Journal reports little AK LNG interest from buyers in Asia
The Alaska Liquefied Natural Gas project has long promised to bring North Slope natural gas to Nikiski, for export to Asia. Optimism about the project among Alaska politicians has remained high, despite the long timeline and cost of the project. But last month, the Wall Street Journal reported that buyers in Japan and South Korea aren’t confident in the project, and don’t plan to make investments or sign contracts.
KDLL talked with River Davis, one of the reporters behind that Journal story.
KDLL: Could you start by telling me a little bit about what your job is and what you typically cover?
River Davis: I've been a reporter with The Wall Street Journal here in Tokyo, reporting out of Japan covering Japanese businesses, for the past five years. Most of the topics that I look at cover the automotive sector, and I also cover energy security and Japan's energy transition.
KDLL: And how did this particular story about the AK LNG project come to your attention?
RD: Well, we were hearing a lot from Japanese companies — and Korean companies as well — that they were being approached by some political figures and people in the business world in Alaska, basically pitching contracts and deals to these companies, asking if they wanted to sign up to take Alaskan LNG.
And so we started this project kind of very neutrally looking at sort of the trade offs that are involved in the project. The positives, of course, being this is a project that could help with energy security, and help Korea and Japan transition away from using Russian gas and oil. So that was kind of the positive energy security angle. Of course, on the other end, we were looking at climate issues. There's been some backlash about the project going forward, particularly a new fossil fuel project going forward in 2023.
So that was the kind of stance we originally approached the story with. But once we did some reporting, we found that the story about how there wasn't a whole lot of interest in the project out of Asia, which were kind of the main target customers for the gas projects. That became kind of the main angle that we discovered hadn't been told yet.
KDLL: Could you go into more detail about what sentiments you learned that people in those countries had about the project?
RD: So the sentiment, specifically out of Japan, I would say is that they felt that this project has been happening for a long time, and that it hasn't had much progress. So for Japan, in particular, companies here, government officials say that they want natural gas quite soon; in the next couple of years is when they're going to witness their worst pinch when it comes to supply. So the project's timeline is a little bit too far out for their wishes. And also, because it has been kind of delayed for such a long time, they are a bit dubious about whether the project itself will actually get off the ground.
Of course, it's a massive project, a massive investment. So those were just factors that they're considering. It's really important to companies here, that if they do indeed sign up for a contract to offhand gas, that a project moves forward, because they will give up other contracts elsewhere. So that security element I think, was a large kind of off putting factor for them.
KDLL: Did these buyers have other options when it comes to getting natural gas on the timeline they're looking for?
RD: They do. Of course, Alaska officials and others supporting the project would say that Alaska has a lot of benefits. Of course, for Japan and Korea, it's just over a week to get natural gas shipped over here. And there's no kind of choke points that the gas has to go through. That could be a potential security issue.
But on the other hand, Japan thinks that it can get gas from other kinds of secure projects. There's a lot of new supply coming to market, you know, around 2027, 2028 out of the US, Australia, the Middle East. And so Japan sees it has a lot of options beyond just Alaska at this point.
KDLL: In Alaska, politicians are still very publicly optimistic about this project. Lisa Murkowski voiced her optimism around here — she was visiting the Kenai Peninsula and expressing her optimism about the project as recently as last week. Why do you think that attitude is still prevalent over here, even as interest is waning in Asia?
RD: Yeah, I think, of course, it's in the interest of people supporting the project to make sure that there's still kind of some optimism about it going forward. They're in the stage where they're looking for investment in the project. So I think if there's too much of kind of a dreary tone, that would be problematic.
I do also get the sense that out of South Korea and Japan, perhaps there's a bit of...information hasn't sort of traveled to Alaska in the way that perhaps it would in other situations. Talking to companies here, you know, they say, 'we're not interested in this project.' But I'm not sure to what extent that kind of has been directly conveyed to people, you know, sitting locally in Alaska. Seems like there's a bit of an information divide there.
KDLL: Do you think your story was one of the first first ways that that information was maybe conveyed in the US?
I think there has been a decent amount of skepticism towards the project, because it has taken kind of such a long time to move forward. And it's been eluding that final investment decision for some time now. So we did see other publications, you know, questioning whether it would be able to reach that final FID stage. But I think as a story that conveyed the voice of potential off takers of gas — that being Japan, Korea, other countries in Asia — this was sort of one of the first stories that I've seen to convey that specific angle.