Alaska-based Qilak LNG Inc. (Qilak LNG), a Lloyds Energy company, announced today that a Heads of Agreement (HOA) has been entered into 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 liquefied natural gas (LNG) export project (Qilak LNG 1 Project). The 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.
“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,” said David Clarke, President and COO of Qilak LNG. “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 MTPA 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.”
Qilak LNG’s announcement comes after a successful pre-feasibility effort which examined 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 utilize Alaska’s gas for power and city gas use in Asia, the Qilak LNG 1 project can be economically and technically viable.
About Qilak LNG
Qilak LNG was formed to identify and develop Arctic LNG projects in North America. Using a near shore concept, Qilak LNG plans to commercialize previously stranded Arctic natural gas supplies for export to Asian markets. The Qilak LNG team has a high level of competence achieved through decades of experience in the LNG industry and extensive knowledge developing projects and operations on the North Slope of Alaska. Working with its group affiliates, Qilak LNG can draw on technical, marketing, and financial resources developed across a global range of projects currently under development.
As a Lloyds Energy Company, Qilak LNG is a core component of Lloyds Energy’s integrated business model which includes its global LNG export projects under development which will convert natural gas, through licensed liquefaction process technologies, into LNG. In addition to export terminals, Lloyds Energy is working with LNG offtake customers to design and build import terminals that offer floating storage and regasification facilities. These projects deliver a faster timeline to first delivery and provide significant cost savings.