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Qilak LNG Inc. signs gas supply HoA with ExxonMobil

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LNG Industry,

Qilak LNG Inc., a Lloyds Energy company, has announced that it has signed a Heads of Agreement (HoA) with ExxonMobil Alaska Production Inc. regarding the potential supply of natural gas from the Point Thomson field to Qilak LNG’s proposed Alaska North Slope LNG export project (Qilak LNG 1 Project).

According to the statement, the HoA foresees ExxonMobil providing at least 560 million standard ft3/d 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 tpy of LNG over a period of 20 years.

Former Alaska Lt. Governor Mead Treadwell, Chairman and CEO of Qilak LNG, said: “The Qilak LNG 1 Project would deliver on Alaska’s long-held goal of commercialising North Slope natural gas.

“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 project aims to capitalise on recent developments in Arctic LNG technology enabling natural gas to be directly exported from the North Slope of Alaska. This concept would significantly decrease the capital cost compared to projects that require a long-distance pipeline and a large minimum LNG order. Phase 1 of the project would reportedly have an export capacity of 4 million tpy, 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.

Darlene Gates, President of ExxonMobil Alaska, said: “ExxonMobil sees the development of the Qilak LNG 1 Project as an opportunity to develop Alaska's gas resources.

“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, the Qilak LNG 1 project will be supported by Japan’s Bank for International Cooperation (JBIC), as it helps fulfil Japan’s commitment to foster investment in US 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.

David Clarke, President and COO of Qilak LNG, said: “The Qilak LNG 1 Project team will work closely with the North Slope Borough and other stakeholders to ensure that the development and subsequent operations are done in a safe and environmentally friendly manner.

“We are committed to ensuring, through extensive scientific study and stakeholder engagement, that any impacts on marine mammals and subsistence activities are mitigated.

“While a significant portion of Qilak LNG 1’s initial 4 million tpy Phase 1 development will be dedicated to Lloyds Energy's global downstream projects, Qilak is also committed to working with Alaskan stakeholders to investigate economically viable distribution to local Alaskan markets via coastal delivery or tanker trucks.”

According to the statement, this recent announcement by Qilak follows a successful pre-feasibility effort, which analysed the technical challenges of shipping directly from a facility offshore in the Beaufort Sea. Based on this process, Qilak LNG has concluded that, with available gas supply, competitive project economics, and a partner willing to utilise Alaska’s gas for power and city gas use in Asia, the Qilak LNG 1 project can be economically and technically viable.

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