking to sign a long-term supply contract for natural gas, as are other Asian markets. Alaska should seize this opportunity to get its gas to a market that is currently paying up to $16 per thousand cubic feet. It’s imperative that all of the players involved do everything possible to accelerate the decision-making process to ensure that the window of opportunity doesn’t close on us.”

This agreement has the potential to bring to an end the warehousing of oil supplies in the Point Thomson field, a point of contention for the state of Alaska for many years.

More can be read about the Point Thomson settlement here at the Department of Natural Resources webbsite.