Alaska, Exxon deal opens way for LNG exports

Fri Mar 30, 2012 5:56pm EDT
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By Yereth Rosen

ANCHORAGE, Alaska (Reuters) - Alaska has reached a settlement with Exxon Mobil Corp (XOM.N: Quote) and its partners to develop a huge, long-fallow oil and gas field, possibly paving the way for a $26 billion pipeline and an export plant for liquefied natural gas.

The settlement, which resolves a long-running lease dispute over the Point Thomson field about 60 miles east of Prudhoe Bay, could allow for exports of liquefied natural gas via tanker to Asia and may boost Alaskan oil production after decades of decline.

In exchange for continued lease control, operator Exxon and partners BP (BP.L: Quote) and ConocoPhillips (COP.N: Quote) have agreed to build a pipeline from the field to deliver 70,000 barrels per day of liquids into the Trans Alaska Pipeline System.

The settlement also calls for the companies to produce 10,000 barrels per day of natural-gas condensates by the winter of 2015-16, state officials said.

The deal is a boon for TransCanada (TRP.TO: Quote), which plans to build a natural gas pipeline from Alaska's North Slope to the south coast, feeding a possible export plant that would ship gas to thirsty markets in Asia.

Alaska Governor Sean Parnell said the companies had agreed to work with TransCanada Corp (TRP.TO: Quote) on the new pipeline project, which proposes to export gas just as Alaska's 40-year-old and only existing LNG plant at Kenai closes down.

Point Thomson holds about 8 trillion cubic feet of natural gas, and the companies are expected to join a growing list of U.S. projects aiming to export LNG as domestic production soars. However, it is not yet clear how many of those projects U.S. regulators will ultimately approve.

"Alaska's resources will be produced from Point Thomson rather than remaining locked underground," Parnell said at a news conference in Anchorage.   Continued...

A mooring station for oil tankers can be seen at the Trans-Alaska Pipeline Marine Terminal in Valdez, Alaska on August 8, 2008. REUTERS/Lucas Jackson