By Curtis Williams
HOUSTON, Oct 4 (Reuters) – Alaska LNG’s developer said the project’s access to stranded natural gas and shorter shipping routes to Asia will make it competitive with US Gulf Coast rivals, despite questions from some analysts about the project’s massive infrastructure costs.
When the project is completed, the cost of shipping gas to Asia from Alaska’s North Slope would be at least 65% cheaper than shipping LNG from the Gulf Coast, Tim Fitzpatrick, communications director for project developer Glenfarne, said on Sunday in an email to Reuters.
The proposed project, backed by President Donald Trump, would move gas from Alaska’s North Slope through an 800-mile pipeline to a liquefied natural gas export plant in southern Alaska. A key question has been whether lower shipping costs justify the billions of dollars needed to build the infrastructure.
Critics have pointed to the project’s estimated cost of $44.5 billion to $54.5 billion, which translates to roughly $2.2 billion to $2.7 billion per million tons per annum (MTPA) of LNG capacity. That appears significantly higher than many recently approved Gulf Coast developments.
But developer Glenfarne argues that the comparison is misleading because it includes the expense of pipeline and gas treatment infrastructure needed to bring stranded North Slope gas to market. The Alaska LNG project entails about $1.4 billion per MTPA in delivery costs, Fitzpatrick said.
US LNG projects approved since Russia’s invasion of Ukraine have generally been built at an average cost of about $1 billion per mtpa or less.
Glenfarne argues the project’s competitiveness should be measured by delivered LNG costs rather than upfront spending.
The company, Fitzpatrick said, so far has identified customers for 13 million tons per year of LNG, and needs 16 million tons annually to support project financing.
Trump on Friday said South Korea will help finance the Alaska LNG effort as part of a $200 billion package of investment in US projects. But Seoul quickly suggested that its role in the Alaska project is not yet set.
(Reporting by Curtis Williams in Houston; Editing by Sergio Non and Cynthia Osterman)
