ExxonMobil and partners quit LNG project

OIL and gas giants ExxonMobil, BP and ConocoPhillips have decided not to invest in the next stage of a proposed US$65bn LNG export terminal and pipeline in Alaska, US.

The decision comes after a report from industry analyst Wood MacKenzie, and seen by the Wall Street Journal, said that the North Slope project “is one of the least competitive” of proposed LNG projects worldwide.

In testimony given to Alaska’s Joint Senate Resources Committee, Exxon said it would pull out of the project due to a “misalignment” between the state and its partners. However, the company would support a transition to a state LNG project or would work to reduce project costs to make the project feasible.

Exxon and its partners said they will still sell gas to the pipeline, if it is built. Exxon also said it would consider selling its one-third stake in the project to the state.

Bill Walker, governor of Alaska, said the state is exploring alternative ideas for the project including third-party investors and project financing. However, the project will not be financed indefinitely if it continues to be uneconomical. “A project that is not economically viable will not be built,” he said.

He also said the decision means that US$500m of pre-FEED engineering and permitting work will now be shelved as a result. If the state decides to go ahead with the project, FEED work could start in 2017.