AK LNG optimism endures while overseas market cools
The long-sought Alaska Liquified Natural Gas project got a boost when Russia invaded Ukraine.
The project would bring natural gas from the North Slope down an 800-mile pipeline to Nikiski, where it would be liquefied, then shipped to Japan and South Korea. Versions of the project have been discussed for decades, but a huge price tag means work hasn’t really moved forward.
Alaska officials promote the pipeline as a way for the U.S. Asian allies to end their dependence on Russian natural gas, and enthusiasm rose in 2022.
Last month, it took a hit; a July Wall Street Journal article reported that those potential buyers in Asia just aren’t interested in Alaska’s LNG, and think the project’s long timeline and lack of investment won’t work for them.
Prominent Alaska politicians have remained optimistic.
Earlier this month, during a visit to the Kenai Peninsula, U.S. Senator Lisa Murkowski said the project continues to remain an opportunity, but she recognized the obstacles.
“It is not a project without challenges, we acknowledge that. It is huge, it is significant. Not only from a cost perspective, but really from the volume of gas that would be made available,” she said. “So you’ve got to make sure that you’ve got that market there. There’s a lot of uncertainty right now in the energy markets.”
Murkowski said for 40 years, Alaska supplied LNG to Japan, which shows a history of a strong energy relationship. And she said Alaska continues to have a strategic advantage.
“We do it in a shorter route than anywhere else in the country, and we do it with no choke points,” she said. “So there are so many advantages that the Alaska LNG project holds.”
In May, Gov. Mike Dunleavy brought energy leaders together in Anchorage to discuss the project, where U.S. ambassador to Japan Rahm Emmanuel said the project could offer energy stability in Asia and create jobs in Alaska. Murkowski’s fellow Alaska Senator Dan Sullivan was also there, and said the state is well-positioned to provide natural gas internationally.
Kenai Peninsula Borough Mayor Peter Micciche expressed enthusiasm after a June meeting with the Alaska Gasline Development Corporation.
“I’m a glass-is-half-full kind of guy. Obviously, I’m very disturbed by what’s going on in Ukraine, but the shift of energy supplies to western Europe has opened up some doors for the AK LNG project, and that is a very good thing for the Kenai Peninsula as a whole,” he said.
Micciche said the pipeline could also be a boon to the Cook Inlet region, where producers are projecting a natural gas shortage and higher energy costs in just a few years.
But at that Kenai meeting, the project got a mixed response from attendees. Those who spoke against it said the state resources for the project could be better spent on other things like education, and cited environmental concerns.
The project has also gotten pushback from environmental groups all over the country. The Sierra Club, a national environmental advocacy group, sued the federal government this month for its approval of the project, saying the Biden administration failed to fully consider the climate and environmental harms of the pipeline, like the tapping of methane gas in the arctic.
Wall Street Journal reporter River Davis said when she first started looking into the topic, that was one of the obvious drawbacks.
“We were looking at climate issues. There’s been some backlash about the project going forward, particularly a new fossil fuel project in 2023,” she said.
But she said it soon became clear there was a general ambivalence about the project among the Japanese and Korean buyers.
“They felt that this project has been going on for a long time, and it just hasn’t had much progress,” she said.
Davis said those buyers have other options, from elsewhere in the U.S. and abroad, like Australia and the Middle East. And the timeline of AK LNG, which is aiming to be up and running in 2030, makes it undesirable. She said because of how long the project has been in the works, buyers are dubious it will ever get off the ground.
Davis said there seems to be an information divide between Asia and Alaska about how serious interest in the project is.
“Talking to companies here, they say there’s not much interest in this project,” she said. “But I’m not sure to what extent that has been directly conveyed to people sitting directly in Alaska.”
Murkowski said she’s aware of the reporting, but said she’ll continue to work on advancing the project with allies in Japan and Korea.