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Glenfarne Alaska LNG LLC President Adam Prestidge, joined by Alaska Gasline Development Corp. Commercial Manager Matt Kissinger and former U.S. Sen. Mark Begich, a strategic consulting advisor with Brownstein and through a subcontract with Northern Compass Group contracted by the Dunleavy administration on the Alaska LNG Project, took a barrage of questions March 23 at a meeting of the Alaska Legislature’s House Resources Committee.
Glenfarne had a slide presentation, but this was the first opportunity committee members had to address Glenfarne and Prestidge was quickly overwhelmed by questions and the meeting became a Q&A session.
How real is the project
Legislators said they were hearing skepticism from constituents that the project was real since various attempts to bring gas from the North Slope over many decades have failed.
In response Begich said this project has all permits in hand; litigation is gone; the right of way is in hand; and gas offtake from the North Slope has been authorized.
Kissinger said it wasn’t until 2015 that the Alaska Oil and Gas Conservation Commission authorized offtake of natural gas from the Slope.
The producer-built project fell through, he said, because it was the wrong cost of capital — producer investors were looking for upstream risk and reward whereas infrastructure investors look for lower risk and lower return.
And, Kissinger said, the integrated project was too big.
Phasing it wasn’t possible until Hilcorp said it would no longer offer long-term firm gas contracts, forcing the realization that imported LNG would be required, which forced up gas prices, allowing a phased pipeline bringing North Slope natural gas to Cook Inlet at a price competitive with imported LNG and increasing Southcentral contract gas prices.
The import terminal
In a question focused on efforts to solve the foreseeable shortage of Cook Inlet gas, Glenfarne was asked about duplicative costs of the Glenfarne import terminal and the Hilcorp conversion of the existing LNG facility to import LNG.
Prestidge said Glenfarne expects that around 95% of the capital it would put into the import facility would be “directly applicable to the export terminal.”
At this point, he said, we’re just developing an LNG facility, noting that there is a long history in the U.S. of converting LNG import terminals into export terminals, with at least 10 LNG export projects in the Lower 48 having started out as import terminals.
Asked if the existing Hilcorp facility couldn’t be used, Prestidge said the facilities are “extremely different,” with the 50-year-old Kenai LNG facility having an export capacity of less than a million tons a year.
The Alaska LNG facility, he said, will handle 20 million tons a year with current engineering.
The buyers
Prestidge discussed the parties with publicly signed agreements of intent to buy LNG, a total of 13 million of the 20 million tons of permitted annual capacity. Because of project financing for the project coming from banks and institutional investors, Glenfarne needs 80% of the export capacity sold — 16 million tons.
He reviewed the current parties, including CPC Taiwan, the national oil and gas company of Taiwan, which at 6 million tons would be one of the largest LNG contracts ever.
Glenfarne is in numerous discussions for an additional 2 million to 3 million tons, which would enable it to reach 16 million tons per annum. Prestidge said events in Iran have accelerated and intensified Glenfarne’s LNG sales discussions, with all parties having signed preliminary agreements anxious to advance and in pricing negotiations with Glenfarne.
The choke points
Prestidge said current events have illustrated why Alaska LNG is unique.
It’s the global chokepoints, he said: the Straits of Hormuz, the Straits of Malacca are both narrow. Ownership of the South China Sea is disputed by seven nations. And the Panama Canal has both traffic and drought issues.
Alaska, by contrast, is a “straight shot along the Aleutian Islands, effectively, from Anchorage to Japan, from Anchorage to Korea,” increasing reliability and reducing shipping costs.
Timetable, transparency
Asked about contracts with local utilities for gas to Cook Inlet, Prestidge said any contracts Glenfarne signs with the local utilities will go to the Regulatory Commission of Alaska and will be public documents. He estimated that would occur within the next couple of months.
He said the price is competitive against the alternative of imported LNG.
Kissinger addressed the issue of project transparency, telling the committee he had worked with a lot of overseas jurisdictions, and they had the same transparency as that here: transparency between the project developer and either a state-owned enterprise or a state agency. In Alaska, he said, it’s AGDC. “And we feel that Glenfarne are being extremely transparent with us at AGDC.”
Related to skepticism about the project, changing dates for the final investment decision, FID, was cited.
Kissinger said AGDC was frustrated when an FID date was put out there, knowing it would be challenging, but what AGDC looks at is what are the puzzle pieces required for FID? Those, he said, are well known: upstream contracts; downstream contracts; completion of FEED, front-end engineering and design; a pipeline contractor.
Looking at those puzzle pieces, Glenfarne “put them in place a lot faster than we had expected.”
AGDC targeted completion of FEED on the pipeline by the end of 2026; Glenfarne completed it a whole year earlier.
AGDC was aiming for a Class 3 cost estimate, believing that would be financeable; Glenfarne did a higher level, a Class 2 estimate, “extremely financeable” for the main line.
He urged focus on milestones, not the FID.
