Only Prudhoe Bay and Point Thomson approved for major gas sales, commission says

Prudhoe Bay and Point Thomson remain the only North Slope fields with regulatory approval to supply major gas sales projects, a narrow bottleneck that keeps Alaska LNG anchored to two giant hubs. At a June 5 Senate Finance hearing, Alaska Oil and Gas Conservation Commission officials said no other field has an application in hand to join that effort, even as smaller gas offtakes continue for other North Slope uses.

The commission said Prudhoe Bay is covered by a 2015 order allowing about 3.6 billion cubic feet of gas a day, while Point Thomson is covered by a separate 2015 order allowing about 1.1 billion cubic feet a day. Commissioner Greg Wilson told lawmakers those volumes are enough to supply Alaska LNG through its first two phases. The practical message was blunt: any broader gas-sales plan still depends on two approvals that already exist, not on a larger field list that has yet to materialize.

That matters well beyond Juneau. A supply base concentrated in Prudhoe Bay and Point Thomson shapes how quickly local hiring, construction activity and long-range revenue forecasts can turn into reality for North Slope communities and the state. The commission’s background material says the two fields together hold more than 35 trillion cubic feet of gas reserves, but also warns that poor gas takeout could strand hundreds of millions of barrels of oil. In other words, every new gas sales decision has to protect the oil still in the ground as well as the gas headed south.

For Prudhoe Bay, the commission says the existing gas offtake rate was set in 1977 at 2.7 billion standard cubic feet per day, leaving about 2 billion standard cubic feet per day available for sales after fuel use and enhanced recovery operations. For Point Thomson, the commission has described it as Alaska’s largest proven yet still undeveloped field and has stressed that its retrograde condensate reservoir is technically different from a typical oil or gas field. Those details help explain why field-level approvals have been so tightly managed.

The Alaska Gasline Development Corporation says Prudhoe Bay and Point Thomson anchor the project and will average about 3.5 billion cubic feet a day, with roughly 75 percent coming from Prudhoe Bay and 25 percent from Point Thomson. The Federal Energy Regulatory Commission’s March 6, 2020 final environmental impact statement described Alaska LNG as a 20 million metric-ton-per-year export project with an 806.9-mile, 42-inch mainline pipeline and dedicated gas transmission lines for Prudhoe Bay and Point Thomson.

The project has already outlived multiple ownership shifts. Wood Mackenzie says BP Exploration (Alaska), ExxonMobil Alaska Production Inc. and ConocoPhillips Alaska exited in 2016, after which AGDC took over leadership. Even with a 30-year gas sales precedent agreement announced in May by Glenfarne Alaska LNG LLC and ConocoPhillips Alaska, the commission’s latest message was clear: for now, Alaska LNG still rests on two approvals, and a wider North Slope supply slate remains years, not months, away.