The US state of Alaska has reached a settlement with ExxonMobil 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 (LNG).
The settlement, which resolves a long-running lease dispute over the Point Thomson field about 95 km 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 and ConocoPhillips have agreed to build a pipeline from the field to deliver 70,000 barrels per day (bpd) of liquids into the Trans Alaska Pipeline System.
The settlement also calls for the companies to produce 10,000 bpd of natural-gas condensates by the winter of 2015-16, state officials said. The deal is a boon for TransCanada, 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 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 (tcf) of natural gas, and the companies are expected to join a growing list of US projects aiming to export LNG as domestic production soars. However, it is not yet clear how many of those projects US 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. The field has been the subject of years of dispute, with the state saying the companies have delayed meaningful development of the liquids.
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(Originally published April 9, 2012, in Oil & Gas News.)