This story has been updated with more information.
A decades in the making pipeline that would transport natural gas between the North Slope and the Kenai Peninsula now has a new majority owner. That's after the state-run entity in charge of the Alaska LNG megaproject announced Thursday it had signed an agreement with Outside pipeline developer Glenfarne Group. They'll now take the lead on attracting investors, with the goal of landing the holy grail -- a final investment decision.
Gov. Mike Dunleavy celebrated Thursday’s agreement as the closest the $44 billion Alaska LNG Project has ever come to fruition.
“I don't think we've been closer to a consummation of a pipeline in our history, a lot of this is feeling confident that this is going to move to a concrete pipeline being built within two and a half years that will bring gas to Alaskans,” he said.
That’s Dunleavy speaking to reporters Thursday evening from Tokyo – the latest stop on an East Asian tour to rally support for and promote the project.
The agreement signed Thursday gives Glenfarne, which is based out of Houston, Texas and New York, 75% ownership of the project. The state of Alaska is hanging on to the other quarter. Frank Richards is the president of the Alaska Gasline Development Corporation. He told his board of directors during a special meeting Thursday afternoon the agreement is the product of a lot of late nights and international teamwork.
“We've been burning the midnight oil to move forward and work on these definitive agreements with Glenfarne,” he said.
At the special meeting, the board voted to give Richards permission to execute the project agreement with Glenfarne. The vote was 6-1 in favor, with member Doug Tansy voting against. Tansy is also the business manager of IBEW Local 1574.
If it’s built, the Alaska LNG Project would move natural gas between the North Slope and the Kenai Peninsula. The full project includes a gas treatment plant on the Slope, an 800-mile pipeline and a liquefaction and export facility in Nikiski.
Thursday’s agreement comes almost four months after the development corporation said it was in talks with Glenfarne to take over the project.
Brendan Duval is Glenfarne's CEO and founder. He told board members his company is excited about being part of the project.
“This really is a tremendous opportunity for the state, for the United States, for our allies, and we couldn't be more thrilled to see the board vote in favor of this transaction,” he said.
Duval told reporters Thursday evening the project is in a “pricing phase.” He said they hope to have a final investment decision for the pipeline by the end of the year.
It’s unclear whether Glenfarne would hang onto its 75% stake if the pipeline isn’t ultimately built, since the terms of the deal are confidential. Here’s Richards again.
“This is a commercial agreement between AGDC and Glenfarne, and as per the statutes granted to us by the legislature as a very commercial deal, we have the responsibility to keep it confidential,” he said.
As the new owner, Glenfarne’s first task will be to update the project’s existing cost estimate.
AGDC estimates that work will cost around $150 million. A small piece – $4 million – is covered by an existing federal grant secured by U.S. Sen. Lisa Murkowski in 2023.
If the project ultimately doesn’t move forward, Glenfarne will be able to recoup as much as $50 million from a backstop OK’d by Alaska’s state-run development agency, the Alaska Industrial Development and Export Authority, or AIDEA.
Duval said AIDEA’s backstop isn’t part of Glenfarne’s current plan.
“There is no reimbursement agreement in place,” he said. “There has been one discussed, but we’ve moved forward independent of that.”
Thursday’s agreement also says Glenfarne will prioritize the pipeline piece of the project before moving to later phases. That would let Alaska customers access gas before it’s available for export.
The Arctic treatment plant would likely be necessary to allow gas to start flowing from established fields like Prudhoe Bay and Point Thompson. But state officials say they’re optimistic gas from a forthcoming field developed by Great Bear Pantheon won’t require treatment before it’s sent south. The developer signed an agreement with the state last year, but the field has not yet started production.
On the same call with reporters, Dunleavy said Alaska is closer than ever to getting the pipeline project off the ground. But he says he understands if people still have doubts about its prospects.
“I was very skeptical for years on this project, and I'm not going to have a final celebration. I'll get excited when these guys go to (final investment decision),” he said. “I'll get excited when pipe is ordered. I'll get excited when it's welded. I'll get excited when gas is going through it. I'll really get excited when we flick on the switch and we're guaranteed that Alaska gas. So I would just say, stay tuned.”
While in Asia, Richards and Dunleavy picked up a nonbinding letter of support for the project from Taiwan’s state-owned CPC Corporation. And though the letter is nonbinding, Richards says it’s a big step towards making the project a reality.
“Six million tons represents one train of the Alaska LNG,” Richards said. “So it's significant for us, and that has then drawn significant interest in review by the other countries that we're talking to.”
Richards says he and Dunleavy had also met with officials and energy companies in South Korea, Japan and Thailand.
But some have questioned the extent to which foreign interest is the result of tariff threats from the White House. Dunleavy says there are concerns about international trade. But he says there’s also demand for natural gas.
“Asian countries are needing gas,” he said. “The question is, where are they going to get it from? And Alaska, in many cases, is closer to them, and we believe it could be delivered at a price that works better than other locales.”
Though Thursday’s decision is a step forward, it’s still unclear whether enough investors will sign on for the project to be built.
Duval, the Glenfarne CEO, said the company plans to announce a funding consortium soon that will focus on finding money for the project. He says the project will be funded with private money. But federal interest may help accelerate the project – like keeping tariffs low and protecting existing federal loan guarantees.
