AKLNG prospects challenged by competition, waning demand
Before the state can hope to advance a $43 billion liquefied natural gas project, it needs to get its own fiscal house in order, a former federal pipeline coordinator said Tuesday.
Larry Persily, also a former deputy revenue commissioner who recently served as a special assistant to the Kenai Peninsula Borough, delivered a one-hour briefing to the House Special Committee on Energy.
Persily offered an outlook on the project designed to ship LNG to Asian markets, and he wasn’t optimistic.
“It’s so hard to imagine now that we could go to market and say, 'We’ve got a great deal for you: We’re still fighting over school funding and how much to pay ourselves, but loan me a few billion dollars; I’m good for it,'" he said. "We’ve got to solve this. This is one of those unanswered pieces. Until we solve our own finances, it’s a little hard to envision us becoming a partner of anything of this size.”
Persily said two other variables are holding back Alaska for which the state has no control: growing global and domestic competition and reduced demand in China, one of the countries targeted as an Asian LNG market by former Gov. Bill Walker.
In Persily's 20-page PowerPoint presentation, three of those pages listed examples of global competitive considerations. He mentioned several regions, including:
- Qatar – Long a world leader in LNG export, the Middle East nation now plans 43 percent expansion within the next five years.
- Australia – Persily cited generous tax incentives as a driver for a $200 billion investment boom in the country, which now has 10 LNG plants.
- Russia – The energy-rich nation is reviewing whether a second Arctic LNG plant will be built this year.
- Papua New Guinea – This southern hemisphere country is considering a $13 billion project to more than double its LNG refining capacity.
The North Slope has about 35 trillion cubic feet of proven natural gas reserves. Some of that gas gets re-injected into oil wells to enhance oil production.
Two weeks ago, Gov. Mike Dunleavy traveled to Houston for an international energy conference. While there, he said he we was told industry executives considered the project “challenged.”
He said he hoped to announce a path forward within two months.
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