The Alaskan State Legislature passed legislation on April 20 that will see the state join a partnership with oil producers on the North Slope to build a pipeline and liquefied natural gas export terminal.
If successful, it will mark the first time a U.S. state has taken such an active role in an oil and gas project.
Plans involve the construction of an 800-mile pipeline that will connect gas fields to an LNG export facility. A 42-inch pipeline will be used that will allow enough gas to both meet the state's needs and allow for some to be exported.
The state will invest in 25 percent of the project, according to Joe Balash, commissioner of Alaska's Department of Natural Resources Juneau will receive its royalty "in kind," meaning that it will take natural gas instead of cash revenue.
Republican Governor Sean Parnell, who is expected to sign the bill, called it an "historic moment for Alaskans."
Related Article: Coast Guard Finds Shell to Blame for Kulluk Incident
"By passing Senate Bill 138, the legislature has put Alaska on a path to controlling her own destiny by becoming an owner in the Alaska LNG Project," he said in a statement. "Alaskans have waited a long time for a gas line, and for the first time in our history, we have alignment, authorization from the legislature and a clear path forward. The Alaska LNG Project has begun."
Construction will not begin immediately on the pipeline, which comes with a steep price tag estimated at between $45 and $65 billion. More studies are planned to refine costs and finalize engineering details.
The project is not expected to come online until 2024 at the earliest, at which point it is expected to be able to produce 16 million to 18 million tonnes of LNG per year.
Private companies involved in the project include BP, ConocoPhillips, ExxonMobil and TransCanada.
By Joao Peixe of Oilprice.com
Joao is a writer for Oilprice.com More