Exxon exec rebuts AGDC president on gasline status

ANCHORAGE — ExxonMobil Development Co. Vice President Jim Flood sent a letter to Alaska Gasline Development Corp. President Keith Meyer Friday to correct “inaccuracies” in a July 13 letter from Meyer to state Senate leaders — all regarding the status of the $45 billion-plus Alaska LNG Project.

Flood’s letter contends Meyer “mischaracterized” the ExxonMobil’s position as not wanting to continue pursuing the LNG export plan in Meyer’s July 13 letter to Republicans Senate President Kevin Meyer and Resources Committee Chair Sen. Cathy Giessel, as well as in lengthy testimony during a June 29 joint Resources Committee hearing.

The letter from AGDC’s Meyer to the senators states the company has a “lack of willingness to chase the project,” a statement Flood objects to in his correspondence.

Flood also emphasizes that ExxonMobil supports investigating a state-led project, as it may allow the participating parties to capture the state’s federal tax-exempt status and improve the project’s currently strained economics.

“As previously stated, we are fully committed to developing a (project) plan that can successfully benefit all parties, including Alaskans,” Flood wrote.

Under its current equity share model, with the state, BP, ConocoPhillips and ExxonMobil each providing a financing share equal to their gas ownership, it appears the project would likely be delayed for at least some time because of depressed worldwide LNG and oil markets.

Much of the commentary from the producer companies regarding the project is in generalities, but ConocoPhillips representatives said at the June 29 Resources hearing that they don’t foresee the company supporting a decision to advance to the front-end engineering and design (FEED) stage next year — wholly about a $2 billion investment.

Flood made it clear that his employer does not feel the same way as its producer partner.

“At no time did ExxonMobil ever suggest we ‘shelve the project,’” he wrote.

Additionally, he stated that the company is also comfortable continuing the “stage gate” approach of the original equity-share project process, which AGDC’s Meyer indicated at the hearing may not be as necessary under a state-led plan.

Lastly, Flood reiterated that ExxonMobil insists that a long-term fiscal agreement between the state and the company is necessary to underpin the massive project before the company is willing to enter FEED.

Commercial negotiations between the companies and the state were suspended in February after months of slow-going, state officials have said, and ExxonMobil “remains ready to re-start discussions on gas sales to support the state-run project,” Flood wrote.

“We hope this letter will help clarify the historical facts and allow us to be more successful in working together in the future. We look forward to working with you to transition the project to the state, explore options to reduce the cost of supply, re-engage on gas sales negotiations, and develop the necessary fiscal regime to commercialize North Slope gas,” he concluded.

The letter was “cc’ed” to several legislators, Department of Natural Resources Commissioner Andy Mack, officials in Gov. Bill Walker’s office and the Alaska leaders of BP and ConocoPhillips among others.

• Elwood Brehmer is a reporter for the Alaska Journal of Commerce. He can be reached at elwood.brehmer@alaskajournal.com.

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