Exxon Mobil said it submitted a draft environmental report to federal regulators for a $500 million liquefied natural gas project in Alaska.

A preliminary engineering and design phase for the Alaska LNG project is under way. Steve Butt, Exxon's project executive, said submitting a draft report to the Federal Energy Regulatory Commission sets the permitting process in motion.

"These draft documents, known as resource reports, allow Alaska stakeholders to engage early in the regulatory process, so potential environmental and socioeconomic issues and opportunities can be proactively identified and managed," he said in a Wednesday statement.

The Alaska LNG project has foundations in production from Prudhoe Bay and Point Thomson fields in the state, which combine for an average 3.5 billion cubic feet of natural gas per day. Exxon says it represents the largest investment in Alaska's history, with roughly 1,000 permanent jobs expected from the facility.

The FERC submission comes one day after Alaska Gov. Bill Walker announced plans to drop a citizen's lawsuit challenging a settlement with Exxon over Point Thomson development. Walker's predecessors tried to limit Exxon from development because of what the governor described as years of inactivity.

State leaders said the lawsuit threatened development of the field and subsequent LNG plans for a state that depends on oil and gas for revenue.

Walker last week said the state has a $3.6 billion budget deficit.