State reaches milestone for gas project, but more work remains
The Alaska Gasline Development Corporation (AGDC) calls it a major milestone towards a natural gas project in Alaska. On Monday, it filed paperwork for a permit to build with the Federal Energy Regulatory Commission (FERC).
But even if Alaska secures that permit, there’s still a long way to go before the gas line project, AKLNG, would be shovel-ready. AKLNG is one of the most expensive of its kind in the world, and so far, no outside company has promised to help pay for it.
Thousands of pages of regulatory work and hundreds of millions of state dollars spent are the only tangible pieces of AKLNG.
“The State of Alaska’s been pursuing this project, I think, as long as I’ve been alive, and I think we have not– we have not as a state actually achieved a milestone such as a FERC license nor have we achieved a milestone where we have induced a customer or a buyer to come to the table,” AGDC board member, Hugh Short, told members of the Senate Finance Committee at a hearing last month.
All three oil companies who once partnered with the state in the AKLNG project have now pulled out– pointing to low gas prices as the reason why.
“A lot of people in Alaska are starting to question the viability of the project,” said Sen. Mike Dunleavy (R-Wasilla).
But the state is still moving forward. AGDC still has about $100 million left to spend, but with the state facing annual budget deficits measured in the billions, some lawmakers are re-considering the investment.
“We should expect a strong case from them (AGDC) about why the funding is necessary at this time and what work will be completed with that,” said Rep. Geran Tarr (D-Anchorage), co-chair of the House Resources Committee, in an interview Monday.
But Governor Bill Walker disagrees.
“For us to stop and not try and monetize that gas, it’s a bit short-sighted,” he said in a recent interview.
This month, Walker met with Vice President Mike Pence and Chinese President, Xi Jinping about Alaska-Asian trade relations. Geographically, Asia is the ideal market for Alaska liquefied natural gas.
“We’ve had positive responses from the market, we’ve had a number of companies that came over last month,” said Walker.
But last month, Japan’s Resources Energy Inc. pulled the plug on funding for a smaller LNG project in Cook Inlet. The company said low gas prices were to blame.
The governor said the smaller project should not be used when measuring progress on the larger one.
“You’re looking at market prices in Cook Inlet, versus stranded gas prices on the North Slope,” said Walker of the differences between the Port MacKenzie project and AKLNG. “You’re looking at [the] economy of scale, they’re really two very, very different projects.”
Now, state officials hope AKLNG won’t face the same fate.
“It doesn’t make much sense to pull the plug on the funding at this point,” said Short.
Now that paperwork has been filed, AGDC hopes to secure federal permits for the project by December 2018. If the state had the money to pay for the rest of the project, it could be finished by 2024.
The post State reaches milestone for gas project, but more work remains appeared first on KTVA 11.