An Alaskan group including a former governor and a labor union have formed a company to purchase permits, engineering and environmental data for the Alaska LNG Project from Alaska’s state-owned gas development corporation.
The new company, Alaska Gasline LNG LLC, said Monday it will start negotiations next week with the state to acquire rights to a Federal Energy Regulatory Commission license along with state and federal permits for Alaska LNG. Rights-of-way across public lands for an 800-mile, 42-inch gas pipeline would also be acquired.
The state corporation, Alaska Gasline Development Corp., or AGDC, intends to end the current state ownership of the project and has set a target of finding a buyer by the end of the year, according to Tim Fitzgerald, spokesman for AGDC.
Former Alaska Gov. Bill Walker; Keith Meyer, former CEO of the state gas corporation and Bernie Karl, an Alaska tourism operator who has a track record in developing new geothermal energy systems, along with the Alaska-based Laborers’ Local 341, are investors so far in the new venture.
Joey Merrick, Business-Manager and Secretary Treasurer of Local 341, and President of the Alaska Petroleum Joint Crafts Council, said it was unusual but not unprecedented for labor organizations to own parts of businesses, particularly ones that can create a lot of jobs,
Meyer said the group is seeking other investors and has already met with one private equity investment group.
Although the world is awash in cheap liquefied natural gas Meyer thinks this is a good time for major buyers to position themselves for an eventual market rebound. “The LNG business has matured.
Forty two countries now import LNG and Alaska is in a beautiful position to participate in the heart of the world LNG trade, the Asia-Pacific region,” Meyer said. That’s because shipping distances are shorter to Asia from a proposed large LNG plant in Nikiski, near Kenai, than from other major LNG supply sources in Australia, the Persian Gulf and U.S. gulf coast, the only exception being Sakhalin, in the Russian Far East.
The Alaska project’s gas supply has also been de-risked, Meyer said. There are 35 trillion cubic feet of gas reserves proven on the North Slope, mostly in association with producing oil fields, so there is no supply or technology risks.
Walker said major North Slope gas owners have signed agreements to cell gas to AGDC, which a new owner of the gas project would inherit. Fitzgerald, of AGDC, said the state corporation also worked with slope gas owners BP and ExxonMobil to reduce the Alaska LNG Project capital cost from $44.3 billion to $38.7 billion.
Walker has had a long involvement with the North Slope gas project and as governor brought in major Chinese companies as potential LNG buyers and potential investors. However, China’s interest cooled when U.S. China trade wars began under President Donald Trump.
In a press conference Monday Walker would not speculate as to whether a new federal administration led by President-elect Joe Biden would help rekindle the China deal but he did say other Asian buyers, including Japan and Vietnam, are interested in Alaska and have signed Memorandums of Understanding with AGDC.
What does fit the Biden energy agenda, Walker said, is that Alaska LNG is the only large U.S. project that can supply conventional new natural gas as opposed to gas produced through hydraulic fracturing, which the new president opposes, and that it’s widely recognized that new gas will be needed to facilitate the large scale transition to a Biden priority, renewable energy.
That’s because only natural gas plants possess the quick-start capabilities needed to backstop renewable energy sources like wind, where a sudden slowdown in wind speed and power generation can destabilize electric grids.
Walker also said the Alaska project is jobs-intensive, which should appeal to the new federal administration and to Congress. Merrick expects the project will have strong support from U.S. labor organizations. “This is a made-in-USA project particularly if a lot of American steel is used,” and is just the kind of infrastructure mega-project needed now in the national economy.
The new group is being given credit for trying to breathe new life into the huge gas project, but there are skeptics.
One is Harold Heinze, former president and CEO of ARCO Alaska who worked extensively on Alaska gas export prospects while at ARCO and as a former Commissioner of Natural Resources.
“This may be the right idea but that’s not yet obvious. It is still premised on a very expensive 800-mile gas pipeline and a very expensive LNG plant,” proposed at Nikiski, Heinze said.
“No one (in the group) is looking at cheaper alternatives, like direct export of LNG from the North Slope or converting gas on the slope into specialized liquids that can be used to produce more oil,” he said.