Click to edit Master title style • Edit Master text styles � Second level - Third level o Fourth level � Fi8h level Alas aska a LNG Project t Update Leslie C. “Fritz” Krusen, VP LNG & AdministraLve Services September 13, 2018
IntroducLon • In Intr troducLon • LNG Mar Market t • Star ars Aligned • Commercial al & Finan ancing • Technical al & Regulatory • Benefi fits ts to Alas aska a 2
Alaska Gasline Development Corp. • Alas aska a Gas asline Development t CorporaL aLon (AGDC): � Independent, public corporaLon owned by the State of Alaska. � Empowered to expedite, finance, and build a gas project. � AGDC is Alaska’s natural gas infrastructure development company. • Vision: Vision: � Maximize the benefit of Alaska’s vast North Slope natural gas resources through the development of infrastructure necessary to move the gas into local and internaLonal markets. • Alas aska a LNG & Alas aska a Stan and Alone Pipeline: � AGDC is advancing two pipeline projects that will provide gas to Alaskans, but only one pipeline project will be built. While Alaska LNG moves forward as AGDC’s priority project, AGDC will conLnue to advance the ASAP project to a Record of Decision. 3
AGDC Takes Lead of Alaska LNG • 2017 – – � Took the lead of Alaska LNG at the end of 2016. � Introduced project to market for the first Lme in 2017. • 2018 – – � Advancing Alaska LNG through regulatory process. � Working toward definiLve commercial agreements. 4
LNG Market • In Intr troducLon • LNG Mar Market t • Star ars Aligned • Commercial al & Finan ancing • Technical al & Regulatory • Benefi fits ts to Alas aska a 5
Hydrocarbon EvoluLon • World is moving to clean aner fuels: � Coal to oil to natural gas. � Methane (natural gas) is the simplest, cleanest hydrocarbon. � Global demand for natural gas is booming as countries seek to meet energy demands and environmental goals. 6
Alaska’s Market Window Gap between global LNG demand and supply in 2025 ranges from 50-100 million tonnes per annum (MTPA), with long-term demand driven by China, India, and other emerging markets across the Asia-Pacific region. Asia represents 73% of the LNG market (and growing). 7
CompeLLon and Tracking Alas aska a must t compete in a a global al mar arket. t. Alas aska a Yam amal al 20 MT MTPA TBD TBD Qatar ar TBD TBD LNG Can anad ada a MT MTPA KiLmat t 13 - 50+ + MT MTPA Mo Mozam ambique Gulf Gu f 40+ + MT MTPA Coas ast t 50+ + MT MTPA Var arious Both th exisLng an and newly Pap apua a New Austr tral alia a proposed projects ts ar are Vo Volumes noted Guinea a 5+ + MT MTPA seeking to sell LNG to th the by eac ach region ~8 - 15MT ~8 MTPA sam ame mar arkets ts as as are proposed, ar Alas aska a LNG. not t exisLng. 8
Stars Aligned • In Intr troducLon • LNG Mar Market t • Star ars Aligned • Commercial al & Finan ancing • Technical al & Regulatory • Benefi fits ts to Alas aska a 9
America’s Project, not just Alaska’s Lar arge infras astr tructu ture. Lar arge constr trucLon. Resource development. t. Energy export. t. 10
Alaska and China Establish Ties Consensus reached that LNG is an area of cooperaLve trade China is the natural market for Alaska’s abundant North Slope gas. 11
Joint Development Agreement THE RIGHT COMPANIES TO ADVANCE THE PROJECT. 12
Financing & Commercial • In Intr troducLon • LNG Mar Market t • Star ars Aligned • Finan ancing & Commercial al • Technical al & Regulatory • Benefi fits ts to Alas aska a 13
Alaska LNG Capital Structure $Bi $Billions s � $27.9 Constr trucLon Cost t � $ 6.2 Owner’s Costs ts � $ 9. $ 9.3 Co 3 ConLn Lngen ency cy � $43.4 PotenLal al Total al 14
Balancing Three Drivers • All infras astr tructu ture an and resource development t projects ts have similar ariLes. • Three key drivers have to be bal alan anced to mak ake th the project t economic. Re Resource Owner/SOA: Acceptable netback and PILT. Cus Custome omers: s: Finan ancing: Product delivered Adequate pricing at a market for debt and clearing price. equity markets. 15
Status of Documents 2018 is a a year ar of pap aperwork: • Re Regulatory is progressing; FERC schedule, ASAP. • Advan ancing defi finiLve LNG sal ale ag agreements ts. • Goldman an Sac achs an and Ban ank of China a engag aged as as lead ad project t cap apital al coordinators for debt t an and equity ty fi finan ancing. EQUIT ITY BUYER R DEB DEBT T 15 LOIs Is/MO MOUs concluded, Se Seeking ing por porLons of Lons of Project t str tructu ture to al allow • • • mo movi ving t g to S SPA. fi finan ancing connected segment t investm tment. t. Str trategic par arLcipaL aLon to offftak ake. • opportu tuniLes. 16
Technical & Regulatory • In Intr troducLon • LNG Mar Market t • Star ars Aligned • Finan ancing & Commercial al • Technical al & Regulatory • Benefi fits ts to Alas aska a 17
Alaska LNG Project Development 2018 Technical al/Regulatory Focus: AcLvely De-Risking the Project through Regulatory Process. • 18
FERC Schedule Published ALASKA LNG PERMIT RMITTIN ING TIME IMELIN INE ed – 2016 cer Led $600 million of engineering, environmental, and science Efffort t Producer completed to advance permisng of Alaska LNG 2014 – under Producer Led Effort. Pr December 2016 AGDC takes the lead of Alaska LNG project April 2017 AGDC Files FERC ApplicaLon August 2017 FAST Act Acceptance and Beyond AGDC Led Efffort t August 2017 PresidenLal ExecuLve Order November 2017 Joint Development Agreement 2017 an March 2018 FERC publishes EIS schedule March 2019 Dra8 Environmental Impact Statement December 2019 Final Environmental Impact Statement March 2020 FERC authorizaLon to construct 19
ASAP Right-of-Way • U.S. Army Corps of Engineers Releases Final Supplemental Environmental Impact Statement for Alaska Stand Alone Pipeline Project (ASAP). • The ASAP Project and Alaska LNG Project both include buried pipelines, share a common mainline alignment for over 80 percent of the route, and provide gas to Alaskans. • The ASAP Final SEIS and forthcoming Record of Decision, will result in three addiLonal federal authorizaLons that will provide tremendous benefit to both projects. 20
Benefits to Alaska • In Intr troducLon • LNG Mar Market t • Star ars Aligned • Finan ancing & Commercial al • Technical al & Regulatory • Benefi fits ts to Alas aska a 21
Benefits to Alaskans: Economy Gas as Supply OperaL aLons Mai Maintenan ance Ru Rural al CommuniLe CommuniLes s Equity ty Retu turn 22
Benefits to Alaskans: Gas for Fairbanks Designed to serve in-state needs before gas as is delivered to th the Liquefac acLon Fac acility ty. • Clean aner ai air for Fai airban anks • Stab able Prices • Energy for al all of Alas aska: a: � Offtakes to communiLes, uLliLes, and industries (mines, etc) along the Alaska Gasline. 23
Benefits to Alaskans: Environment Alas aska a LNG will bring clean an ai air an and blue skies to Alas aska a an and th the world. Alas aska a LNG will offfset t 80 million to tonnes of CO 2 per year ar going into to th the atm atmosphere. 24
Benefits to Alaskans: Jobs Project t lab abor ag agreement t will ensure Alas askan ans will be fi first t in line to work on Alas aska a LNG. 25
Future Benefits to Alaskans: LNG to Coastal CiLes 1,000m3 Norwegian LNG Shutle Carrier Small-Scale LNG Regas-Storage Terminal • Norwegian an & Jap apan anese smal all-scal ale distr tribuLon program am is a a model for Alas aska a • Alas aska a Afffordab able Energy Fund estab ablished by th the Legislatu ture (Senator Lyman an Ho Hofffman an in lead ad); to receive 20% of Alas aska a Royal alty ty Gas as funds remai aining a8 a8er Perman anent t Fund deposit t • Legislatu ture to ap appropriate funds for more afffordab able energy opLons to communiLes not t ac accessible from th the pipeline/electr trical al grid; could be renewab able forms but t could al also be coas astal al LNG 26
Future Benefits to Alaskans: LNG Bunkering Cruise ship exhaust prompts complaints to Alaska agency • Ships (cruise, car argo, ferry) emit t far ar less par arLculates, sulfur, an and CO2 when fueled (“bunkered”) by LNG, instead ad of heavy residual al oil (ag agai ain, “bunker”) or diesel 27
Summary • Progressing on al all fronts ts. • Lar arge project: t: lots ts of ag agreements ts an and process. • Lar argest t LNG mar arket t is in our bac ack yar ard. • Alas aska a is ab able to compete. • Tran ansformaL aLonal al benefi fits ts to Alas aska a for generaL aLons: � Gas for Alaskans. � Environment. � Jobs. � Economy. � Revenue to the state. 28
Click to edit Master title style • Edit Master text styles � Second level - Third level o Fourth level � Fi8h level AGDC.us
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