Pantheon Resources Agrees to Sell North Slope Gas to Southcentral

AGDC is the state-owned entity leading development of the Alaska LNG project to export liquified natural gas using a pipeline from the North Slope to a tidewater terminal at Nikiski. AGDC is pursuing an option to phase Alaska LNG by prioritizing Phase 1, the in-state segment consisting of a 42-inch pipeline to provide natural gas for customers in Southcentral. Phase 1 does not involve construction of a liquefaction plant, lowering the capital expenditure and allowing gas transport as early as 2029. Phase 1 has an estimated price of $10.7 billion, compared to $44 billion for the fully integrated export gasline.

“Phasing Alaska LNG by leading with the construction of the pipeline will make Alaska LNG’s export components more attractive to LNG developers and investors, and this agreement will help unlock the project’s substantial economic, environmental, and energy security benefits for international markets as well as for Alaska,” says AGDC President Frank Richards. “This agreement solidifies the commercial foundation needed for the Phase 1 portion of Alaska LNG and provides enough pipeline-ready natural gas, at beneficial consumer rates, to resolve Southcentral Alaska’s looming energy shortage as soon as 2029.”

The agreement is primarily focused on Phase 1 of Alaska LNG, yet it also creates opportunities for Pantheon to benefit when the full gasline, including export capability, is completed.

“We are delighted to have the opportunity to create a win-win for the State of Alaska and for Pantheon as we turn the fantastic exploration an appraisal success of the past five years into the development of two giant oil and gas fields on Alaska’s North Slope,” says Pantheon Executive Chairman David Hobbs. “When we set out our strategy to achieve early production and cashflow on the path to financial self-sufficiency, we considered gas monetization (as a path to non-dilutive funding) only one of several possibilities. However, the availability of our pipeline-quality associated gas created the opportunity to bolster the Alaska LNG project, including the pipeline, LNG export facilities, and gas conditioning facilities.”

The initial term of the precedent agreement is until June 30, 2025, and it will automatically renew for additional one-year terms until either party provides notice of termination. AGDC previously secured gas supply commitments from BP and ExxonMobil in 2018, but those deals expired, leaving Alaska LNG without a definite supplier. Since then, shortfalls of Cook Inlet gas supplies have increased in-state demand.

The base price in the Pantheon precedent agreement represents potentially significant savings to in-state consumers versus alternative supply options, with further savings possible if the State of Alaska and Pantheon agree to terms reducing the gas price to below $1 per mmBtu. Furthermore, securing financing for Phase 1 of Alaska LNG could potentially increase commercial alignment for the complete project.

AGDC aims to undertake Front End Engineering and Design ahead of FID by the middle of 2025.