Alaska Resource Review, September 2026

ALASKA LNG: THROUGH THE YEARS

V O L UVMOELU3M| EI S1S|UISES3U|ES2E|PSTUEM MB E R 2 0 2 64

pre-FEED work. Fluor was retained as a contractor and the estimated cost was reduced to $38 million, or about $43 billion adjusted for inflation. 2020-26: Following Gov. Dunleavy’s instruc- tions, AGDC undertook an effort to find a private company to lead the project and in early 2025 ExxonMobil introduced state officials to Glenfarne, a U.S. energy infrastructure company. Glenfarne had developed energy projects in Latin America, including an LNG import project, and was working to develop two LNG export projects on the U.S. Gulf Coast. In March 2025, AGDC selected Glenfarne to be its private partner. AGDC would retains 25% of Alaska LNG with Glenfarne as developer with a 75% ownership share. Under the agreement, Glenfarne would invest in the final engineering and cost estimates for the Alaska LNG project. Glenfarne has done some of that but the amount of spending has not been disclosed. ADGC also split the Alaska LNG project into two phases, the first phase being the 42-inch pipeline from the North Slope to Southcentral Alaska to deliver gas to Alaska communities, and the second phase the large LNG export plant at Nikiski, near Kenai.

are long-lasting and steady. The three producers withdrew from the project but said the state, through AGDC, could continue permitting work and to obtain the Federal Energy Regulatory Commis- sion, or FERC, license so as to not lose the value of investments to date, including by the producers. ADGC did this. The FERC licensing was completed and the license was issued, making the project “shovel ready” with all of its major permits in place. 2018: In 2018, then-Gov. Bill Walker had reached a preliminary agreement with Chinese companies to invest in the project and purchase LNG. The Chinese were very interested and sent technical teams to Alaska to visit the North Slope, tour the pipeline route and meet with AGDC. However, U.S.-China trade tensions soured after President Donald Trump’s election and the Chinese interest waned. Gov. Mike Dunleavy was also elected governor and instructed AGDC to end its state-led initiative and find a private partner to lead Alaska LNG. The major producer BP, ExxonMobil and ConocoPhillips meanwhile expressed continued support, although ConocoPhillips withdrew so as to focus on oil development. BP and ExxonMobil worked helped AGDC reduce the capital cost estimated in the 2016

of approximately $43 billion for the project.

2016: With the pre-FEED cost estimate completed, in 2016 the three producers and AGDC asked Wood Mackenzie, the consulting firm, do a commercial feasibility and market analysis. Wood MacKenzie’s conclusion was that the project ap- peared competitive against U.S. Gulf of Mexico LNG producers but that it was disadvantaged because of its commercial structure, with 75% ownership held by the producing companies and 25% by the state’s AGDC. The problem was for the producers. The project appeared feasible but the investment rate of return for the producing companies was low comparable to oil and gas projects, which would have a higher return than a large infrastructure project like a pipeline. Return on investment for “upstream” projects, such as new oil development, might bring returns of 20% or more for producers while “midstream” projects bring lower returns, often in the 10% range, Wood Mackenzie said in presenta- tions of its study. Wood Mackenzie suggested that alternative commercial structures be considered to attract in- vestors who focus on large infrastructure projects and who are willing to accept lower returns that

Photo by Lee Leschper

Many efforts aimed at Alaska LNG have involved building a pipeline parallel to the Trans Alaska Pipeline System (TAPS).

2014: The state’s work on ASAP laid the foundation for the Alaska LNG Project, which is now underway. The large North Slope producers, having abandoned the idea of an overland pipeline through Canada, refocused on the overland pipe- line across Alaska to a large LNG plant in southern Alaska. A joint-venture of the three producers was formed that also included the state’s AGDC. It was important to have the state included, the produc- ers felt, because of its ownership of North Slope gas reserves under its royalty share of production. Having the state as a partner in the project would also reduce potential conflicts. Even as the state joined the gas consortium on the large pipeline and LNG project AGDC, the state gas corporation, continued work on the smaller ASAP, which was designed to serve only Alaska communities, as an energy-security backstop in case the larger LNG export plan did not proceed. Meanwhile, the urgency of dwindling Cook Inlet gas supply had lessened after Hilcorp Energy entered Cook Inlet in 2012 and began redeveloping aging Cook Inlet gas fields and establishing new gas reserves. 2015: Work continued on Alaska LNG by the consortium of the three producers with ExxonMobil leading the project with the state’s AGDC, which by now held a 25% interest in the project. The primary work was on developing a pre- Front End Engineering and Design, or pre-FEED, construction estimate. The pre-FEED cost $600 million with AGDC paying its 25% share. The pre- FEED was completed in 2016 with a cost estimate

The state ended the TransCanada agreement and paid the company $327 million for its work under an original agreement that provided up to $500 million in state matching funds. 2011: In 2011, Cook Inlet gas reserves were declining to the point where utilities in South- central Alaska worried they might be unable to secure enough fuel for space heating and power generation. An energy emergency in Alaska’s larg- est population areas seemed a distinct possibility. The Municipality of Anchorage began planning for electricity “brownouts” to conserve power. The Legislature responded with a plan for a small-diameter, 24-inch gas pipeline to be built from the North Slope to Interior and Southcentral Alaska. This became the Alaska Stand-Alone Pipeline Project, or ASAP. Responsibility to develop ASAP was given to a special subsidiary formed by the Alaska Housing Finance Corp., which had experience with special-purpose subsidiaries. A plan was developed and feasibility and preliminary engineering work was done by the new Alaska Gasline Development Corp., or AGDC, which was formed in 2013 as an AHFC subsidiary. AGDC’s plan for ASAP also included a natural gas processing plant on the North Slope to remove carbon dioxide. State and federal permits were applied for and received as well as a right-of-way lease across state of Alaska lands. The size of the pipeline was later changed from 24 inches to 36 inches to allow the pipeline to operate at a lower pressure, removing the need for gas compressor stations along the route.

CONTINUED FROM PAGE 13

incentives for a gas pipeline through Canada. AGIA’s goal was to bring in a private pipeline company to build and own the project. A state license, with a $500 million state contribution, was awarded to TransCanada Corp., a major Canadian company. 2008: TransCanada was awarded a license by the state of Alaska in 2008, which granted the company incentives for a pipeline but that same year North Slope producers BP and ConocoPhillips announced their own initiative, the Denali project, to compete with TransCanada for the overland pipeline. Shortly after, ExxonMobil, also a North Slope gas owner, joined the Trans-Canada venture to compete with BP and ConocoPhillips’ Denali pipeline. Neither the TransCanada or Denali pipeline project moved forward. At that time Lower 48 drill- ers had perfected development of large shale gas resources with horizontal drilling and hydraulic fracturing of rock. The result was a boom in new gas production and falling gas prices in the con- tinental U.S. This made a long-distance overland pipeline from Alaska uneconomic. In 2011, Gov. Sean Parnell asked TransCan- ada and the producers consider once again a trans-Alaska pipeline and LNG alternative to export gas due to low U.S. gas prices and rising Asian LNG demand. TransCanada initially considered the LNG alter- native but then withdrew from the Alaska project.

Thousands of Miles of Experience Committed to Client Satisfaction Dedicated to Safety Excellence

www.AKRDC.org

ALASKA RESOURCE REVIEW SEPTEMBER 2026

Made with FlippingBook interactive PDF creator