
Luke Saugier
32:57 - 33:34
"Our only upstream cost will be that connection into the pipeline, which will be right at, as you say, the tailgate of our plant."
“Our only upstream cost will be that connection into the pipeline, which will be right at, as you say, the tailgate of our plant.”
The reason that we have structured our agreements on selling gas the way that we have is to minimize the cost to Hilcorp, the upstream operator, to sell that gas, right? So I'm not quite sure what the cost of building a gas pipeline and a gas treatment plant are, but none of that cost will be paid by Hilcorp. Our only upstream cost will be that connection into the pipeline, which will be right at, as you say, the tailgate of our plant. And I think that's consistent with our business model. We are an upstream oil and gas company.
Three major North Slope producers told the Alaska Senate Finance Committee they signed gas sale precedent agreements for Alaska LNG Phase 1 and will sell at the lease line. That structure means midstream pipeline and treatment costs won't be deductible against oil production tax.
