The Alaska LNG Project netted two more agreements earlier this month [9/10, 9/11] during an energy conference in Italy. Both agreements are nonbinding, but proponents say it’s proof of ongoing positive momentum. The developments come as the company behind the project aims to decide whether to move forward with development, or not, by the end of the year.
Adam Prestidge remains optimistic about the Alaskan LNG Project’s commercial viability. He’s the project president under Glenfarne Group, which assumed majority ownership earlier this year.
“We think it is a fantastic project from an infrastructure fundamental standpoint,” he said. “Its commercial attributes, we think, make it a really attractive project, and put it in a really advanced state.”
The idea of a natural gas pipeline between the North Slope and Southcentral has been tossed around for decades.
If it’s built, the three phase project would extract and treat natural gas on the North Slope, move it through an 800-mile long pipeline to Southcentral and then liquefy it in Nikiski for export overseas. The project already has the necessary land and permits. What it needs now are customers – and, of course, to be built.
Since taking over, Glenfarne’s secured five nonbinding agreements with potential project customers. Two of those were signed at the Gastech Conference earlier this month in Italy.
One agreement is with JERA Co. – Japan’s largest power generation company – to purchase a set amount of liquefied natural gas from the project over two decades.
The other agreement outlines a “strategic partnership” with POSCO International. The company is the sales representative of POSCO Group, Korea’s largest steel producer, and also imports liquefied natural gas.
Prestidge says he’s aware of the skepticism around nonbinding contracts. But he says the scale and scope often require a drawn out negotiation process – sometimes up to one or two years.
“They’re enormous contracts, and they don’t just turn into binding agreements overnight,” he said.
Glenfarne Communications Director Tim Fitzpatrick says four of the agreements are at the first in a three-step process to get to a binding agreement.
The agreements come as project owners prepare to make a final decision whether to move forward with development – a decision expected by the end of the year.
Glenfarne enlisted another firm to update the project’s current cost estimate. Prestidge says Glenfarne does not expect construction costs to be “significantly more expensive” than previous estimates, but they’re keeping the final construction price tag secret.
“You wouldn't normally be publishing publishing costs for a project – for a private project, kind of on a recurring – rolling updates,” he said. “And so the ultimate cost to complete is going to be something that is most likely not going to be made public.”
Glenfarne says construction costs are only one part of the equation. Prestidge says steel tariffs and the cost of liquefied natural gas will ultimately dictate final project costs, and Glenfarne thinks its commercially viable.
Larry Persily is a former state revenue commissioner and Federal Coordinator of the Alaska Natural Gas Transportation Projects. He suspects Glenfarne’s decision won’t sit well with Alaskans.
“I think keeping it secret, which is another way to say private, will just increase the skepticism among Alaskans who think this thing has been a multi-million dollar wasted effort over the years,” he said.
And Persily is doubtful project costs will come in at previous estimates, around $44 billion, pointing to rising labor costs and project overruns in other parts of the country. In the mid-2010s, the total estimates were between $45 billion and $65 billion. In 2020, the estimate dropped $37.5 billion, but then came back up, in part, due to inflation.
“It's really hard to believe that is going to come in at that [Alaska Gasline Development Corporation] estimate,” he said. “Mega-projects like this are notorious for going over budget.”
Prestidge says Glenfarne’s team is up to the challenge.
“We're very appreciative of the reception that we've gotten from Alaskans,” he said. “We know, we know that we're new in the state, and we're going to continue working, working really hard to deliver this fantastic project for the state.”
Glenfarne and the Alaska Gasline Development Corporation will hold an open house Oct. 8 at the North Peninsula Recreation Center from 6:30 to 7:30 p.m. to share project updates and meet with residents.
