State corporation announces tentative deal with BP to buy gas for Alaska LNG project

Update: 4:30 p.m.

Alaska is one step closer to getting a gas supply for its massive natural gas pipeline project.

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The Alaska Gasline Development Corporation announced on May 7 that it settled on the terms of a gas sales agreement with BP Alaska.

The final agreement hasn’t been signed yet. But corporation President Keith Meyer said the key terms — that is, the volume of the gas and how much it will cost — have been figured out.

BP owns more than a quarter share of Prudhoe Bay and about one-third of the nearby Pt. Thomson field.

Meyer said the company has committed to selling all of the gas it can produce from those fields, but that won’t fill the pipeline.

The state corporation will need gas supply agreements with all of the North Slope producers for the project to run at full capacity.

What this agreement could do is help the project get financing this year. Meyer said he sees the gas supply agreements as a key piece in that process.

“So now that we’ve got the the supply pieces falling into place now that lets us get a lot more clarity on the financing piece which is also underway. But that’ll take really through the balance of this year,” Meyer said.

This agreement is one of many the state corporation is negotiating right now. It is on a tight timeline to get them done in time to meet peak gas demand in 2025.

The state corporation must get final agreements to buy gas from producers, line up buyers and secure the federal and state permits to build the $45 billion project.

ORIGINAL STORY:

Alaska is one step closer to getting a gas supply for its massive natural gas pipeline project.

The Alaska Gasline Development Corporation announced on May 7 that it had agreed on the terms of a gas sales agreement with BP Alaska. According to a media release from the state corporation, the two have not finalized that long-term gas sales agreement, but they expect to do it this year.

BP owns more than a quarter share of Prudhoe Bay and about one-third of the nearby Pt. Thomson field. But, it is not clear how much gas BP has committed to selling to the state-led project.

This agreement is one of many the state corporation is negotiating right now. It is on a tight timeline to get them done in time to meet peak gas demand in 2025.

The state corporation must get final agreements to buy gas from producers, line up buyers and secure the federal and state permits to build the $45 billion project.

Rashah McChesney is a photojournalist turned radio journalist who has been telling stories in Alaska since 2012. Before joining Alaska's Energy Desk , she worked at Kenai's Peninsula Clarion and the Juneau bureau of the Associated Press. She is a graduate of Iowa State University's Greenlee Journalism School and has worked in public television, newspapers and now radio, all in the quest to become the Swiss Army knife of storytellers.

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