Tag: lng

By: Yereth Rosen, Alaska Beacon

The president of the United States urged lawmakers to do everything they can to make the long-desired Alaska natural gas pipeline a reality.

“It is in the national interest to bring Alaskan gas reserves to market at the lowest possible price for consumers,” the president said in an official message. “Every effort must be made to ensure timely completion of the pipeline at the lowest possible cost consistent with Federal regulatory policies.”

The president was Jimmy Carter. The year was 1979. The Alaska natural gas pipeline project was already several years old, with official presidential approval issued two years earlier. The 4,748-mile pipeline project, which Carter touted as “the largest privately financed energy project ever undertaken,” was to be completed by 1984 at a cost of $10 billion to $15 billion, according to the approved plans.

That project never happened, nor did any of the other iterations of an Alaska natural gas pipeline plan that followed.

Now, five decades later, Gov. Mike Dunleavy is describing an alternate version of the yet-unbuilt pipeline as an imminent megaproject.

“For decades and decades and decades, this gasline project has been a dream of many Alaskans. And we’re closer today than we ever have been,” he said in comments posted on Facebook on May 29.

As Carter did, Dunleavy uses superlatives to describe the plan. “That project will be the largest on the face of the earth, probably the largest in terms of investment ever,” he said in opening remarks on May 19 at the Alaska Sustainable Energy Conference in Anchorage.

Dunleavy has called the legislature into a special session to consider sweeping tax concessions that he says are necessary to make the project work economically. His plan, which the legislature is considering, would eliminate nearly all of its state and municipal property taxes on project-related infrastructure in exchange for the promise of a share of the revenues once gas starts flowing through the line.

The current project sponsor is Glenfarne LLC, a New York- and Houston-based company founded in 2011. Glenfarne, a privately held investment and management company specializing in energy, entered the Alaska gas pipeline history last year when it acquired 75% of a project promoted by the state-owned and state-financed Alaska Gasline Development Corp. It has never built or operated a major natural gas pipeline or LNG facility.

Glenfarne says the project would cost between $44.5 billion and $54.5 billion.

Decades of proposals

The Glenfarne plan, for a phased-in pipeline to carry natural gas from the North Slope to a liquefaction plant in Cook Inlet, is the latest in a long series of pipeline plans and campaigns that emerged over the past half century.

The oil fields on Alaska’s North Slope that have been producing since 1977 also hold vast quantities of natural gas, as is common in petroleum basins. Known natural gas reserves on the North Slope, mostly at Prudhoe, total about 35 trillion cubic feet, and experts say there is certainly more natural gas to be discovered.

So far that gas has been considered “stranded” — too isolated to be marketable. Instead of being sold to utilities or other users, the gas that is brought to the surface with oil produced on the North Slope is reinjected into the reservoirs, where it helps build pressure that will enable more oil recovery. Each day, about 8 billion cubic feet of natural gas has to be reinjected, an amount equivalent to the daily natural gas consumption in Japan in 2024.

The prospect of selling that gas tantalized Alaskans and the energy industry and inspired a wide range of proposals that have come and gone over the past decades.

Some proposals were for overland pipelines through Canada, as the Carter-approved plan proposed. The main alternatives to the Canada route have been plans for an “all-Alaskan” line taking gas from Prudhoe to Valdez, the site of the trans-Alaska oil pipeline marine terminal, or to Cook Inlet for processing into liquefied natural gas to be transported by tanker vessel. Other plans proposed shorter lines delivering to in-state markets and an over-the-top route that would skim the Arctic coast before connecting with a Mackenzie Delta pipeline in the Northwest and Yukon Territories — a Canadian project that, like Alaska gasline, never materialized.

There have been plans for projects that would skip the pipeline construction altogether. In the early 2000s, BP experimented with a gas-to-liquids technology that might produce synthetic oil that could be shipped down the existing trans-Alaska pipeline. BP set up a facility in Nikiski for the project but closed it in 2009. Two pending proposals, one from a company called Qilak and another from a company called Polar LNG, call for natural gas deliveries directly from the North Slope by icebreaker. Even those are not new; the icebreaker idea was considered in the 1980s by Arco Alaska.

Also dating back to the mid-20th century are various task forces, commissions, coordinating offices, approved state and federal legislation, enthusiastic support from presidents, completed environmental impact statements and completed permits. There were various tentative agreements with oil producers, major corporations and Asian governments for participation the project. There were numerous special sessions of the Alaska Legislature — and, at the urging of project sponsors, financial inducements assembled by the state and federal governments.

A list of projects that surfaced through 2021 is available from the Alaska State Library, though it comes with a caveat: “It does not purport to be complete.”

Not one foot of gas pipeline has been laid, but plenty of space is taken up on Alaska library shelves by rows and rows of studies and reports produced since the 1970s.

Dunleavy insists that the Glenfarne project is different, though he conceded in a May 21 presentation that “people have heard about this project forever.”

In a presentation at the Sustainable Energy Conference in Anchorage, Dunelavy cited numerous factors that he said made the current plan different from past failed plans.

He listed energy disruptions caused by the war in Iran and Russia’s invasion of Ukraine, the rise of technologies that have dramatically increased the need for energy, the impending shortage of Cook Inlet natural gas that has long fueled Southcentral Alaska, the permits that the Alaska Gasline Development Authority already secured — plus the ardent support of President Donald Trump, who has pushed for aggressive resource development in Alaska since he returned to the White House in January of 2025.

“When you get all the geopolitical stuff that’s changed the world and then you get Trump 2.0 in here and data farms and cryptocurrency and electrification, it’s a different project,” Dunleavy said at the conference.

But Larry Persily, a veteran Alaska journalist and past head of the federal gas pipeline coordinating office that was originally established by President George W. Bush in 2004, sees a lot of wishful thinking surrounding the Glenfarne plan.

“We want to think it’s different. We want the pipeline. We want the revenues. We want the jobs. And we want the promise of affordable energy,” Persily said.

He cited ongoing “pep rallies” to help convince people that things are different this time, like the June 2 event hosted by the Greater Fairbanks Chamber of Commerce.

“We have a sales job, and it’s ginned up a lot of enthusiasm — misplaced, I believe,” he said.

Past optimism

Of the past plans, Persily said, the most similar to Glenfarne’s proposal was the Yukon Pacific plan for a LNG project, which emerged in the 1980s.

Yukon Pacific’s Trans-Alaska Gas System, also referred to as TAGS, envisioned a gas pipeline paralleling the trans-Alaska oil pipeline to a liquefaction plant in Valdez, from where tanker vessels would take LNG to Asian markets. The estimated price tag was $12 billion.

The Yukon Pacific plan was vetted through two environmental impact statements, one for the pipeline and one for the terminal. The company had permits in hand, including long-term federal and state right of way authorizations.

It had backing of the Bush and Clinton administrations. It had popular support, including from two-time Gov. and former U.S. Interior Secretary Wally Hickel, who founded Yukon Pacific in 1981 but relinquished his shares in the company to avoid any conflict of interest. It had some major corporate backing; in 1988, Yukon Pacific became a subsidiary of the CSX Corp., a major railway, transportation and real estate owner and operator.

What it lacked was economics to justify construction. The project was never built.

‘My way is the highway’

In the late 1990s and early 2000s, the spotlight shifted from the LNG option back to the overland route through Canada.

Democrat Tony Knowles, elected in 1994 and reelected in 1998, concluded that the route through Canada was the most likely. He used a catchy phrase to describe his choice: “My way is the highway.”

He championed legislation and issued executive orders to encourage development. He proposed using $17 billion in railroad bonds for the project. And, like others before, he spoke confidently about the prospects for bringing the pipeline to reality.

“I believe Alaskans can be on the working end of a shovel building a natural gas pipeline within two years. After two decades of false starts and broken dreams, the economic and political stars are finally aligned in our favor. Natural gas is the fuel of the 21st century,” Knowles said in his Jan. 10, 2001, state of the state address.

Industry officials made similarly optimistic statements.

A month prior to Knowles’ state of the state speech, Dick Olver, then chief executive of BP Exploration and Production, predicted gas deliveries within seven years.

“It is no longer a question of ‘if’ North Slope gas will be commercialized, but ‘when’ and ‘how,’” Olver said in a Dec. 5, 2000, speech to the Alaska Support Industry Alliance, a trade group for oilfield service companies. “We believe ‘when’ will be no later than 2007, and there are three exciting options for bringing North Slope gas to market at the present time,” he said, going on to summarize the overland pipeline, LNG concept and gas-to-liquids options being considered by BP at the time.

Frank Murkowski, who served for 22 years in the U.S. Senate before becoming the governor who succeeded Knowles, exuded similar optimism.

“This administration has brought the long-held dream of construction of an Alaska natural gas pipeline to the threshold of reality,” Murkowski said in a Jan. 20, 2006, speech to the Alaska Support Industry Association’s Meet Alliance conference.

Murkowski’s efforts focused on a deal with the three North Slope producers — BP, ConocoPhillips and Exxon Mobil — for what was then a $20 billion project. Murkowski said the producers needed “fiscal certainty,” not just on natural gas taxes but on oil taxes.

Like Dunleavy, Murkowski called the legislature into special session to approve tax concessions he said were urgently needed to make the gas pipeline a reality. “We have been waiting 30 years,” he said in a speech at the start of what turned out to be two special sessions on the topic.

The idea of locked-in oil taxes was not popular and, according to several legislators, contrary to the Alaska constitution.

Sarah Palin, elected governor later that year, took a different approach, a state license for which companies would compete. She sponsored a bill called the Alaska Gasoline Inducement Act, or AGIA, which lawmakers approved in 2007. Lawmakers meeting in a special session the following year approved the Palin administration’s proposal to award the license — which came with a pledge of up to $500 million in state cost reimbursement — to TransCanada. Palin signed the bill on Aug. 27, 2008, officially granting the license.

The following week, after she was selected as the vice presidential candidate on the national Republican ticket, Palin portrayed the gas pipeline as a fait accompli. 

“I fought to bring about the largest private-sector infrastructure project in North American history. And when that deal was struck, we began a nearly $40 billion natural gas pipeline to help lead America to energy independence,” Palin said at her Sept. 3, 2008, acceptance speech at the Republican National Convention in Minneapolis. “That pipeline, when the last section is laid and its valves are opened, will lead America one step farther away from dependence on dangerous foreign powers that do not have our interests at heart.”

TransCanada’s AGIA plan fizzled, as did a competing plan pursued by ConocoPhillips and BP called Denali.

The fracking resolution that flooded the Lower 48 with cheap natural gas made an overland route through Canada less attractive than an LNG project delivering to Asian markets.

The iterations that rose from the ashes of AGIA, pursued through the administrations of Gov. Sean Parnell and Gov. Bill Walker, were new versions of the previously proposed LNG plans, including some attempts involving TransCanada and the major oil producers. The idea of keeping the project entirely in Alaska had some popular appeal in the state, as encapsulated in a bumper sticker seen in the early 2000s that proclaimed “CANADA my ass/it’s ALASKA’s GAS.”

Leadership of the project ultimately fell to the Alaska Gasline Development Corp., a state entity created by the legislature in 2010 in response to concerns about dwindling Cook Inlet gas supplies. AGDC’s takeover came in spite of a 2002 Department of Revenue report concluding that state ownership “would not likely improve the feasibility of the project or be valued by private sector project sponsors.”

AGDC in 2020 won authorizations from the Federal Energy Regulatory Commission to build and operate the LNG project, the same approval that Yukon Pacific received decades earlier.

State concessions demanded

As with Glenfarne, past project sponsors have argued that tax or other financial concessions are needed to make massive investment in a gasline worthwhile.

Those arguments date back to the 1970s, when the Northwest Alaska Pipeline Co., the main sponsor of the Carter administration-approved overland gas pipeline through Canada, requested that the state issue $1 billion in bonds to pay for the project.

John McMillan, the company’s chief executive, was dissatisfied at the time with the administration of then-Gov. Jay Hammond.

“Regarding the State of Alaska, we must confess to a sense of frustration. While the State is the principal beneficiary of this project and will realize more direct and indirect benefits from its construction and the sale of the Prudhoe Bay gas than anyone else, we have been unable to develop any positive progress with the State which would materially assist in the development of a financial plan to move the project forward,” McMillan said in prepared statements delivered on Oct. 15, 1979, to a U.S. Congressional committee.

While lawmakers in the Frank Murkowski era rejected the governor’s idea of linking oil taxes to the long-desired gas pipeline, their changes to the oil tax system led to federal bribery and political corruption convictions and jail time for several lawmakers and others, including Bill Allen, the chief executive of what was at the time the state’s largest oilfield service company.

BP, a party to the Murkowski negotiations and, later, a partner with ConocoPhillips in the Denali gas pipeline proposal, left the state in 2020 after selling off all its Alaska assets to Hilcorp.

Because of the AGIA provisions, the state wound up reimbursing TransCanada about $327 million from 2010 to 2015, accoring to one legislative tally. The state paid out another $65 million in late 2015 to acquire the company’s remaining share in the project. The buyout gave the Alaska Gasline Development Corp. access to the Canadian company’s engineering studies and other documents.

Altogether, Persily said, the state has spent more than $1 billion in the past 25 years on the yet-to-be-built gas pipeline.

That does not include items like the cost of the current special legislative session or the $500,000 that the just-passed state budget for the next fiscal year appropriated to the Department of Revenue to adjust the tax system to accommodate Glenfarne’s desired near-elimination of property taxes. 

Sen. Bill Wielechowski, D-Anchorage, is among the lawmakers considering whether additional financial concessions that Glenfarne is seeking are justified. The deliberations follow a long history of unfulfilled gasline promises, he noted.

“I don’t think anyone’s opposed to giving them the tax break as long as they need it,” Wielechowski said of Glenfarne’s plan. “We’re just struggling with the lack of information and the feeling that we’ve been burned in the past.” 

James Brooks contributed to this story.