Pantheon Resources signs landmark gas sales agreement with Alaska LNG

Pantheon Resources plc (AIM: PANR) has reached a significant milestone by signing a Gas Sales Precedent Agreement (GSPA) with 8 Star Alaska LLC, a subsidiary of the Alaska Gasline Development Corporation (AGDC). This agreement is pivotal as it marks a major commitment in the development of the Alaska LNG Project—a federally authorized natural gas and LNG export project aimed at delivering natural gas within Alaska and exporting up to 20 million tonnes per annum of LNG. The GSPA entails that Pantheon’s wholly-owned subsidiary, Great Bear Pantheon LLC, will supply up to 500 million cubic feet per day of natural gas at a maximum base price of $1 per million BTU.

Key Provisions and Economic Implications

The agreement sets a framework for a binding take-or-pay Gas Sales Agreement to be negotiated post-Final Investment Decision (FID), which is anticipated by mid-2025. Pantheon’s commitment to supply natural gas supports the phased approach of the Alaska LNG project, which initially focuses on constructing a 42-inch pipeline to tackle the energy crisis in Southcentral Alaska by 2029, without the immediate construction of an LNG plant. This phase, with materially lower capital expenditure and shorter construction timeframe, enhances the project’s feasibility and economic viability.

Industry Perspectives on the Agreement

AGDC President Frank Richards highlighted the strategic importance of the agreement, stating, “This agreement solidifies the commercial foundation needed for Phase 1 of Alaska LNG and provides pipeline-ready natural gas at beneficial consumer rates, resolving the looming energy shortage in Southcentral Alaska as soon as 2029.”

David Hobbs, Pantheon’s Executive Chairman, expressed enthusiasm about the deal’s potential, noting, “We are delighted to create a win-win situation for the State of Alaska and for Pantheon, turning our exploration success into the development of two giant oil and gas fields on Alaska’s North Slope.”

Broader Impact and Future Prospects

This agreement not only secures a stable supply of natural gas for Alaska’s internal needs but also positions the Alaska LNG project as more attractive to LNG developers and investors globally. By aligning the gas supply from Pantheon’s Kodiak and Ahpun oil and gas fields with the state’s infrastructure projects, this partnership is set to unlock substantial economic, environmental, and energy security benefits.

The strategic alignment between Pantheon and AGDC under this agreement promises to enhance the economic feasibility and funding profiles of both entities’ projects, potentially leading to accelerated development and reduced financial strain. Furthermore, it sets the stage for continued expansion and development of energy resources in Alaska, reinforcing the state’s position as a key player in the global energy market.

The strategic partnership forged between Pantheon Resources plc and the Alaska Gasline Development Corporation through this GSPA is a testament to the transformative potential of collaborative energy projects. By securing a reliable source of natural gas at competitive prices, this agreement not only addresses immediate regional energy needs but also lays the groundwork for sustainable economic growth and environmental stewardship in Alaska. It represents a forward-thinking approach to energy development, leveraging Alaska’s rich natural resources responsibly and efficiently.