Memorandum Re: Resolution No. G15-01 Authorizing … Docs/2015BoardMeetings/01142015... · Board...

MEMORANDUM

To: Board Members Alaska Industrial Development and Export Authority From: Ted Leonard Executive Director Date: January 14, 2015 Subject: Resolution No. G15-01 Authorizing Cost Reimbursement Agreement between

AIDEA, Furie Operating Alaska, LLC and Cornucopia Oil and Gas Company, LLC Summary Management recommends that AIDEA, under the conditions outlined in Resolution No. G15-01, as allowed in AS 44.88.172, enter into a Cost Reimbursement Agreement (“CRA”) with Furie Operating Alaska, LLC and its parent company, Cornucopia Oil and Gas Company, LLC, for the purpose of performing due diligence and the development of a Finance Plan with regards to potential AIDEA participation in financing a planned production facility and related infrastructure for the production of natural gas from the Kitchen Lights Unit in the northern portion of Cook Inlet. Under the CRA, Furie agrees to reimburse the Authority for the actual direct and reasonable costs properly incurred by the Authority in undertaking Development Activities that include the performance of due diligence for AIDEA’s potential involvement in the project and development of the project finance plan. Costs for these activities will be capped at $100,000 and if the project proceeds, those costs may be reimbursed as transaction costs. Project Description Furie Operating Alaska, LLC is a Texas limited liability company created for the purpose of developing natural gas from lease blocks in the Cook Inlet of Alaska. Presently, Cornucopia Oil and Gas Company, LLC (“COG”), a Texas limited liability company, owns the majority of the working interest in numerous state of Alaska administered oil and gas lease blocks that have been combined into the Kitchen Lights Unit (“KLU”), located offshore of Nikiski, Alaska (see Figure 1). COG acquired Furie in 2011; Furie is the named operator of the unit. Through this memo and the CRA, both Furie Operating Alaska, LLC and COG are collectively referred to as “Furie”. Furie is currently engaged in engineering, procurement, and construction of the necessary infrastructure for the development of the natural gas from the unit. A summary of the planned facilities are as follows:

A gas production monopod platform to support up to six production wells. The platform is designed for the production of up to 100 million cubic feet per day with the potential to expand the facility to process up to 200 million cubic feet per day of natural gas (“mmcf/d”).

Board Memorandum Resolution No. G15-01 January14, 2015 of 4

This monopod is fabricated and currently awaiting transport from Seattle, Washington for installation starting in spring 2015.

A 15-mile sea-bottom pipeline that will convey water, gas, and other fluids to the on-shore production facility. This pipeline is capable of carrying 100 mmcfd/day of natural gas. Permitting has been approved that will allow for two potential pipelines with a total capacity of 200 mmcf/d of natural gas. The project that will be reviewed is for one pipeline only. The pipe has been purchased and is currently staged at Point MacKenzie, waiting installation planned to start in spring 2015.

An onshore production facility, located just north of the former Agrium fertilizer facility that will separate and treat the natural gas to produce pipeline quality natural gas. The onshore production facility is currently approximately 50% complete with construction.

First gas from the above facilities is anticipated during the fourth quarter of 2015. To support these efforts, Furie also has plans in-place for the drilling of additional gas production wells during 2015 and 2016 utilizing a jack-up drilling rig.

Figure 1: Map of Kitchen Lights Unit and proposed platform and pipeline location (from November 2, 2014 Petroleum News)


Project Financing & Repayment Furie estimates the remaining cost to complete the above described facilities at approximately $144 million. To date, Furie has invested approximately $135 million in the project. AIDEA would provide financing for up to $50 million of the potential facility costs. Furie currently has $70 million of funds available through a term credit facility issued by Energy Capital Partners (ECP), an energy private equity firm with $13 billion in total assets under management. The remaining capital required to bring gas online will be provided through equity contributions. At this time it is envisioned that AIDEA will take a preferred equity stake in the facilities, similar to the investment structures used for the Endeavour and MOC1 projects. Current discussions with Furie intend to provide repayment of the investment over a 5-to-8 year term with an annual dividend at a to-be negotiated rate. Furie intends to sell the produced natural gas locally to several parties and are in discussions or have agreements with the Homer Electric Association, Tesoro (Kenai refinery), Chugach Electric Association, Matanuska Electric Association, Enstar, and Agrium. Economic Impact & Mission Suitability This project would fulfill AIDEA’s mission of economic development and job growth through the following:

The project provides natural gas to sustain the electric and heating utilities in the Southcentral Alaska region.

The project will employ up to 200 individuals for construction activities during the spring through fall 2015 construction season.

The project will employ up to 10 permanent positions for the operations and maintenance of the new infrastructure and up to 5 permanent professional positions to perform administrative and support functions.

The project contributes new gas resources that are necessary to enable the redevelopment of industrial and gas conversion industries such as the Agrium fertilizer facility or the development of a regional LNG production facility (as being discussed by Resources Energy Inc., “REI”).

The project will generate new tax and royalty revenues for both the Kenai Peninsula Borough and the state of Alaska.


Timeline & Scope In accordance with this CRA and AS 44.88.172, AIDEA intends to expend up to $100,000 from the Economic Development account for the following activities:

Review and confirmation of the size and expected production of the gas reserves.

Verification of the on-going engineering and construction work, cost estimates, and schedule to understand both the magnitude of capital investment and timeline for the successful completion of the project.

Review and verification (as appropriate), of the business plan and financing for the development of the project.

Creation of an appropriate Finance plan that will assure repayment per statute of 44.88.172 funds used for this project and the development of all necessary collateral.

Engagement of third-party consultants, subject matter expert’s, legal advisors, and State of Alaska Department of Law resources for the preparation, negotiation, and completion of the necessary legal and financing plan documents to enable AIDEA’s participation in the project.

Provide for the reimbursement of other direct costs, including travel and communication costs for the completion of AIDEA’s due diligence and financing plan efforts.

It is anticipated that this work will be done in a two to three month period, in order to meet the project proponent’s timeline and AIDEA Board consideration of the project/investment no later than the May 2015 AIDEA Board meeting. Recommendation to Board AIDEA management recommends approval of Resolution No. G15-01 directing AIDEA to execute a Reimbursement Agreement with Furie Operating Alaska, prepare due diligence and finance plan documents and bring a recommendation on AIDEA’s potential investment in the project to the Board by May, or earlier. Attachments

1. AIDEA Resolution No. G15-01

2. AIDEA-Furie Cost Reimbursement Agreement

3. Furie Presentation to Cook Inlet Regional Citizen’s Advisory Council

ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY

RESOLUTION NO. G15-01

RESOLUTION OF THE ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY AUTHORIZING A COST REIMBURSEMENT AGREEMENT WITH FURIE OPERATING ALASKA, LLC AND CORNUCOPIA OIL AND GAS COMPANY, LLC FOR DEVELOPMENT ACTIVITIES REGARDING GAS PRODUCTION FACILITIES

WHEREAS, Furie Operating Alaska, LLC, a Texas limited liability company, and

Cornucopia Oil and Gas Company, LLC, a Texas limited liability company (together referred to

herein as “Furie”), have requested that the Alaska Industrial Development and Export Authority

(the “Authority”) potentially finance under AS 44.88.172 proposed gas production facilities for

Furie’s oil and gas leases that are part of the Kitchen Lights Unit located in Cook Inlet (the

“Project”);

WHEREAS, the Project would consist of constructing and developing a production

platform, pipeline, and onshore production facility to produce pipeline quality natural gas from

the Kitchen Lights Unit;

WHEREAS, under AS 44.88.173, the Authority, before approving the Project, must

prepare and approve a finance plan for it;

WHEREAS, the Authority needs to undertake certain activities (the “Development

Activities”) before completing the finance plan for the Project and before approving the

Authority’s investment in the Project, and the Development Activities are described in the

“Scope” provision of Section 2(a) of the proposed Cost Reimbursement Agreement between the

Authority and Furie;

WHEREAS, the Authority shall have the sole authority to determine the scope of the

Development Activities and the amount of and purpose for expenditures on the Development

Activities, and to select, contract with, and direct the engineers, attorneys, consultants and other

professionals assisting with the Development Activities, and Furie shall have no authority to

approve expenditures or contracts, enter into contracts, incur expenditures, or administer or

direct the Development Activities;

AIDEA Resolution No. G15-01 Page 2

WHEREAS, the estimated cost of completing the Development Activities for the Project

is not expected to exceed US $100,000;

WHEREAS, the Staff of the Authority has prepared a Cost Reimbursement Agreement

with Furie, a copy of which is attached; and

WHEREAS, it is in the best interests of the Authority that it enter into the Cost

Reimbursement Agreement with Furie and that, subject to the execution of such agreement, the

Authority may expend up to US $100,000 to conduct the Development Activities for the Project.

NOW, THEREFORE, BE IT RESOLVED BY THE ALASKA INDUSTRIAL

DEVELOPMENT AND EXPORT AUTHORITY AS FOLLOWS:

Section 1. Staff of the Authority is authorized to undertake the Development

Activities with respect to the Project in such a manner as the Executive Director determines to be

appropriate.

Section 2. The Executive Director is authorized to execute the Cost Reimbursement

Agreement on behalf of the Authority with such non-material modifications as the Executive

Director, in his discretion, may deem appropriate.

Section 3. Subject to the execution of the Cost Reimbursement Agreement by Furie

Operating Alaska, LLC and Cornucopia Oil and Gas Company, LLC, the Authority may utilize

up to US $100,000 from the Economic Development Account, AS 44.88.172, to undertake the

Development Activities.

DATED at Anchorage, Alaska on this 14th day of January, 2015.

ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY

___________________________________ Chair

SEAL ATTEST: ________________________________ Secretary

AIDEA-FOA-COG Cost Reimbursement Agreement Page 1 of 9

COST REIMBURSEMENT AGREEMENT

This Cost Reimbursement Agreement (“Agreement”) is made as of the ____ day of January, 2015, by and between the ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY (the “Authority”), a public corporation of the State of Alaska, and FURIE OPERATING ALASKA, LLC, (“FOA”), a Texas limited liability company and CORNUCOPIA OIL AND GAS COMPANY, LLC (“COG”), a Texas limited liability company. COG and FOA are collectively referred to herein as “Furie” for the purposes of this agreement and are jointly and severally liable for all the obligations of “Furie” under this agreement. Both FOA and COG are licensed to conduct business in the State of Alaska.

The parties recite that:

A. The Authority’s purpose is to advance and promote economic development and employment in Alaska by, among other things, financing or facilitating the financing of the development of the natural resources of the state.

B. In October 2010, Cornucopia Oil and Gas Company, LLC (“COG”) obtained the majority of the working interest in the Kitchen Lights Unit (“KLU”), which includes numerous State of Alaska administered oil and gas development lease blocks in the northern portion of the Cook Inlet, located offshore from Nikiski, Alaska. In June 2011, COG acquired Furie, which is a minority working interest owner and the named operator of the KLU.

C. In Fall of 2011, Furie began exploration of the State of Alaska administered oil and gas development leases held in the KLU, offshore of Nikiski, Alaska through bringing the Spartan 151 jack-up drilling rig to the Inlet.

D. In June 2013, positive drilling results for economically recoverable natural gas reserves were discovered through tests on well KLU #3. Furie then began planning for the development and production of this gas.

E. Furie is currently continuing with construction and development for the necessary production platform, pipeline, and onshore production facility (all or portions of the foregoing constituting “the Project”) to produce pipeline quality natural gas from the KLU. Furie is anticipating completion of these facilities in fall 2015.

F. Furie has requested the financial assistance of the Authority with respect to the development of the Project.

G. To that end, Furie understands that the Authority must conduct certain due diligence analyses, development and other activities regarding the Project with a view to towards reaching a decision on whether the Authority will participate in the financing the Project, in part. A decision to participate in financing the Project also requires AIDEA to develop and adopt a finance plan that is required by statute.

H. The Authority is willing to conduct such analyses and other activities so long as Furie reimburses the Authority for the costs thereof on the terms and conditions provided for in this Agreement.


I. Furie acknowledges that, notwithstanding this Agreement, the Authority reserves its full and absolute discretion to determine whether to terminate the analyses and other activities in respect of the Project, or whether to participate in financing the Project or not.

NOW, THEREFORE, in consideration of the mutual promises made in this Agreement, the parties agree as follows:

1. Expenditure of Funds for Development Activities. In reliance on Furie unconditionally agreeing to reimburse the Authority for reasonable amounts expended by the Authority in connection with its due diligence analyses and other activities referenced above, and in reliance on the other terms and conditions of this Agreement, the Authority agrees that it will, for the benefit of the Project, advance and expend an amount not to exceed US$100,000 in direct costs for the “Development Activities” specified in Section 2 below. The Authority shall have the sole authority to determine the scope of the Development Activities and the amount of and purpose for expenditures under this Agreement; provided that all such expenditures are incurred to assist the Authority in reaching a decision on whether, or to what extent, it will finance the Project. The Authority also shall have the sole authority to enter into contracts with any engineers, attorneys, consultants and other professionals who will assist with the due diligence, development, and finance plan activities. Furie shall have no authority to enter into contracts, incur expenditures, or administer or direct activities undertaken pursuant to this Agreement.

2. Scope and Budget.

(a) Scope. The Development Activities contemplated under this Agreement are generally expected to consist of the following activities, but are not necessarily limited to these specific activities:

(i) Review and verify as necessary the engineering and construction work completed to date by Furie that will help understand the magnitude of capital investment required for the completion of the Project.

(ii) Review and verify, as appropriate, Furie’s business plan, including operational, financing, and other costs and existing sales contracts for the gas produced from the Project.

(iii) Prepare, negotiate, and complete the necessary legal and financing plan documents (the “Project Development Agreements” or PDA) as required for the Authority’s financial participation in the Project.

(iv) Prepare all necessary reviews as described above to enable the completion of a concise Due Diligence and Finance Plan report for AIDEA Board consideration on the potential investment by the Authority in the Project.

In accordance with Section 1, the Authority, in its discretion, may adjust the Scope and may determine that all of these activities are not necessary or that additional activities not specified in this subsection may be required. The Authority will consult with Furie prior to completion of these activities, but does not require Furie’s approval to complete such activities.


(b) Budget. The overall budget for the Development Activities is US $100,000 and the Authority shall have no right to exceed such limitation on the quantum of reimbursable expenses without first obtaining the written consent of Furie.

(c) Confidentiality. Furie and AIDEA acknowledge that the materials constituting the Development Activities and all materials and information concerning Furie’s oil and gas reserves and business are confidential. Neither party shall disseminate the materials or information produced or obtained through the Development Activities to any third persons without the prior written consent of the other party to this Agreement. Each party, however, shall be entitled to use the results of the Development Activities and ensuing information and materials for each party’s own purposes, and each party may disseminate the information and materials to each party’s own employees, consultants, accountants, attorneys, financial analysts, and other advisors for their use in assisting the receiving party with respect to the Project, provided such persons have a reason to know and review same and have agreed to maintain the confidentiality of the materials. In addition, if either party hereto is requested or required by applicable law to disclose any of the materials from the Development Activities, such party shall provide the other party with prompt written notice (unless prohibited by law) of any such requirement so that the other party may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Section (c). In the event that such a protective order or other remedy is not obtained, or that compliance with the terms of this Section (c) is waived in writing by the affected party, the party hereto that is required to disclose any such information agrees that it will furnish only that portion of the Development Activities that is legally required, provided that such party exercises its reasonable best efforts to preserve the confidentiality of the information, including without limitation, by cooperating with the other party to obtain reliable assurances that confidential treatment will be accorded the Development Activities being disclosed. Each party hereto acknowledges that disclosure of the Development Activities in violation of the terms of this Section (c) may inflict irreparable harm on the other party and that such harm might not be fully compensated by monetary damages, and that the other party shall be entitled to seek specified performance and injunctive or other equitable relief as a remedy for any breach of this Section (c) without positing of a bond or other security. Such remedy shall not be deemed to be the exclusive remedy for breach, but shall be in addition to and cumulative with all other legal and equitable remedies to which the injured party may be entitled.

3. Reimbursement Obligation. In consideration of the terms and conditions of this Agreement, Furie agrees to reimburse the Authority for the actual direct and reasonable costs properly incurred by the Authority in undertaking the Development Activities. Furie’s total obligation for reimbursement under this Agreement will not exceed US $100,000. Direct costs include, but are not limited to, costs of engineers, attorneys, consultants, and other professionals, and pre-approved travel, shipping, transportation, and/or communication costs (including such reasonable travel and transportation costs for Authority staff). Direct costs do not include Authority staff time. Furie shall reimburse the Authority for the same within 30 days after receipt of a detailed itemized invoice from the Authority with supporting documentation satisfactory to Furie evidencing payment of direct costs by the Authority. Reimbursement amounts shall accrue interest beginning 30 days after the date of the Authority’s demand at the rate of ten percent (10%) per annum, or if less, the maximum amount permitted by law.


4. Qualified Project Costs. The Authority may, if the Authority and Furie agree in writing, enter into subsequent agreement(s) with respect to the financing of the Project, and may include all costs of the Development Activities incurred under this Agreement and subsequent or additional Development Activities costs as “qualified costs.” These qualified costs may be financed pursuant to the Project Development Agreement (PDA) to be negotiated between the Authority and Furie. The terms for the repayment of the qualified costs shall be specified in the PDA and Furie’s reimbursement obligation under Section 3 of this Agreement shall be satisfied through the PDA. In the event that the Authority and Furie do not complete the PDA or the Authority does not provide financing for the Project, qualified costs up to the maximum set forth above shall be reimbursed according to the terms of this Agreement.

5. Reservation of Authority’s Discretion. The obligation of the Authority pursuant to this Agreement is strictly limited to the advancement of funds for the Development Activities as provided in Section 1 above, and nothing in this Agreement shall obligate the Authority to participate in or otherwise finance the Project. Without affecting Furie’s reimbursement obligation under Section 3 above, the Authority may at any time, in the Authority’s sole and absolute discretion, terminate the Development Activities if: (a) Furie withdraws or otherwise declines to proceed with development assistance from the Authority; or (b) the Authority (i) determines that the Project is not feasible, (ii) determines that Furie cannot execute the project, (iii) determines that the project is not economically viable, or (iv) determines that the Project is not subject to financing by the Authority, or (v) declines to finance the Project. Without affecting Furie’s reimbursement obligation under Section 3 above, should the Authority elect to finance the Project the Authority may in the PDA executed with Furie impose additional terms and conditions with respect to the Development Activities as the Authority, in its sole and absolute discretion, determines to be reasonable and prudent.

6. No Other Obligations. Nothing in this Agreement obligates either Furie or the Authority to pay for any other costs of developing or considering the development of the Project. Nothing in this Agreement obligates either party to proceed with the development of the Project; designate any subsequent study, report, engineering, or analysis as part of the Development Activities; to provide any financing for the Project; or to otherwise advance or participate in the Project. If the parties decide to go forward with the Project, nothing in the Agreement commits the parties to any particular structure for the transaction, or to any particular form of financing, or to any specific terms for the development and financing of the Project.

7. Indemnity. Furie shall defend, indemnify and hold harmless the Authority and the State of Alaska, and their respective officials and employees, from and against all suits, claims, actions, causes of action, losses, costs, penalties and damages (of whatever kind or nature, including reasonable attorneys’ fees and litigation costs) (collectively a “Loss”) arising out of, in connection with, or otherwise related to any incorrect information or documents supplied by Furie to the Authority under this Agreement in connection with the Development Activities; provided, however, that Furie shall have no obligation under this Section 7 for any Loss caused by the Authority’s gross negligence or willful misconduct. This indemnification, defense, and hold harmless obligation shall survive the termination or expiration of this Agreement.

8. Governing Law; Remedies; No Waiver. This Agreement is governed by the law of Alaska. Any legal proceeding related to this Agreement shall be filed in the Superior Court for


the State of Alaska, Third Judicial District at Anchorage, and not elsewhere. Furie consents to the jurisdiction and venue in the Anchorage Superior Court. If the Authority is required to pursue Furie in any form to collect any sum Furie owes under this Agreement, Furie shall reimburse the Authority for its actual reasonable and documented collection costs, including but not limited to reasonably incurred attorneys’ fees, even if no formal legal proceedings are instituted. All of the Authority’s rights and remedies that are available to it under this Agreement or at law or in equity shall be cumulative; no one right or remedy shall be deemed exclusive of any other right or remedy. No failure or delay on the Authority’s part in exercising any right, power or remedy will operate as a waiver of the same, nor will any single or partial exercise of the same by the Authority preclude any other or future exercise of the same or any other right, power or remedy.

9. Term. This Agreement shall expire one year following the date first written above, unless extended by written agreement of the parties. Expiration of the term shall not relieve Furie from the obligation to reimburse the Authority for costs incurred during the term. Either the Authority or Furie may terminate this Agreement earlier for any reason whatsoever by giving written notice of termination to the other party. An early termination, however, shall not relieve Furie from the obligation to reimburse the Authority for those costs agreed to be paid by Furie under this Agreement incurred or obligated up to the date of the termination and those costs arising as a result of the termination, including costs incurred or obligated during the time reasonably necessary for the Authority to terminate the Development Activities and related contracts after the Authority receives a notice of termination from Furie, provided such costs do not exceed US $100,000.

10. Amendment; Assignment. This Agreement may only be amended in a writing signed by both parties. This Agreement is binding on and shall inure to the benefit of the parties and their successors and assigns, but Furie shall not assign its rights or delegate its duties under this Agreement without the prior written consent of the Authority, which consent may be granted or withheld in the Authority’s sole and absolute discretion. Any attempted assignment or delegation by Furie without the Authority’s prior written consent shall be absolutely void and not merely voidable.

11. Notices. All notices required or permitted under this Agreement shall be in writing and given by mail or fax or in person to the parties at the addresses set forth below:

Authority: Alaska Industrial Development and Export Authority Attn: Executive Director 813 W. Northern Lights Boulevard Anchorage, Alaska 99503 Telephone: 907-771-3000 Fax: 907-771-3044

Furie: Furie Operating Alaska, LLC Attn: Bruce Webb, Sr. Vice President 1029 W. 3rd Ave., Suite 500 Anchorage, AK 99501


Telephone: 907-277-3726 Fax: 907-277-3796

All notices shall be effective upon actual delivery.

12. No Third-Party Beneficiaries. Nothing in this Agreement shall be interpreted as creating any rights of any kind whatsoever in persons or entities that are not parties to this Agreement. This Agreement does not create a partnership, joint venture or any similar relationship between the parties and neither party shall represent that any such relationship exists between them.

13. Integration; Interpretation. This Agreement contains the complete and final understanding of the parties with respect to the subject matter covered. All prior agreements, understandings, negotiations and representations are expressly superseded and may not be relied upon. This Agreement has been negotiated by the Authority and Furie with the assistance of their respective legal counsel. This Agreement shall not be construed against the party drafting it.

14. Authority. Each person signing below on behalf of one of the parties represents that he or she has the power and requisite authority to bind the party he or she purports to represent to this Agreement. Furie warrants that: (1) it has full authority and capacity to enter into this Agreement and to fully perform its obligations under this Agreement; (2) all limited liability formalities for Furie to make this Agreement or to perform its obligations under this Agreement have been satisfied; (3) Furie is not prohibited from entering into this Agreement or performing its obligations under this Agreement by any contract, indenture, covenant, law, regulation, or court order or decree; and (4) Furie does not require the consent or approval of any third parties to make this Agreement or to perform its obligations under it.

15. Counterparts. This Agreement may be signed in counterparts and the signature pages may be exchanged by electronic means, all of which shall be fully effective to bind the parties.

IN WITNESS WHEREOF the parties have executed this Cost Reimbursement Agreement effective as of the date first written above.

[Signature Pages Follow]


AUTHORITY

ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORTIY By: ________________________________ Ted Leonard Executive Director STATE OF ALASKA ) ) ss. THIRD JUDICIAL DISTRICT ) The foregoing instrument was acknowledged before me, a Notary Public, at Anchorage, Alaska, on this ____ day of ____________, 2015, by Ted Leonard, the Executive Director of the Alaska Industrial Development and Export Authority, a public corporation of the State of Alaska, on behalf of the public corporation. ____________________________________ Notary Public in and for State of Alaska My Commission Expires: _______________


FURIE FURIE OPERATING ALASKA, LLC By: ___________________________ ∙ ∙ STATE OF ALASKA ) ) ss. THIRD JUDICIAL DISTRICT ) The foregoing instrument was acknowledged before me, a Notary Public, at Anchorage, Alaska, on this ___ day of ____________, 2015, by Bruce Webb, Sr., the vice president of Furie Operating Alaska, LLC, a Texas limited liability company, on behalf of the limited liability company. ____________________________________ Notary Public in and for State of Alaska My Commission Expires: _______________


CORNUCOPIA OIL AND GAS COMPANY, LLC

By: _________________________________ ∙ ∙ STATE OF ________________ ) ) ss. COUNTY OF ______________ ) The foregoing instrument was acknowledged before me, a Notary Public, at ______________, ____________, on this ___ day of ____________, 2015, by ________________________, the _______________ of Cornucopia Oil and Gas Company, LLC, a Texas limited liability company, on behalf of the limited liability company. ____________________________________ Notary Public in and for State of _________ My Commission Expires: _______________

FURIE OPERATING ALASKA, LLC

Gas Development and Infrastructure Plan

September 2014

Gas Development and Infrastructure Plan FURIE OPERATING ALASKA, LLCCIRCAC - September 2014

Bruce Webb

Senior Vice President

[email protected]

Platform Location and Pipeline LocationFrom KLU #3 Natural Gas Discovery Well location, drilled in the summer of 2013

FURIE OPERATING ALASKA, LLCCIRCAC - September 2014Gas Development and Infrastructure Plan

KLU Platform

Furie Onshore Facility

Furie 10” marinepipeline, in

parallel with CIGGS

Tesoro Refinery, Agrium, & CPAI LNG

Platform to Onshore FacilityConceptual Drawing with two 10” proposed pipelines

(only one 10” marine gathering line will be installed to start production)


Onshore Facility50-acre land parcel in Nikiski, AK


Facility Specs

| 800-foot tie in pipeline to CIGGS utility gas line

| ~7-miles from Agrium, Export LNG, and Tesoro Facilities

| 2-phase gas/water separators one for each pipeline Glycol/gas dehydration

Platform Fabrication Pictures – State Services (Ingleside, TX)Production Deck (Top Left) & Main Deck (Bottom Right) – March 2014

CIRCAC - September 2014Gas Development and Infrastructure Plan FURIE OPERATING ALASKA, LLC

Platform Caisson Picture

CIRCAC - September 2014

State Services, Ingleside, TX – March 2014

Gas Development and Infrastructure Plan FURIE OPERATING ALASKA, LLC

Platform Transportation Barge

FURIE OPERATING ALASKA, LLCCIRCAC - September 2014

Monopod to be transported vertically, and production/main deck to be installed offshore. Barge will be the 455-8 with lift set


Platform Transportation Route - Gulf of Mexico to Cook Inlet

CIRCAC - September 2014

Sail away from GOM June 4, 2014, transport to Seattle, WA arriving on July 10, 2014

Gas Development and Infrastructure Plan FURIE OPERATING ALASKA, LLC

• Corpus Christi > Cristobal 1,534 nm/ 9 days

• Panama Canal transit 5 days• Balboa > Long Beach

2,933 nm/ 16 days• Long Beach for stores 2 days• Long Beach > Seattle

1,006 nm/ 6 days• Seattle > Cook Inlet

1,380 nm/ 10 days• Total transit 46 days


Platform in Seattle, Washington

Horizontal Directional Drilling Procedure from the Onshore Facility

FURIE OPERATING ALASKA, LLCCIRCAC - September 2014

From Furie’s onshore processing facility, 3,000 feet of the 16-inch conductor casing is being drilled to the offshore seabed. The 10-inch gathering line will be pulled through this casing.



Horizontal Directional Drilling at the Onshore Facility (June 2014)


16 Miles of Pipeline Currently Stored at Port MacKenzie (July 2014)

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