Qilak LNG, ExxonMobil Pact on Gas Supply

Alaska-based Qilak LNG announced that a Heads of Agreement (HOA) has been entered into with ExxonMobil Alaska Production regarding the potential supply of natural gas from the Point Thomson field to Qilak LNG's proposed Alaska North Slope liquefied natural gas (LNG) export project (Qilak LNG 1 Project).

According to the Lloyds Energy company, which was formed to identify and develop Arctic LNG projects in North America,  the he HOA foresees ExxonMobil providing at least 560 million standard cubic feet per day (mmscfd) of natural gas to Phase 1 of the Qilak LNG 1 Project, based on the design concept of offshore liquefaction and loading, and icebreaking LNG carriers, to export 4 million tons per year (MTPA) of LNG over a 20-year term.

"The Qilak LNG 1 Project would deliver on Alaska's long-held goal of commercializing North Slope natural gas," said former Alaska Lt. Governor Mead Treadwell, Chairman and CEO of Qilak LNG. "With this HOA and our recently completed pre-feasibility study, Qilak will now begin extensive feasibility efforts, including preliminary permitting, with a target of reaching Final Investment Decision (FID) by 2021."

The Qilak LNG 1 Project seeks to capitalize on recent developments in Arctic LNG technology allowing natural gas to be directly exported from the North Slope of Alaska.  This concept would significantly reduce the capital cost compared to projects that require a long-distance pipeline and a large minimum LNG order. Phase 1 of the Qilak LNG 1 Project would have an export capacity of 4 MTPA, with the option for additional capacity to come online in future phases as determined by gas supply and global demand.

Qilak LNG targets delivery of gas to Asian markets, including Japan, with competitive shipping costs compared to many other sources of LNG in the US and other global LNG projects. Qilak LNG is also in discussions in several Asian countries to engage potential stakeholders in various parts of the Qilak LNG 1 project.

"ExxonMobil sees the development of the Qilak LNG 1 Project as an opportunity to develop Alaska's gas resources," said Darlene Gates, President of ExxonMobil Alaska. "As the largest holder of discovered gas resources on the North Slope, ExxonMobil has been working for decades to tackle the challenges of bringing Alaska's gas to market."

As a result of these efforts, Qilak LNG 1 is to be supported by Japan's Bank for International Cooperation (JBIC), as it helps fulfill Japan's commitment to foster investment in U.S. LNG production capacity and to bring new LNG supplies to Indo-Pacific region. This cooperation is expected to grow as the next phase project feasibility is determined.