Two US companies are trying to carry out US President Donald Trump’s plan to create a major liquefied natural gas (LNG) export hub in Alaska.
This is reported by the Financial Times.
Glenfarne Group and Polar LNG are seeking to raise up to $80bn in financing to develop gas projects in Alaska. They are expected to supply LNG to Japan, South Korea and other Asian countries.
Both companies say the war with Iran and disruptions to LNG supplies from the Middle East have increased potential buyers’ interest in their projects. One of Alaska’s advantages, they argue, is a shorter shipping route to key Asian markets, taking just over a week.
Next week, company representatives plan to present their projects at the largest conference dedicated to the gas and LNG industry in Thailand.
However, to secure the necessary funds they will have to convince investors that the large-scale projects can be delivered despite high costs and a range of other risks.
Energy producers and Alaska’s authorities have been trying for around 50 years to turn the state into a major LNG export centre. The region has substantial reserves of cheap gas produced alongside oil.
Yet the ambitious plans have still not been realised because of the high cost of infrastructure, difficult construction conditions and opposition to expanding fossil-fuel energy in an environmentally sensitive region.
Despite Donald Trump’s backing, the projects remain difficult to implement.
One of the main risks is building a gas pipeline across the entire state. Its cost is estimated at about $17bn, and the scale of the work creates significant risks of overrunning the initial budget.
A separate problem for Glenfarne Group’s project has been the lack of the necessary support at state level.
Last month, state lawmakers failed to pass tax incentives for the company’s proposed $54.5bn Alaska LNG project.
Glenfarne chief Brendan Duval told the FT that this had delayed construction of the project’s first phase.
It предусматриває the construction of a pipeline around 1,190 km long. It is intended to transport gas from fields on Alaska’s North Slope to Nikiski in the south-central part of the state.
The project also предусматриває building gas liquefaction facilities capable of producing about 20 million tonnes of LNG a year.
At the same time, Glenfarne still needs to find buyers for an additional 3 million tonnes of LNG that the company plans to sell.
Supporters of developing LNG infrastructure in Alaska believe the projects could get a new chance thanks to rising gas demand in Asian countries and the instability of traditional supply routes.
For Japan and South Korea, Alaska’s proximity could potentially be a significant advantage. At the same time, investors will have to factor in the enormous cost of building pipelines, liquefaction plants, port infrastructure and other facilities.
In addition, Glenfarne’s project depends on signing long-term contracts with buyers. Without guaranteed demand, raising tens of billions of dollars to build the infrastructure will be far more difficult.
Thus, despite political support from Trump and heightened interest in US LNG amid the war in the Middle East, plans to turn Alaska into a major export hub remain uncertain for now.
The companies need to address financing, the construction of a large-scale pipeline, securing political and tax support, and finding buyers for future supplies—all at the same time.