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Alaska LNG agreement Glenfarne and POSCO form partnership for Alaska gas pipeline and LNG project
Alan Bailey for Petroleum News
Glenfarne Alaska LNG LLC and POSCO International Corporation have formed a strategic partnership for the Alaska LNG project, the companies announced on Dec. 1 during a Washington DC ceremony attended by senior officials from the Trump administration.
The project involves the construction of a 807-mile, 42-inch diameter gas pipeline from the North Slope to the Cook Inlet region of Southcentral Alaska, the construction of a gas treatment plant on the North Slope, and the construction of a liquified natural gas manufacturing and export facility on the coast of Cook Inlet.
POSCO International Corporation is the largest sales representative of POSCO Group, South Korea's largest steel producer and a major importer of LNG. Glenfarne is the lead developer and partner with the state-owned Alaska Gasline Development Corporation in the Alaska LNG project, Glenfarne said.
Three components to agreement There are three components to the strategic partnership with POSCO: the provision of a significant amount of the steel required for pipeline construction; a 20-year heads of agreement for the purchase of one million tonnes per annum of LNG; and a capital investment in the project by POSCO prior to the project final investment decision, or FID. A heads of agreement, while not legally binding, is a firm commitment to purchase a commodity such as LNG -- it represents a stronger commitment than a letter of intent.
"POSCO Group is one of the world's leading steel and energy companies, and their commitment to Alaska LNG reflects the high degree of support in Asia and across the Pacific for unlocking this valuable source of abundant, competitive LNG," wrote Brendan Duval, Glenfarne chief executive officer and founder, in a Dec. 4 press release. "Our partnership represents an important milestone in Glenfarne's progress developing this project, backed by strong industry support and engagement."
In the press release Glenfarne also noted the company's previously announced partnership with Baker Hughes, under which Baker Hughes is making an investment in the LNG project and providing LNG compression technology and power generation equipment.
High level of optimism During a Nov. 12 talk at the Resource Development Council's annual Alaska Resources Conference, Duval expressed a high level of optimism about the Alaska LNG project. In addition to the heads of agreement with POSCO, Glenfarne has signed letters of intent with potential customers for the purchase of 10 million tonnes per annum of the 16 million tonnes per annum that will be required to render the project viable. Glenfarne anticipates the potential to export more than 20 million tonnes per year of LNG through the planned system.
Duval commented on several factors that support what Glenfarne sees as the likely success of the project. In particular, the North Slope is known to hold huge quantities of natural gas readily available for export. In addition, the planned LNG export facility on the Cook Inlet is conveniently located at a shorter distance from potential customers in the Japan region than other LNG sources. Moreover, the sea route between Alaska and Japan avoids regions of political contention and could, if necessary, be effectively protected by the U.S. Navy, Duval commented.
"This makes it the only LNG facility in the United States on the Pacific coast, which allows for short shipping times and no maritime choke points through canals or geopolitical hotspots. This makes Alaska energy a powerful cornerstone for long-term energy reliability and security for the State of Alaska, for the United States of America, and for our Asian partners," Duval said.
He also commented that a reason for Glenfarne becoming involved in the project was that, with the amount of work, including engineering and permitting, that had already been carried out for the project, the project is ready to move ahead. All that remains is repricing the components of the project, placing purchase orders and entering into commercial agreements, he said.
Five components to the development Duval characterized the development as consisting of five components. The first component involves the construction of the gas pipeline from the North Slope to the north side of the Cook Inlet, to address a pending gas supply crisis in Southcentral Alaska. The second component involves the extension of the gas pipeline under the Cook Inlet to Nikiski on the Kenai Peninsula. A third component involves the construction of an LNG import facility, under an agreement with Enstar Natural Gas Co., to enable the short-term import of LNG, if North Slope gas does not become available in time to address Cook Inlet gas supply shortfalls. A fourth component involves the build out of the LNG import facility into an LNG export facility. And the fifth component involves the construction of gas processing units and ancillary infrastructure on the North Slope.
The plan is to conduct the project in two phases. Phase one consists of that first component, to address Southcentral gas supplies. Phase two consists of the remaining components, to complete the facilities required for the export of LNG.
However, Petroleum News understands from a previous statement by Enstar that the LNG import facility project for Enstar forms a separate project -- Duval indicated that engineering work has started for this project, which will entail construction of the first tank of the eventual export terminal, and the pier and berth for one LNG carrier.
Doable and competitive Duval commented that his company views the Alaska LNG project as doable and competitive.
"So, we've been operating at warp speed," Duval said. "It's quite amazing when we speak to others that are in much larger companies at everything that we're doing in parallel in terms of the bidding out of the construction, assembling the team, assembling the financing, doing all the commercial analysis, negotiating the contracts."
Engineering company Worley has been working on a pre-final investment decision study, with Glenfarne launching a contract bidding process. Glenfarne has also been working on engagement with the local community, Duval said. He commented that the pipeline will require eight compressor stations, that the necessary permitting is all in place and that 95% of the necessary rights of way have been established.
"One of the things that's very important to us is to reach what I call mechanical completion by the end of 2028, because then we've got the same administration in place that's helping clear any roadblocks on permitting that may pop up," Duval said with reference to the phase 1 project.
This timeframe will require the placement of orders in January for the needed piping and steel, with trenching for the installation of piping beginning around the end of 2026, he said.
And the project will generate major work opportunities, with a preference for Alaska employment, Duval said.
Final investment decision for phase one Duval commented that his main focus at present is to reach the final investment decision for phase one, the construction of the gas pipeline for domestic Alaska gas supplies, to ensure that there are no Alaska supply shortages.
"So, this is an amazing challenge, a huge commitment ... It's the most important project I've ever worked on," Duval said.
Glenfarne has previously indicated that it anticipates a final investment decision for phase two in late 2026.
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