Pantheon Resources PLC (AIM:PANR, OTCQX:PTHRF) has entered into a gas sales precedent agreement (GSPA) with a subsidiary of the Alaska Gasline Development Corporation (AGDC).
The GSPA envisages that Pantheon will supply up to 500 million cubic feet per day of natural gas at a base price of $1 per million BTU.
It marks a significant step towards the development of the Alaska LNG project, the company highlighted in a statement.
The agreement is part of Phase 1 of the Alaska LNG project, Pantheon noted, with the project expected to see the construction of a pipeline from the Alaskan North Slope to Southcentral Alaska.
“This agreement solidifies the commercial foundation needed for the Phase 1 portion of Alaska LNG and provides enough pipeline-ready natural gas, at beneficial consumer rates, to resolve Southcentral Alaska's looming energy shortage as soon as 2029,” AGDC president Frank Richards said.
"Phasing Alaska LNG by leading with the construction of the pipeline will make Alaska LNG's export components more attractive to LNG developers and investors, and this agreement will help unlock the project's substantial economic, environmental, and energy security benefits for international markets as well as for Alaska.”
A win-win for Pantheon and Alaska
Pantheon executive chair David Hobbs, meanwhile said: “We are delighted to have the opportunity to create a win-win for the State of Alaska and for Pantheon as we turn the fantastic exploration & appraisal success of the past five years into the development of two giant oil and gas fields on Alaska's North Slope.”
“We are building a mutually beneficial long-term relationship with Alaska LNG and with the State which seeks to supply much needed gas required for Southcentral Alaska's energy needs, while at the same time realising the value from our total aggregate contingent resources exceeding 1.5 billion barrels of ANS blend and 6 Tcf of natural gas.
Hobbs added: "When we set out our strategy to achieve early production and cashflow on the path to financial self-sufficiency, we considered gas monetisation as a path to non-dilutive funding only one of several possibilities.
“However, the availability of our pipeline quality associated gas created the opportunity to bolster the Alaska LNG project, including the pipeline, LNG export facilities and gas conditioning facilities.
“We are happy to be able to share the benefit, thereby enhancing both Pantheon's and AGDC's project economics and funding profiles.
“Our goal of demonstrating sustainable market recognition of $5-$10 per barrel of 1C/1P marketable liquids by end of 2028 remains unchanged."
What it covers
The GSPA outlines key commercial terms to be incorporated into a binding Gas Sales Agreement (GSA) in the future, after a Final Investment Decision (FID) is made – currently anticipated by mid-2025.
The initial term of the GSPA extends until June 30, 2025, or until the definitive GSA is executed.
It also gives the option for the State of Alaska to reduce the natural gas unit price and opens additional funding pathways for Pantheon’s projects.