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AGDC-Pantheon reach natural gas sales precedent agreement
Kristen Nelson Petroleum News
Alaska Gasline Development Corp. and Pantheon Resources plc said June 4 that they have reached a gas sales precedent agreement. This follows a March 28 statement from Pantheon on its discussions with AGDC to provide natural gas to an AGDC gas pipeline with initial delivery in 2029 and full delivery by 2032.
AGDC is the state-owned entity leading development of the Alaska LNG Project, while Pantheon Resources owns 100% working interest in the Kodiak and Ahpun oil and gas fields on the North Slope adjacent to the trans-Alaska oil pipeline and the Dalton Highway. The gas sales precedent agreement is between Pantheon subsidiary Great Bear Pantheon LLC and AGDC subsidiary 8 Star Alaska LLC.
AGDC is pursuing an option to phase development of its project to export North Slope natural gas as liquefied natural gas by starting with the 42-inch gas pipeline, allowing North Slope gas to reach consumers in Southcentral where a shortage of Cook Inlet natural gas is now projected.
Funding opportunities The companies said the gas sales precedent agreement "opens up additional funding pathways for the Alaska LNG Project and the Ahpun field development activities."
"This agreement solidifies the commercial foundation needed for the Phase 1 portion of Alaska LNG and provides enough pipeline-ready natural gas, at beneficial consumer rates, to resolve Southcentral Alaska's looming energy shortage as soon as 2029," said AGDC President Frank Richards.
The existence of the pipeline, he said, would make export components of the project "more attractive to LNG developers and investors."
"When we set out our strategy to achieve early production and cashflow on the path to financial self-sufficiency, we considered gas monetization as a path to non-dilutive funding only one of several possibilities," said David Hobbs, executive chairman of Pantheon. Because the project's gas is pipeline quality, he said, this opportunity to provide gas to AGDC benefits both parties.
The gas sale precedent agreement is for up to 500 million cubic feet per day of gas at a maximum base price of $1 million per British thermal unit. The agreement is for one year until June 30, 2025, or until the definitive gas sales agreement is executed, and renews automatically for one year at a time until either party provides notice of termination.
The gas sales agreement will be conditional on both parties reaching final investment decisions and receipt of required permits and approvals. AGDC aims to reach final investment decision by mid-2025, allowing gas transportation as early as 2029.
--KRISTEN NELSON
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