Route to Market

Oil Export

The TAPS main oil line is in its fifth decade of operation and is a federally regulated common carrier pipeline. The blend of production streams from Prudhoe Bay, Kuparuk River and all the other fields feeding into the TAPS constitutes Alaska North Slope Crude Blend, which is exported by tankers at Valdez and delivered to US West Coast refineries. The quoted benchmark, ANS Crude Blend, is the price of the blended Alaska North Slope liquids stream when delivered to the US West Coast so the value at the entry to the TAPS main oil line is less than the quoted ANS Crude Blend price by the cost of seaborne transport from Valdez and the TAPS tariff.

The liquid hydrocarbons that Pantheon will produce have a different composition than the legacy production through the pipeline. The principle by which a common carrier pipeline allocates barrels injected into the pipeline vs barrels lifted from the export point is to ensure that, so far as possible, each shipper gets out the same value of ANS Crude blend as the value of the liquids that they put in. Therefore, Pantheon’s production from Ahpun and Kodiak would be subject to what is known as a Quality Bank adjustment resulting in an expected 10% shrinkage factor through TAPS (Ahpun Field export volume vs ANS lifted volume at Valdez).

Gas Export

In the absence of any pipeline or other market from the ANS, excess associated gas not used to produce electricity for field operations will be re-injected into reservoir. However, in June 2024, Pantheon entered into a Gas Sales Precedent Agreement (“GSPA”) which has helped to rekindle the Alaska LNG project by allowing it to be broken into its different components. Phase 1 of Alaska LNG will be the 800 mile, 42” pipeline from the North Slope to Southcentral Alaska to serve in-state gas demand. Subsequent phases will include the Arctic CCS project and the LNG export project from Nikiski.

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