ExxonMobil, BP and ConocoPhillips have reached agreement with the state of Alaska to take a significant step forward on a $40bn-plus project to export liquefied natural gas to Asia, resolving a long-running lease dispute that had been holding up progress.
In a joint letter, the chief executives of the three companies said they were "aligned" on a plan to develop the huge gas reserves of Alaska's North Slope, which until now have been stranded without a route to market.
They have agreed on a target of 2016 for making a commitment to a large-scale export project, which they said would require an "unprecedented" investment in the state.
Sean Parnell, Alaska's governor, who has been pushing the companies to do more to develop the North Slope reserves, described the statement as a "historic" event.
The most commercially attractive solution for North Slope gas is to build a pipeline to Alaska's south coast and a plant to produce LNG for fast-growing Asian markets, at an estimated total cost of $40bn-$50bn.
Exxon, BP and Conoco, together with TransCanada, the pipeline group, will now work on identifying a specific project, including a timetable, a route for the pipeline and a site for the LNG plant.
The companies hope to resolve those issues within a year.
An important obstacle has been removed with the end of the dispute over Point Thomson, a large North Slope field that holds about a quarter of the region's gas reserves.
The state had been seeking to take back leases on the field, arguing that the companies there, principally Exxon, BP, Conoco and Chevron, had been too slow to start production. The first development plan was agreed in 1977.
The companies have now promised to start the first commercial production of condensate, a liquid that can be used to make fuels or petrochemicals, by May 1 2016. Chevron has dropped out, assigning its interest to Exxon on undisclosed terms.
There are also two deadlines for the companies to decide on a "major gas sale", a project to sell at least 500m cubic feet of gas per day from the North Slope.
By 2016, they have to commit to such a project or make alternative investments. By the end of 2019, if they have still not given the go-ahead, they would lose some of the leases on Point Thomson.
The North Slope has proven reserves of 35tn cubic feet of gas – about one-eighth of US total reserves – and undiscovered resources estimated at 236tn cu ft.
Almost 90 per cent of Alaska's gas output, which comes out of the ground alongside oil production, is simply reinjected back into the field, because there is no way to sell it.
Exxon and TransCanada have been working on a route to take the gas across Canada to the "lower 48" US states, but the low price of North American gas resulting from the shale revolution makes that option unattractive.
LNG can sell in Japan and China for more than seven times the US benchmark gas price.
The LNG proposal still has to clear commercial and regulatory hurdles.
In their letter, the three chief executives said: "Commercialising Alaska natural gas resources will not be easy. There are many challenges and issues that must be resolved, and we cannot do it alone."
They added: "Unprecedented commitments of capital for gas development will require competitive and stable fiscal terms."
Frank Harris, an analyst at Wood Mackenzie, warned that the plan was not guaranteed "smooth sailing", facing competition in Asian markets from other suppliers such as Australia and east Africa, and possibly political difficulties in the US.
Ed Markey, a Democratic congressman from Massachusetts, has already attacked the plan, saying: "If we export America's natural gas to China, we might as well export our manufacturing jobs with it."
Mr Harris said: "Even though the gas is arguably stranded and therefore LNG is a sensible monetisation option, it is still in the US and therefore highly likely to be impacted by the current uncertainty around export licences and revocation. More clarity on US gas export policy will be needed for buyers to take it seriously."
Energy exports from Alaska have proved contentious in the past. For most of the time since the Trans-Alaska oil pipeline was opened in 1977, there has been a legal requirement for any crude sent through it to be shipped to the rest of the US.
However, there is already a project on Alaska's south coast that sends LNG to Japan.
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