To deal with the affordability crisis of Cook Inlet gas, our utilities and elected leaders need the clearest possible picture of our energy options. Alaskans need to see this picture, too, to understand and inform the energy decisions made on our behalf. This means piercing the secrecy and dishonest hype around AKLNG, the proposed 800 mile North Slope gas pipeline, and basing decisions on the most up-to-date and thorough cost estimates. But Glenfarne, the project’s private developer, isn’t sharing information about AKLNG’s cost — and using estimates that hide massive subsidies in order to appear competitive with other gas options.

Governor Mike Dunleavy has said he plans to introduce legislation to give the AKLNG project a 90% break on the property taxes that help fund local schools, roads, and emergency services. Consultants, too, give legislators a hard sell on the need for tax breaks and other “risk sharing” between the project and the state. At the same time, our utilities are fumbling in the dark on high-stakes decisions about how to invest in our energy future. We need to know: if the legendary gasline were built, what would we in south central Alaska be paying for North Slope gas? 

The best guess would be based on the “Front End Engineering and Design” study, an intensive accounting for the project cost that Glenfarne commissioned last year from the Australian engineering firm Worley. This FEED cost estimate should supercede every previous rough estimate of AKLNG’s cost — the $44 billion that AKLNG still holds up in public or the potential $70 billion that independent analysts think more likely — for the legislators deciding how Alaska should deal with Glenfarne, the utility leaders weighing energy options, and the boroughs deciding just how much property tax they’d consider sacrificing for Glenfarne’s decision to build the project.

But Glenfarne is not sharing the FEED estimate. And in the absence of good information, the only recent, detailed estimate for the essential cost-of-question is a fundamentally flawed model which – among its most egregious assumptions – bakes in Dunleavy’s controversial 90% tax break. 

Current cost estimate assumes tax breaks

In the house of cards that is the economic logic of AKLNG, one load-bearing member is a study from late 2024 on the fundamental question of what North Slope gas – piped in via the “Phase 1” in-state pipeline that doesn’t include an LNG export terminal or Cook Inlet crossing – would cost Railbelt utilities.

This report, by consultants Wood Mackenzie, is still the most detailed recent estimate of AKLNG’s cost to be made public — but the far more detailed FEED study should supersede it as a decision-making document. In addition to wild, unsupported assumptions about gas demand, the report also relies on two fundamental assumptions that Glefarne could easily firm up today if they had any interest in helping Alaskans make clear decisions:

• Wood Mackenzie models the cost of building the Phase 1 pipeline as $10.8 billion, a number given to them by AKLNG. Elsewhere in the report, Wood Mackenzie estimates the cost could be as high as $14.8 billion, but they don’t plug this number into their gas cost scenarios. The FEED cost estimate that Glenfarne is concealing is a more rigorous and up-to-date estimate of the required capital. Glenfarne could and should share this number. 
• Wood Mackenzie assumes North Slope drillers sell gas to the pipeline for $1 per thousand cubic foot. There is also a more credible secret number to replace this one. In a January press release, Glenfarne trumpeted “gas precedent agreements” with ExxonMobil and Hilcorp for North Slope gas, in addition to an already-existing agreement with start-up driller Pantheon. These are not final agreements, but using them to update the Wood MacKenzie prices would bring the model a little closer to reality.

Based on these outdated inputs, plus the dubious assumption that all of Fairbanks’ heating and energy demand would quickly switch to natural gas despite the need for a 32-mile lateral to Fairbanks not included in the capital cost, Wood Mackenzie estimates North Slope gas could cost around $12.80 per thousand cubic feet. Adding on additional vague assumptions about demand growth (more gas buyers help share the capital cost, bringing down the per-unit price), Wood Mackenzie constructs other cost scenarios ranging from $11.20-$8.97 per thousand cubic feet.

Importantly, all Wood Mackenzie’s price scenarios pack in an assumption of the 90% property tax break that Gov. Dunleavy has talked of introducing. So giving Glenfarne this special tax privilege wouldn’t lower these gas costs — tax rates closer to the status quo would raise them.

Wood Mackenzie estimates the alternate option of imported LNG could cost between $10.21 and $13.72 per thousand cubic feet. So in summary, the consultants concluded AKLNG could maybe beat the high end of the imported LNG cost range, if many more businesses commit to buying its gas and Glenfarne is all but excused from paying property taxes to the Kenai Peninsula borough and other local jurisdictions they’d operate in.

When Alaskans hear Glenfarne talk about bringing cheap energy to the Railbelt, they should be aware that AKLNG Phase 1 relies on a nearly free ride from our boroughs to have even a chance of beating imported LNG costs. Burying this controversial subsidy as a default assumption in their widely-cited cost study has likely bamboozled many Alaskans into accepting Glenfarne’s wild claim that Phase 1 can economically stand on its own. 

Would updating the capital cost estimate with Glenfarne’s FEED numbers help or hurt this already weak economic rationale? Unless Glenfarne suddenly becomes interested in transparency, we can only guess.

The people deciding Alaska’s energy future shouldn’t be forced to guess. We should all be aware of what AKLNG would cost us.