The lead developer of a mammoth natural gas pipeline and export terminal long planned for Alaska touted new deals and heightened interest last week, but the project remains far from the finish line.
The Glenfarne Group — the majority owner of the Alaska LNG project — unveiled two new partnerships last week: one with JERA, Japan’s largest power generation company; and another with POSCO International, a South Korean trading and investment company.
Reactions were mixed on what the new agreements mean for Alaska LNG, with observers noting both the project’s public momentum and the fact that the deals are not final. Alaska has been trying to build a gas pipeline for decades — and it’s no small feat.
“It’s a tall order and it’s an expensive order,” said Brigham McCown, a senior fellow and director of the Initiative on American Energy Security at the Hudson Institute.
McCown said success “really turns” on lining up binding supply and purchase agreements. McCown is the former chief executive of the Alyeska Pipeline Service Co., which operates the Trans Alaska Pipeline System that moves crude oil.
The cost of the Alaska LNG project, including the pipeline and the export terminal in southern Alaska, has been put at an estimated $44 billion. But observers say it could actually cost billions of dollars more.
On Wednesday, Glenfarne signed a nonbinding letter of intent with JERA, where the Japanese company said it would buy 1 million metric tons a year from the Alaska project over a 20-year time span. The agreement with POSCO is to “advance a strategic partnership” for Alaska LNG’s development, including initial terms for POSCO to supply steel to the pipeline and also to buy gas from the project.
Though the agreements are preliminary, Glenfarne CEO Brendan Duval touted interest in the project, which he called a “signature North American LNG project” in a news release. The new deals follow earlier agreements with Taiwan’s CPC Corp. and Thai national oil company PTT — agreements announced since Glenfarne took over as the lead developer this year.
GOP Alaska Gov. Mike Dunleavy “sees momentum behind the Alaska LNG project and is encouraged by the preliminary agreements Alaska LNG has reached with Pacific Rim nations, utilities, and international energy firms,” said Jeff Turner, Dunleavy’s communications director, in a statement Friday.
In Italy last week as the gas industry gathered for a conference, Energy Secretary Chris Wright and Interior Secretary Doug Burgum attended a Glenfarne signing ceremony with JERA.
The Alaska LNG project is “one of the greatest energy infrastructure projects in our nation’s history” and one that can provide “enormous energy security to the United States and our allies,” Wright said in the announcement about JERA.
Here are three questions answered about the Alaska LNG project:
When could Alaska LNG be up and running?
If all goes well, supporters say LNG exports could be departing from Alaska in five or six years.
Glenfarne, which is based in New York and Texas, said last week that it’s planning to make a final investment decision on the pipeline portion of Alaska LNG before the end of this year. Glenfarne didn’t provide a comment to POLITICO’s E&E News last week when asked for an update on the Alaska project.
The company announced a partnership with Worley — an Australian professional services company — in May to do additional engineering and prepare a final cost estimate for the pipeline.
“You will probably see gas going to Asia in 2030, [2031],” said Dunleavy, the Alaska governor, in a March interview with CNBC International.
Glenfarne also became the project’s lead developer that same month, taking over that mantle from Alaska Gasline Development Corporation (AGDC), a public corporation of Alaska.
In an April question and answer document to the Alaska State Legislature, AGDC said the Alaska LNG project “could begin delivering gas to Alaskans as soon as 2030 or 2031, and LNG exports to Asia could begin shortly thereafter.”
In May, Dunleavy said construction on the pipeline could begin as early as next year and gas could be flowing through the line by 2028 or 2029.
For countries the United States doesn’t have a free-trade agreement with, the Alaska LNG project must begin exports of LNG by mid-August 2032, DOE said in a June 2023 order.
An order this year from DOE said applications to extend the export commencement deadline for projects will be considered on a case-by-case basis.
The Federal Energy Regulatory Commission approved the Alaska LNG projectin May 2020, saying that AGDC’s “proposed facilities shall be constructed and made available for service within ten years of the date of this order.”
But Cooper Freeman, Alaska director for the Center for Biological Diversity, said Glenfarne might not be able to get the LNG project finished by the end of this decade.
“It’s not like they just got them yesterday,” Freeman said of past approvals, adding the project has “never made sense.”
“It makes even less sense now,” he said. “Alaskans don’t want this because Alaskans want healthy wildlife and clean air and water in the biggest, greatest state in the nation.”
What role might the US government have?
The federal government could play a major part in getting the Alaska LNG project built, as it remains a project favored by President Donald Trump and his administration.
Trump directly mentioned the project an in an executive order in late January. Roughly four months later, several high-profile members of Trump’s National Energy Dominance Council traveled to Alaska to advocate for greater energy development in the state — including the Alaska LNG project.
A return trip this fall is in the works, according to Jarrod Agen, executive director of the dominance council. He said the focus will be on the Alaska gas pipeline, as well as critical minerals and roads.
“It’s one of the top priorities of the president to build a second pipeline for natural gas through Alaska,” Agen said this month, speaking at an event hosted by the Center for Strategic and International Studies. Agen said the project is backed by native Alaskans on the North Slope.
He also said U.S. military could purchase gas from the project.
“I do think what we’ve talked about is there are [Department of Defense] sources — there’s bases in Alaska that could be used as offtake agreements on LNG,” Agen said.
Agen said he hadn’t heard “discussions right now about the U.S. investing as partner.”
The Department of Defense didn’t provide a comment on the Alaska LNG project last week.
In an interview last week with CNBC, Commerce Secretary Howard Lutnick signaled that Japan’s pledge to invest $550 billion in U.S.-based projects could be tapped for Alaska LNG.
“There’s an investment committee, we suggest projects,” Lutnicksaid during the interview. “Let’s say the Alaska LNG pipeline, we want to invest $100 billion and finally unleash the American oil and natural gas that we have in Alaska. $100 billion project. The president green lights it, we hire the construction people, and we send a capital call to the Japanese. They send in the money.”
The pipeline gets built, and “when the cash flow starts,” that’s shared 50-50 until “they get their money back,” Lutnick said.
McCown at the Hudson Institute said the U.S. government should be a “passive” investor if it decides to take a stake in the Alaska LNG project.
“The problem becomes when the federal government decides to be an active investor and wants to start telling a private company how to do their business,” he said. “That would not be in anyone’s interest whatsoever.”
What needs to happen to make the project a reality?
In short, more people need to sign deals to buy LNG from Alaska.
Backers of the Alaska LNG project have long made the case that shipping gas from America’s largest state to Asia is much faster than shipments of LNG coming from the Gulf of Mexico, which Trump has renamed the Gulf of America.
Another argument is the gas from Alaska could help Asian countries distance themselves from Russian gas, particularly after Russia’s invasion of Ukraine in early 2022.
But the project also comes with a range of challenges, including that it will require thousands of workers to build. Dunleavy in May said that number could be as high as 20,000.
McCown said the Trans Alaska pipeline was built by five different pipeline companies “simultaneously” and “we have far fewer workers that can build pipelines today,” plus the challenges of building in the Arctic.
“There’s a lot to like about it, but this is a monumental undertaking,” McCown said.
While the Alaska LNG project would unlock “stranded” gas, he said, the proposal still comes with risks around cost and potential reluctance on contracts beyond 20 years.
A number of analysts and observers have argued that the $44 billion cost estimate is dated and likely too low — and could be tens of billions of dollars higher.
A pipeline in Alaska is costly to build and “more expensive to maintain, because of where it’s located, the environmental conditions of the Arctic,” McCown said.
Alex Munton, director of global gas and LNG research at Rapidan Energy Group, said an issue is financing with the Alaska LNG project because of its high cost and the risks around that.
“Thus far, none of these agreements provide any better clarity or signal that the project is in a better position now in terms of accessing the finance or bringing in the capital that it needs to develop the project,” he said.
Munton said the agreements announced between Glenfarne and other companies so far are “preliminary.”
“When you’re thinking about the interest of these Asian customers, they understand this is about buying LNG sometime in the 2030s, a long way from now,” he said.
Munton said the permitting box is checked, but remaining steps for Alaska LNG include lining up a company that will build the project, finalizing a commercial framework and financing the project “through a combination of equity investment and debt.”
