|
AGDC agreements for Alaska LNG project still a work in progress
Kristen Nelson Petroleum News
In November 2017 the state of Alaska and the Alaska Gasline Development Corp. signed a joint development agreement with three Chinese entities - China Petrochemical Corp. (Sinopec), CIC Capital Corp. and the Bank of China Ltd.
The goal was Chinese participation in an Alaska liquefied natural gas project, with investment from China in exchange for LNG from the project.
The JDA said the parties would work together on a scope of work defined in the agreement, including the opportunity for delivering 75 percent of the LNG produced from Alaska to China “at a cost-based and stable price utilizing the benefits of strategic financing and investment,” strategic financing opportunities and a transparent investment model.
The agreement included timelines, the first of which was May 31, 2018, by which time the parties hoped to be able to determine the Chinese disposition of 75 percent of the LNG, develop “the general framework and indicative pricing for potential and customary strategic financing and international project financing for Alaska LNG”; and explore feasibility for the parties to invest in the project.
The second timeline was the end of 2018 for signing of definitive agreements. The end of 2018 was also when the agreement expired unless the parties agreed to extend it.
Delays Both timelines have now slipped.
Jesse Carlstrom, AGDC communications manager, told Petroleum News in a Dec. 31 email that “large energy infrastructure” projects such as Alaska LNG have long-term contracts which “take time to develop.”
“Based on the progress achieved in 2018, the parties are seeking to continue negotiations into 2019 in order to reach definitive agreements,” Carlstrom said. He added that when all the interested parties want to conclude agreements, “it’s typical to extend the negotiation period. The volume of paperwork alone is enormous and typically takes more than a year to complete.”
“AGDC and the Joint Development Agreement parties, Sinopec, CIC Capital, and Bank of China are actively engaged and are working toward reaching definitive commercial agreements by June 30, 2019,” Carlstrom said.
Asked if the parties would extend the JDA, and if that was a formal process requiring signatures, he said:
“All of the Joint Development Agreement parties want to extend the negotiation period. Yes, a formal extension agreement is required and all parties will need to sign off on it.”
Carlstrom said none of the parties have withdrawn from the Nov. 9, 2017, agreement.
“Since November 2017, AGDC, Sinopec, CIC Capital, and Bank of China have been actively collaborating on all aspects of Alaska LNG, including project financing, construction, and offtake of LNG. All of the parties agreed an extension is desired to keep working toward definitive commercial agreements. The parties in China want to conclude a deal with Alaska,” he said.
Regulatory work In addition to issues around the JDA, AGDC has been working on regulatory issues.
The Federal Energy Regulatory Commission has said it anticipates issuance of a final order for the Alaska LNG Project in early February 2020. AGDC filed an application for a permit under Section 3 of the Natural Gas Act and Part 153 of FERC regulations in April 2017, covering siting, construction and operation of a new LNG export terminal and associated facilities and construction of the natural gas pipeline and associated facilities.
AGDC had initially hoped to have its environmental impact statement in hand by the end of 2018 and begin construction in 2019. The notice of availability for the final EIS is now set for early November of this year, followed by a 90-day federal authorization decision deadline in early February 2020.
- KRISTEN NELSON
| 