JUNEAU, Alaska July 3 The state of Alaska and
four energy firms have signed a joint-venture agreement to begin
preliminary work on an 800-mile natural gas pipeline from the
North Slope to a liquefied natural gas (LNG) export plant,
Governor Sean Parnell said Wednesday.
The agreement calls for partners to invest millions in
so-called front-end engineering and design work over the next 18
months for the project, which could ultimately cost between $45
billion and $65 billion.
The agreement comes two months after the state's legislature
backed Parnell's plan to work with North Slope leaseholders
Exxon Mobil, ConocoPhillips and BP, plus
pipeline company TransCanada on a project development
That contract will have to be ratified by the legislature
and is still forthcoming, likely by the end of 2015.
Wednesday's agreement means all the partners are involved in
field work currently under way, Parnell told Reuters.
"Real work is beginning now on engineering, design and
environmental field work," Parnell said. "The state is now a
Gas could hit local and foreign markets and feed Asia's
rising demand for LNG in the mid-2020s, according to the state's
The state has a history of exporting natural gas from Cook
Inlet to Asian markets dating to the 1960s.
Still, the state's efforts to market North Slope gas have
been tripped up by market changes, such as the emergence of
shale gas, and tied up in political battles between the
legislature and executive branch.
That has changed, Parnell said, because of a stronger
alignment among the partners.
"While many projects have faltered in the past, I am
cautiously optimistic about this one because it's the first time
in our history when all the necessary parties for a project are
aligned, all the necessary parties are putting down their money
and all have agreed to work together," he said.
ConocoPhillips spokeswoman Natalie Lowman called the
agreement a "significant milestone."
A recent oil tax change helped make the LNG project more
economical, BP spokeswoman Dawn Patience said.
"Alaska's oil tax change was critical to putting Alaska back
into the game for an LNG project, since a healthy oil business
is a prerequisite for gas commercialization," Patience said.
(Reporting by Steve Quinn; Editing by Terry Wade and Leslie