For over a decade, the central peninsula has grown accustomed to the ritual of Alaska Liquified Natural Gas (LNG) presentations at the Nikiski Community Rec Center. The Alaska LNG (AK LNG) project would build an 800-mile pipeline from North Slope natural gas fields to an export terminal in Nikiski. For many years, its various backers have been coming to tell us the gas line is inevitable and imminent, and to explain why “this time is different.” On Oct. 8, it was Glenfarne’s turn.
Before this year, the state-owned Alaska Gasline Development Corporation (AGDC) had been Alaska LNG’s sole proponent. But in January, AGDC announced that it was giving away 75% of the project to private developer Glenfarne. Glenfarne has said they’ll finish the definitive cost estimate and announce their go/no-go decision on the project by the end of the year.
The commonly-cited cost estimate for this megaproject is $44 billion, but independent analysts suspect a more up-to-date price tag could be over $60 billion. But even though Alaskans own 25% of the project through AGDC, Glenfarne says it won’t make its cost estimate public. And we don’t know some of the basic common-sense information about this project that comes with any normal business deal: what role does Alaska’s 25% ownership require it to play if the investment decision goes ahead? How much money are we on the hook to contribute to the project? What is our off-ramp from the partnership? The agreement between AGDC and Glenfarne is also secret, and this could have serious repercussions for our wallets as Alaskans and U.S. taxpayers.
Before the Nikiski open house, I wrote a blog post titled “Alaska LNG owes Alaskans basic answers,” which outlined questions that AK LNG’s proponents should be answering. Below are those questions, along with what I learned about them earlier this month at AK LNG’s Nikiski open house.
Question 1: Under what terms has AGDC entered into a partnership with Glenfarne?
Answer 1: In March, the state-owned AGDC gave the private developer Glenfarne 75% of the Alaska LNG project under a non-public agreement. AGDC, a corporation created by the legislature in 2010, had been AK LNG’s sole proponent after the major North Slope drillers backed out of the project in 2017. Glenfarne Alaska president Adam Prestidge said in Nikiski that Gov. Mike Dunleavy introduced Glenfarne to the project.
Though AGDC is funded entirely from the state treasury (amounting to nearly $500 million since 2010), Alaska statute allows it to enter secret agreements – maybe good for doing business, but bad for accountability with Alaskans’ public money.
Question 2: What rights and obligations does the state have under the agreement?
Answer 2: The legal text of the agreement between AGDC and Glenfarne isn’t public, but AGDC officials gave a general outline of it to Alaska legislators early this year.
- On Feb. 10, AGDC presented to Senate Finance.
- They returned to Senate Finance on Feb. 12.
- On April 9, they presented to Legislative Budget and Audit.
- On April 23, they presented again to Legislative Budget and Audit.
In return for 75% of the project, Glenfarne is completing the “Front End Engineering and Design” studies that will produce a definitive cost estimate, as well as raising construction capital and investment that will enable a go/no-go decision (“final investment decision” or FID) when the construction costs are fully funded. Alaskan companies would have first priority to buy about a sixth of the pipeline’s gas. AGDC presentations to the Legislative Budget and Audit committee on April 9 and April 23 go into detail.
Question 3: What must AGDC do to retain its 25% stake if the project proceeds?
Answer 3: AGDC officials told the legislature in February that the state’s 25% ownership of the project doesn’t require it to make further investments. The state, via the Legislature, “will have the right, but not the obligation, to invest in any subproject amount up to 25%,” according to a memo from AGDC.
Glenfarne has publicly committed to making an early 2026 announcement on its final investment decision for one sub-project – the “Phase 1” in-state gasline, estimated at a $10 billion price tag, intended to meet Alaskan demand and later be expanded into the $44 billion export project. This means they could be hitting up Legislators for investment in the 2026 session that starts in January.
Under Glenfarne’s plan to borrow 70% of the pipeline cost and sell equity for the rest, the state could contribute up to 7.5% of the funding (25% of the 30% equity portion), amounting to about $800 million, AGDC told the Legislature (slide 8). The other elements of the full export project – the terminal, North Slope treatment plant, and Cook Inlet crossing – would be future expenses that the state might share similarly.
The Alaska LNG project has always relied on political will and government subsidies to make up for its fundamentally poor economics. If Glenfarne and AGDC expect the Alaska treasury to pitch in, they shouldn’t expect us to blindly throw in several hundred million without understanding the full project cost. They need to tell Alaskans exactly what they’re getting into.
Question 4: What is the project expected to cost?
Answer 4: Glenfarne is undertaking a “Front End Engineering and Design (FEED)” study meant to nail down a firm estimate for what AK LNG would cost. Since the early 2020s, the project has been citing an official cost estimate of $44 billion, ignoring the significant inflation that has occurred since, as well as supply chain uncertainty and the effects of tariffs. An independent analysis published this summer estimates that a more accurate cost estimate could be over $60 billion.
However many billions it may be, Glenfarne doesn’t intend to share the number with Alaskans. Prestidge told KDLL that “the ultimate cost to complete is going to be something that is most likely not going to be made public.”
Why does the public need to know the definitive, up-to-date cost estimate that Glenfarne is producing?
If we take Glenfarne’s timeline at face value, our elected representatives may soon be deliberating whether to buy into the project (for up to $800 million based on the outdated estimate, likely more in reality). For our legislators to make this decision while fulfilling their obligation to be accountable to voters, they can’t be dealing with secret numbers. They, and the voters they answer to, should know the full project cost.
A second reason to make the cost public is that our utilities are now making urgent decisions about our future energy supply. The Cook Inlet gas they’ve relied on since the 1960s is set to become prohibitively expensive by the early 2030s and to fall short of demand by the middle of that decade. If North Slope gas is an option, what can they expect it to cost? It depends on what the pipeline that delivers it will cost.
Question 5: How does the definitive project cost estimate affect the estimated price of gas delivered to Alaska via the pipeline?
Answer 5: The pipeline’s owners will need to recover whatever they invest in building it through the gas they sell. As long as AGDC keeps the expected cost of building the pipeline a secret, the cost of the gas delivered through it will remain a guess, useless for planning our energy future.
The gas cost estimates that AGDC likes to cite, released early this year by consultancy Wood Mackenzie, are based on its outdated project cost estimate of $44 billion. The report concludes that an in-state pipeline without gas exports could deliver gas for about $9-$13 per thousand cubic foot – ranging from just above the cost of Hilcorp’s recent gas contracts (about $8.60) to the middle of the estimated cost range for imported LNG ($10-$14). The report makes many questionable assumptions to reach these prices, such as expecting new industry to be attracted to Alaska by gas that’s more expensive than today’s Cook Inlet gas. Economist Bradford Keithley believes the price also includes significant unstated subsidies. The fundamental number underlying the gas cost is the cost of building the pipeline. If this cost is secret, AK LNG will only continue bringing confusion instead of clarity to urgent decisions about what our utilities should be building and when.
Question 6: Is Glenfarne committed to the Nikiski LNG import terminal it’s building in partnership with ENSTAR, whether or not it invests in the Alaska LNG export project?
Answer 6: Glenfarne is partnering separately with ENSTAR to build a facility for importing LNG on the same Nikiski site it intends to use for the Phase 2 LNG export terminal. This import terminal will include about 5% of the construction needed for the AK LNG export terminal, with the intent of later expanding and converting it to the export terminal.
Our electric utilities, having failed to diversify their energy generation even as the expense and unreliability of Cook Inlet gas become acute, will need to import LNG in the near future. For that they’ll need a terminal – either Glenfarne’s or the rival project up the road, where Hilcorp and Chugach Electric are planning to retrofit the old Kenai LNG terminal for imports. It’s important that the import projects are taken seriously, even if the North Slope gasline fails to materialize.
Glenfarne spokesperson Tim Fitzpatrick said Glenfarne’s investment decision on the LNG import project will be independent of its decisions on AK LNG. Prestidge said Glenfarne intends to construct it simultaneously with the pipeline, beginning in late 2026.
My other questions concerned the cost of dismantling, removing, and remediating (DR&R) AK LNG sites and infrastructure after the end of the project’s life. Are those costs adequately known? Are they priced in? Who will be responsible for them? AK LNG’s spokespeople in Nikiski said they have no estimate of those costs nor structures for allocating them, and seemed to think it was bizarre that I was asking. I’ll update this post if I have more information on AK LNG’s DR&R plans.