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AGDC and ConocoPhillips sign MoU to create LNG joint venture

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LNG Industry,

Acting through Alaska Gasline Development Corp. (AGDC), the State of Alaska, US, has signed a memorandum of understanding (MoU) with ConocoPhillips Alaska Inc. to create a joint venture (JV) company. The JV would market LNG from the Alaska LNG project to global LNG markets. It would also acquire North Slope gas, with the aim of bringing both LNG buyers and wellhead sellers together. In addition to this, AGDC and ConocoPhillips are planning to support other large North Slope producers in the JV’s formation.

AGDC claims that the MoU is part of the company’s broader plan to prepare the Alaska LNG project for a front end engineering development (FEED) decision. This plan includes the following elements:

  • Structuring for federal and state tax efficiencies, including seeking a federal ruling on tax-exempt status.
  • Advancing low cost financing and investor options.
  • Engaging engineering, procurement and contracting (EPC) companies with the ability to shoulder a significant part of the construction risk.
  • Bringing major North Slope producers on board to commit their gas to the planned JV, or tolling arrangements with the project.
  • Positioning a JV to engage the LNG market to measure the extent and timing of demand.

AGDC claims that once the JV has been formed, sales and negotiations with global purchasers could start immediately.

The Chairman of AGDC, Dave Cruz, said: “The AGDC board welcomes the commercial progress made by AGDC under the leadership of President Meyer as evidenced by this agreement.”

The President of AGDC, Keith Meyer, said: “We are pleased to be working with ConocoPhillips, the leader in Alaskan LNG, in this important phase of Alaska’s major infrastructure project.”

Once established, it is also expected that the JV would initially focus on gathering LNG market information in support of its pursuit of gas and LNG sales as the project proceeds. The JV would also look to set out terms for the reliable and sufficient supply of gas to the project, resolving longstanding project gas supply assurance issues. The MoU expects that third parties or other producers could also join the JV, make gas available through wellhead sales, or even commit to tolling arrangements with the Alaska LNG project.

Edited from press release by David Rowlands

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