Trump tariffs bring questions about AKLNG costs
President Donald Trump’s proposed tariffs on steel and aluminum imports have raised questions over how they might affect a proposed natural gas pipeline project.
Alaska wants to ship gas from the North Slope to Cook Inlet for export to Asian markets. It’s a $44 billion project that will require imported steel.
Trump’s Thursday announcement came four days after Gov. Bill Walker announced a trade mission to China. He noted how China was Alaska’s biggest export partner.
Last fall, several Chinese businesses agreed to help Alaska advance its liquefied natural gas export project, though no financial commitment was made.
Alaska Gasline Development Corp.'s chief executive president said on Monday he didn’t expect the tariffs to have a significant impact.
“Most of our cost of the project is actual construction and equipment as opposed to raw steel,” Keith Meyer said. “Suffice it to say that it won’t have a major impact on the project."
But former federal pipeline coordinator Larry Persily said there are too many unknowns, especially for a project that remains speculative.
“If China invests and finances 75 percent of the project, China is going to want the business to provide a lot of the steel,” Persily said.
“But, what you don’t know is (whether) the tariff going to be applied to just raw steel," Persily said. "Or what if China takes steel and manufactures it into a compressor or a production module -- will the tariff be on the steel part of it or the finished project? We don’t know the details yet.”
Persily has worked for state and borough lawmakers on both sides of the aisle. He currently works for House Resources member John Lincoln (D-Kotzebue) as a resources aide.
Persily added, “You don’t have the rules; you don’t have the exemption requirements. You don’t have the exemption process. What you do know is much of the steel that would go into an Alaska LNG project is going to come from overseas.
“It appears it will cost more to import steel from overseas, particularly China. We just don’t know much. But it will add to the cost of the project. There is no way out of it that I can see.”
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