Alaska LNG Terminal

From Global Energy Monitor
This article is part of the Global Fossil Infrastructure Tracker, a project of Global Energy Monitor.
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Alaska LNG Terminal, formerly called the Alaska South Central LNG Terminal, is a proposed LNG terminal in Alaska, United States.

Location

The terminal is planned for Nikiski, Alaska.

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Project Details

  • Owner: Alaska Gasline Development Corporation (100%)[1]
  • Parent Company: State of Alaska
  • Location: Nikiski, Alaska, United States
  • Coordinates: 60.707778, -151.262778 (approximate)
  • Type: Export[1]
  • Trains: 3[1]
  • Capacity: 20.1 mtpa (6.7 mtpa per train)[1]
  • Cost: US$38.7 billion[2]
  • Financing: Bank of China and Goldman Sachs are Financial advisors[3]
  • Status: Proposed[1]
  • Start Year: 2025[4]

Note: mtpa = million tonnes per year; bcfd = billion cubic feet per day

Background

Alaska LNG Terminal is a proposed LNG terminal in Alaska, United States.[5]

The project would deliver 3.5 billion cubic feet of natural gas a day from Alaska's North Slope gas fields through the proposed 800-mile Alaska LNG Pipeline (AKLNG) to the terminal, much of which will be for international export to Asia.[6][7] The project is projected to be the most expensive energy project in North American history.[8]

The proposal originally involved BP, ConocoPhillips, and ExxonMobil, as well as the state-owned Alaska Gasline Development Corporation. But the private oil companies pulled out of the project as an LNG surplus has depressed gas prices. Alaska’s Gasline Development Corporation, the only party committed to pursuing the project, submitted its application to FERC on April 17, 2017. Alaska’s application asks FERC to approve the project by December 2018 so that it can have the project operational by 2024.[9]

In November of 2017, China’s biggest state oil company, Sinopec, one of its top banks and its sovereign wealth fund agreed to fund development. The announcement, made with fanfare as part of U.S. President Donald Trump’s state visit to China, lacked details about binding offtake agreements or financing. It is not known how this will effect development.[10]

In March of 2020, the Federal Energy Regulatory Commission (FERC) published the final Environmental Impact Statement (EIS) for the project, which analyzes the project’s environmental impacts and necessary mitigation measures. FERC is expected to issue the final approval for Alaska LNG in June 2020.[11]

In May 2020, FERC authorized the Alaska LNG project.[12]

In June 2020, an Alaskan Native village council and a coalition of environmental groups filed a formal request for FERC to reconsider its approval of the project. Filed by the Chickaloon Village Traditional Council, the Center for Biological Diversity, Earthjustice, the Northern Alaska Environmental Center and Sierra Club, the appeal says that FERC's May 21 approval failed to consider the project’s impacts on climate change and endangered species, including polar bears, Cook Inlet beluga whales and North Pacific right whales. According to the appellants, the project’s pipeline would have a daily capacity of 3.3 billion cubic feet of gas. Burning that amount of gas could result in more than 76 million tons of carbon dioxide equivalent emissions annually, similar to building 20 new coal-fired power plants. Erin Whalen, an attorney at Earthjustice, commented: “Even those who support this project should be appalled at how dismissively FERC has treated its numerous significant impacts on Alaska and the climate, telling the public essentially not to look behind the curtain. The agency needs to scrap its order and start over.”[13]

Also in June 2020, Alaska Gasline Development Corporation announced that the cost estimate for the project had been revised down from US$44.2 billion to US$38.7 billion. The company's president Frank Richard said that these new costings would influence discussions with potential project partners though also stated that ultimately market conditions would determine the project's future.[2]

In August 2020, the US Department of Energy issued the project with a final license for LNG exports to all countries, including those without U.S. free trade agreements.[14]

As of January 2021, the project was still awaiting a final investment decision (FID), which is expected to come some time in 2021. The expected start year was pushed back to 2025.[1]

Describing Alaska's "struggling effort" to develop the project, in February 2021 S&P Global reported on how Alaska Gasline Development Corporation was shifting its project focus toward a pipeline project that would deliver natural gas produced from Alaska's North Slope to the central part of the state as a means of de-risking the overall LNG project. Alaska Gasline Development Corporation said it would seek federal clean energy infrastructure funding to cover about 75% of the pipeline costs and will rely on a private partner to cover the rest of the project's costs while spearheading its development. This US$5.9 billion pipeline is one part of the proposed Alaska LNG Pipeline (AKLNG) which is intended to feed the planned LNG terminal. According to Larry Persily, a former federal coordinator for Alaska gas pipeline projects under the Obama administration, Alaska's new plan is likely to fail: "The project is dead. It's been dead for a while, and reconfiguring it to be a smaller dead project is the same outcome ... Do they really think the Biden administration, this Congress and this country is going to contribute US$4.5 billion to a fossil fuel pipeline in the Arctic in 2021?"[15]

After the Alaska LNG Pipeline (AKLNG) was left out of the Biden administration's infrastructure plan, and hence seemingly frozen out from receiving federal funding support, Alaska Gasline Development Corporation president Frank Richards claimed in May 2021 that he was in talks with private companies interested in taking over parts of the project. Richards said, without revealing the names of the companies, that the goal was to announce private partners later in 2021.[16]

Opposition

Gov. Bill Walker has asked the Trump administration for fast-track approval of the project and to exempt it from dozens of environmental rules. On May 22, 2017 the Center for Biological Diversity filed a motion against the proposal, saying the project endangers the Cook Inlet beluga whales and North Pacific right whales.[9]

Financing

In April 2018, the Alaska Gasline Development Corporation appointed the Bank of China and Goldman Sachs to serve as global capital coordinators for the project. This follows the Bank of China along with Sinopec and CIC Capital signing a joint development agreement with Alaska Gasline Development Corporation in November 2017 to collaborate on the advancement of Alaska LNG. Bank of China and Goldman Sachs are to assist with the raising of equity and debt financing for the continued development of Alaska LNG. Funds are expected to be raised in multiple rounds, including offerings to Alaska residents, municipalities, Native Corporations and private equity sources.[3] IJGlobal reported that CIC Capital is set to become an equity investor in the project, Sinopec is to become an offtaker, and Bank of China intends to lend funds to the project.[17]


Articles and resources

References

  1. 1.0 1.1 1.2 1.3 1.4 1.5 Liquefaction Facility, Alaska Gasline Development Corporation, accessed April 13, 2021
  2. 2.0 2.1 "Price tag drops to $38.7B for Alaska LNG Project," Kallanish Energy, Jun. 29, 2020
  3. 3.0 3.1 "Bank of China & Goldman Sachs selected to drive Alaska LNG project," Petroleum Exploration Society of Australia, Apr. 2, 2018
  4. Alaska shifts plan for gas pipeline supporting Alaska LNG project, S&P Global, February 9, 2021
  5. Alaska South Central LNG Terminal , A Barrel Full, accessed April 2017.
  6. "Alaska LNG Project Overview," Alaska LNG, accessed May 7, 2017.
  7. "Governor touts U.S.-China deal as helping Alaska LNG, but analysts are doubtful," Alaska Dispatch News, May 25, 2017
  8. "Alaska LNG provides more details on project construction," Kenai Peninsula Borough Mayor's Office, 28 June 2016.
  9. 9.0 9.1 "Legal Action Challenges Nation's Largest Liquefied Natural Gas Project," Center for Biological Diversity, 22 May 2017.
  10. Julie Gordon,China deal seen as no guarantee for Alaska LNG export project Reuters, November 9, 2017.
  11. ALASKA LNG PROJECT ACHIEVES MAJOR PERMITTING MILESTONE Alaska Gasline Development Corporation, March 6, 2020
  12. FERC Authorizes Alaska LNG Project Federal Energy Regulatory Commission, May 21, 2020
  13. "Filing Challenges Trump Administration Approval of Alaska LNG Project," Center for Biological Diversity, Jun. 23, 2020
  14. "Alaska LNG project secures approval for global exports of natural gas," Hydrocarbons Technology, Aug. 21, 2020
  15. Corey Paul, "Alaska shifts plan for gas pipeline supporting Alaska LNG project," Feb. 9, 2021
  16. Tegan Hanlon, "A state corporation is still pushing a massive gas line plan in Alaska. Is it a pipe dream?," May 5, 2021
  17. "Alaska LNG," IJGlobal TRANSACTION DATA, Jul. 17, 2020

Related GEM.wiki articles

External resources

External articles