ExxonMobil, BP, ConocoPhilips back out of Alaska LNG

ExxonMobil, BP and ConocoPhilips are looking to exit the Alaska LNG project following a report by Wood Mackenzie stating the project’s competitiveness ‘ranks poorly’ under current market conditions.

Speaking to the Alaskan House and Senate Resource Committees, David VanTuyl, regional manager for BP in Alaska, noted the project is commercially challenged.

The pre-FEED work on the Alaska LNG project is over 90 percent complete, however, Van Tuyl noted that the next phase will likely cost over one billion dollars.

“We don’t want to rush into the largest energy project in North America only to end up losing lots of money for all of us. So right now is not the time to make that commitment,” he said.

He stressed BP has not given up on the project but noted the cost of supply have to be reduced in order to make the project competitive.

Bill McMahon, ExxonMobil’s senior commercial advisor for the project said that the company supports the state’s plans to assume full management of the project through Alaska Gasline Development Corp.

The company will be a part of the development of Alaska’s North Slope natural gas resources through investment in the development of Prudhoe Bay and Point Thomson and by making gas available for sale for the project.

Alaska’s governor Bill Walker commented on the report by Wood Mackenzie stating that at current LNG market prices, Alaska LNG project could struggle to make “acceptable returns even under US$70/bbl price,” saying that there is still potential for the project to be viable.

By exploring alternative project structures it could be economically viable even at $45/bbl oil prices, Walker said.

AGDC, that is currently holding transition meetings with BP, ConocoPhillips, and ExxonMobil, said it expects the transition to be completed by the end of the year.

According to AGDC’s plans, FEED work could start in 2018 while the construction could begin in 2019.

The liquefaction and export facility of the $45 billion-plus Alaska LNG project will be built on the eastern shore of Cook Inlet on the Kenai Peninsula. The plant would receive gas via an 800-mile pipeline from the North Slope and is expected to be able to produce about 20 mtpa of LNG from three liquefaction trains.

LNG World News Staff