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Alaska, energy firms ink deal in step to free stranded gas

Thursday, 16 Jan 2014 | 9:22 AM ET

Jan 16 (Reuters) - Alaska has signed an agreement with major oil and gas firms to bring stranded gas reserves to market by building a pipeline to connect with a proposed liquefied natural gas (LNG) terminal.

The deal was signed with TransCanada Corp and the three major producers of Alaskan North Slope oil - Exxon Mobil Corp, BP PLC, ConocoPhillips, Alaska Governor Sean Parnell said in a statement Wednesday.

The producers have been re-injecting about 8 billion cubic feet per day of gas back into fields as the original plan to send it to other U.S. states was derailed by the shale gas boom .

"This commercial agreement...is Alaska's roadmap to developing our vast gas reserves," Parnell said.

"This is truly a historic achievement...We're moving forward with a project that's on Alaska's terms and in Alaskans' interests," Parnell said.

The project aims to supply Asian markets as well as the Alaskan domestic market.

The Heads of Agreement, signed by the commissioners of Natural Resources and Revenue and Alaska Gasline Development Corp (AGDC) includes the state as an equity partner.

The deal provides gas to Alaskans, lays out proposed fiscal terms, and will allow third-party access to all of the project components, including possible construction of a new LNG train at the liquefaction plant, the governor said.

The Alaska LNG project would be one of the largest export projects of its kind in the world. The project could cost an estimated $45 billion to $65 billion and could include the construction of an 800-mile pipeline to a proposed LNG terminal in the Nikiski area on the Kenai Peninsula or another site.

Parnell said the agreement ensures Alaskans' interests are protected by outlining significant participation by AGDC and recognizes that AGDC will continue to pursue its own Alaska Stand Alone Pipeline instate gasline project.

The agreement will be subject to public review by the Legislature this session, the governor said.