Natural Resources Commissioner Joe Balash, Revenue Commissioner Angela Rodell and Alaska Gasline Development Corporation (AGDC) President Dan Fauske announced Wednesday that a Heads of Agreement (HOA) was signed by the commissioners of Natural Resources and Revenue, ExxonMobil, BP, ConocoPhillips, TransCanada, and the Alaska Gasline Development Corporation.

“This agreement is essential to establishing the commercial structure of this project and will allow the project’s investors to move this project, so important to the future of all Alaskans and our broader economy, on a clear path forward,” said Commissioner Rodell.

“As an equity partner, the state will play a critical role in setting the terms for decades‐worth of gas production from the North Slope. In setting these terms, our goal will be to maximize the royalty value of the state’s gas on behalf of all Alaskans,” said Commissioner Balash.

The signing of the commercial agreement will allow the project to move forward with the Pre-Front End Engineering and Design stage, and establishes the framework for negotiating multiple project-enabling agreements.

The HOA includes the state as an equity partner, provides gas to Alaskans, lays out proposed fiscal terms, and includes pro-expansion principles that will allow third-party access to all of the project components, including possible construction of a new LNG train at the liquefaction plant.

In addition to the HOA, the two commissioners have also signed a Memorandum of Understanding (MOU) with TransCanada defining the pipeline company’s role in developing the midstream (pipeline) portion of the project.

Governor Parnell welcomed the news of the signing. “This commercial agreement, with its transparent set of terms, is Alaska’s roadmap to developing our vast gas reserves,” Governor Sean Parnell said. “This is truly a historic achievement. Not only have all the necessary parties aligned around a single project, but we’re moving forward with a project that’s on Alaska’s terms and in Alaskans’ interests. I extend my thanks to all of the parties for the hard work that went into this agreement, and look forward to working with legislators on laying the framework to best manage our gas resources.”

After the state announcement of the formal agreement, Rep. Mike hawker of Anchorage and House Speaker Mike Chenault of Nikiski responded to the agreement. The MOU with TransCanada is part of an amicable wind‐down of its Alaska Gasline Inducement Act (AGIA) license and describes an arrangement for the company to provide the State of Alaska with transportation services for the state’s royalty and tax share of gas flowing through the pipeline, including offtake points for instate gas deliveries.

“I’m pleased to see this tangible evidence of alignment among all stakeholders in an Alaska gas project,” Hawker said. “We’ve tried many times to advance gas commercialization, but this is different. The stakeholders are working as partners with common interests, rather than as adversaries. While the Governor’s legislation enabling alignment will require extensive deliberation through our committee process, I believe we will find the best possible balance of protecting Alaskans’ interests and facilitating a commercial project.”

“The progress on a gasline is exactly what I envisioned four years ago with HB 369 – alignment between commercial interests and Alaska’s needs,” Chenault said. “I’m enthused, but will keep in mind that a decision to build a gasline is still years away. Meanwhile, it’s important that AGDC continue progressing an instate gas pipeline. The best line is a big line in partnership with industry, but Alaska must be ready to take care of Alaskans if a big line doesn’t meet industry’s commercial benchmarks down the road.”

The Alaska LNG project is one of the largest export projects of its kind in the world.

A copy of the Heads of Agreement can be read here. (PDF)