Alaska-based Qilak LNG announced that it has entered into a Heads of Agreement deal with ExxonMobil for the supply of natural gas to Qilak’s proposed Alaska North Slope LNG export project (Qilak LNG 1). The agreement sees ExxonMobil providing at least 560 million scf/D of natural gas from its Point Thomson field to Phase 1 of the project, which should allow for the export of 4 mtpa of LNG over a 20-year term.
Qilak LNG 1 will target delivery of gas to Asian markets primarily by shipping tankers through Arctic waters directly from the North Slope instead of using a pipeline. The project, which will cost an estimated $5 billion, will require the construction of a gas treatment plant at Point Thomson, but Qilak LNG said it would “significantly” reduce the capital cost compared to projects that require a long-distance pipeline and a large minimum LNG order.
The company said in a statement that it is in discussions with several Asian companies to engage potential stakeholders in various parts of the project. Japan’s Bank for International Cooperation has already agreed to support the project to an unspecified level.
Mead Treadwell, Qilak LNG chairman and CEO, said that the company will begin feasibility efforts, including preliminary permitting, with a final investment decision targeted in 2021.
Located on the eastern edge of the North Slope oil development, Point Thomson began production of natural gas liquids in 2016. Average production from the field has consistently fallen short of its expected 10,000 B/D target, often by significant amounts.
“ExxonMobil sees the development of the Qilak LNG 1 Project as an opportunity to develop Alaska’s gas resources,” ExxonMobil Alaska President Darlene Gates said. “As the largest holder of discovered gas resources on the North Slope, we have been working for decades to tackle the challenges of bringing Alaska’s gas to market.”